Rivas v. CVS Pharmacy, Inc.

Background

Nora Edit Rivas brought state-law claims against CVS Pharmacy, Inc. and Long Drug Stores California, LLC, which the opinion collectively calls “CVS.” Her claims involved alleged whistleblower retaliation, wrongful termination, and wage-and-hour violations. CVS removed the case to federal court and moved to compel arbitration under the Federal Arbitration Act.

CVS relied on a “CVS Health Arbitration Agreement” presented through its WorkDay onboarding portal when Rivas was rehired as a pharmacy technician in November 2023. The portal required an employee to open the agreement and check an acknowledgment box stating that the employee had reviewed the document and that an electronic signature would be applied. CVS’s records showed that Rivas acknowledged the agreement on December 10, 2023. Rivas said she did not remember checking the box, had not had a meaningful chance to review the onboarding materials, and had not understood the significance of agreeing to arbitration.

The agreement allowed employees to opt out within 30 days by mailing a signed and dated letter containing specified information. The agreement also stated that arbitration was not a mandatory condition of employment. Rivas did not opt out.

Consent to Arbitration

Rivas argued that she had not voluntarily consented because she did not understand arbitration and would not have agreed had she known she was giving up the right to a jury trial. The court rejected that argument. It found that the electronic records showed that Rivas affirmatively acknowledged the agreement using credentials available only to her. The court also relied on the rule that failing to read, or carefully read, a contract generally does not prevent enforcement.

The court gave particular importance to the 30-day opt-out period. It concluded that Rivas could have accessed the onboarding documents after the onboarding process, reviewed the agreement, and opted out. Because she did not use that option, the court found that she became bound by the agreement.

Unconscionability

Under California law, unconscionability is a defense to contract enforcement. Procedural unconscionability concerns unfair pressure or surprise, while substantive unconscionability concerns terms that are excessively harsh or one-sided. Rivas argued that the onboarding process was rushed, that she lacked a meaningful opportunity to opt out, and that she was not given copies of the agreement or the arbitration rules.

The court assumed, for purposes of its analysis, that Rivas may have been rushed, but found that any limited procedural unfairness was overcome by the 30-day opt-out opportunity. It also found that employees could access the onboarding documents through the WorkDay portal and that the agreement explained how to find the arbitration rules online or by telephone.

Rivas separately argued that the opt-out process was substantively unconscionable because it required mailing a letter and monitoring for a later acknowledgment. The court rejected that argument, finding that the opt-out instructions were clearly identified, described the required steps, and allowed employees to ask questions or consult a lawyer before the opt-out period ended.

Disposition

The court stated that it did not need to decide CVS’s argument that the agreement delegated questions about consent and enforceability to an arbitrator. Assuming the court could decide those questions, it granted the motion to compel arbitration because the agreement was enforceable, Rivas had not opted out, and the agreement was not unconscionable.

Judge William Orrick granted CVS’s motion to compel arbitration. The proceedings were stayed, and the Clerk was directed to administratively close the file. The court expressly stated that the administrative closure was not a dismissal or disposition of the action against any party and that further proceedings could be initiated if necessary.