Monplaisir v. Integrated Tech Group, LLC

Background

This order concerns a motion by the defendants to compel arbitration in a wage-and-hour putative class action. The parties briefed the validity and enforceability of the arbitration agreement under federal and California law. The agreement provided that federal-law claims would be decided under federal law and that common-law claims would be decided under Florida substantive law.

The court previously asked the parties either to agree to use California law or to submit new briefing. They disagreed: the plaintiffs preferred California law, while the defendants preferred Florida law. The court then ordered briefing on whether the agreement’s validity was a common-law matter and whether the defendants had waived reliance on the Florida choice-of-law provision by previously briefing California law.

Analysis

The parties agreed that the validity of an arbitration agreement is governed by ordinary state-law principles and that unconscionability is a common-law doctrine. They disagreed about whether the agreement’s choice-of-law provision applied to the validity and enforceability challenge.

The court interpreted the provision according to its plain language. It concluded that “claim” meant a claim for relief asserted between the parties—the basis for the lawsuit. The court reasoned that the arbitration agreement’s validity or unconscionability was not itself a claim. Instead, the defendants invoked the agreement only after the plaintiffs brought their claims, and the plaintiffs challenged enforceability only after the defendants invoked arbitration.

The court also noted that the defendants did not respond to the plaintiffs’ argument on this point in their supplemental brief. The court observed that the defendants’ proposed wording showed how a provision could have been drafted to govern an agreement’s interpretation and validity, but the defendants had not used that wording.

Because the choice-of-law provision did not apply, the court applied California’s choice-of-law principles. It stated that Florida law would apply only if it materially differed from California law on the issue. The defendants identified no material difference, and they had already argued that the arbitration provision was valid and enforceable under California law.

Ruling and effect

The court held that the choice-of-law provision did not govern the arbitration agreement’s validity and enforceability. It further held that California law governs those issues. The court did not decide the motion to compel arbitration in this order; instead, it stated that the motion would be decided under California law based on the briefs already submitted. The court reset the motion’s hearing for Thursday, February 20, at 10:30 a.m.

Judge William Alsup signed the order.