Johnese v. Starbucks Corporation

Background

Aaliyah Johnese sued Starbucks Corporation after Starbucks terminated her employment on June 15, 2017. She alleged that Starbucks did not properly respond to her requests for intermittent leave for medical treatment, disciplined her for missing shifts, requested medical information, and terminated her before she could provide additional documentation. Her complaint asserted eight causes of action: disability discrimination, failure to engage in a timely interactive process, failure to accommodate, retaliation, aiding and abetting discrimination, failure to prevent discrimination, wrongful termination, and unfair business practices.

Starbucks removed the case from state court and moved to compel arbitration and dismiss or stay the action. Starbucks argued that Johnese agreed to arbitrate claims related to her employment. Johnese argued that Starbucks had not shown that she signed the arbitration agreement. She also argued that the agreement was unconscionable, meaning unfairly one-sided and therefore unenforceable.

Arbitration Agreement and Signature

The Federal Arbitration Act generally makes written arbitration agreements enforceable, subject to ordinary contract-law defenses. Because the parties disputed whether an agreement was formed, the Court applied California contract principles and required Starbucks to prove the agreement’s existence by a preponderance of the evidence, meaning that the evidence showed it was more likely than not that an agreement existed.

Starbucks presented evidence about its online Retail Hourly Hiring system. The system notified applicants that new hires would be subject to an arbitration agreement as a condition of employment. During onboarding, the applicant had to consent to electronic communications, agree that a click signature would be a legal signature, review the arbitration agreement, and sign the onboarding forms. Starbucks’s records indicated that Johnese viewed and signed the arbitration agreement on May 23, 2016, and that an electronic copy was sent to her email address.

The Court found that this evidence sufficiently established that Johnese electronically signed the agreement. It also rejected the argument that an electronic signature was legally insufficient, citing California law recognizing electronic records and signatures. The Court noted that Johnese had consented to click-signature technology and that the evidence connected the electronic signature to her actions. The Court also noted that no evidence supported counsel’s later suggestion that a manager, rather than Johnese, may have completed the online forms.

Unfairness Challenge

Under California law, an arbitration agreement must be both procedurally and substantively unconscionable to be invalid. Procedural unconscionability concerns how the contract was presented and whether there was oppression or surprise. Substantive unconscionability concerns whether the terms are unjustifiably one-sided. Because the Court found that Johnese could not establish substantive unconscionability, it did not address procedural unconscionability.

Johnese challenged the agreement’s process for selecting an arbitrator and its limits on discovery. The agreement allowed the parties to try to choose an arbitrator jointly and, if they could not agree, to select one from a list provided by the American Arbitration Association through alternating strikes. The Court found that this was a neutral selection process.

The agreement limited each party to three interrogatories, 25 requests for documents, and two eight-hour days of depositions, but allowed a party to seek additional discovery by showing a substantial need. The Court found that these provisions provided more than minimal discovery and were not unlawfully one-sided. The Court also rejected Johnese’s argument that the agreement limited only employee claims while allowing Starbucks to sue in court. It found that the agreement covered claims brought under any statute, local ordinance, or common law relating to employment, including claims typically brought by employers.

Ruling and Effect

The Court found the arbitration agreement enforceable and granted Starbucks’s motion to compel arbitration. It stayed the action pending resolution of the arbitration, required the parties to file joint status reports every 90 days, required notice within 48 hours after the arbitration concluded, and directed the clerk to administratively close the case. The opinion does not separately state a disposition on the request to dismiss the action.