Lacour v. Marshalls of CA, LLC

Background

Robert Lacour asserted wage-related, meal-break, and rest-break claims under the California Labor Code and Business and Professions Code in a proposed class action against Marshalls of CA, LLC, Marshalls of MA, Inc., and The TJX Companies, Inc., collectively referred to in the opinion as Marshalls. Marshalls moved to compel arbitration under a 2014 arbitration agreement, asked alternatively that the court stay or dismiss the action, and moved to strike the class allegations based on the agreement’s class-action waiver.

Marshalls presented evidence that it mailed individual packets containing the agreement and related materials to employees, including Lacour, and sent a follow-up postcard before the opt-out deadline. The agreement allowed employees to opt out by mail or online by March 12, 2014, and stated that continued employment without opting out would constitute acceptance. Marshalls presented evidence that Lacour did not opt out and continued working until May 2019. Lacour declared that he did not receive the materials, attend informational meetings, or sign the agreement.

Arbitration Agreement

The court held that it had authority to decide whether an arbitration agreement existed. It distinguished between whether the parties ever formed an agreement, which the court decides, and whether an existing agreement is enforceable, which may be delegated to an arbitrator.

Applying California contract law, the court held that Marshalls proved the agreement’s existence. Under the mailbox rule, mailing a letter creates a rebuttable presumption that the intended recipient received it. The court found that Marshalls’s mailing evidence, including evidence confirming Lacour’s address and testimony from the company that handled the mailing, established the presumption. Lacour’s declaration denying receipt, without additional evidence about an incorrect address or mail-delivery problems, did not overcome it.

The court also held that Lacour implicitly consented to the agreement. Although silence ordinarily does not constitute acceptance, the court found that the agreement gave Lacour a clear opportunity to opt out and stated that continued employment without opting out would constitute acceptance. Lacour’s failure to opt out and continued employment therefore bound both parties to the agreement.

The agreement covered claims involving wages, breaks, and rest periods. Lacour did not dispute that his claims fell within that language, so the court found that the agreement encompassed the present dispute.

Delegation and Unconscionability

The agreement’s delegation clause provided that disputes concerning the agreement’s enforceability, validity, or revocability would be resolved by an arbitrator, subject to an exception for matters addressed in another section. The court held that this language clearly and unmistakably delegated questions of arbitrability and enforceability to the arbitrator.

The court considered Lacour’s challenge to the delegation clause itself. Under California law, unconscionability generally requires both procedural unfairness, such as oppression or surprise, and substantive unfairness, such as overly harsh or one-sided terms. The court rejected Lacour’s argument that the clause was procedurally unconscionable because employees had a meaningful opportunity to opt out, the clause appeared in the first paragraph, and it was the same size as the rest of the five-page agreement. The court also stated that the clause was not substantively unconscionable because it applied the arbitrator’s or court’s decision equally to both parties.

The court therefore held that the delegation clause was not unconscionable. It ruled that the arbitrator, rather than the court, must decide whether the agreement as a whole is unconscionable or otherwise unenforceable.

Class Allegations and Disposition

The agreement contained a class-action waiver. Lacour did not separately challenge that waiver; he argued only that no agreement existed. Because the court found that an agreement existed and found no separate challenge to the waiver, it granted Marshalls’s request to strike the class allegations under Federal Rule of Civil Procedure 12(f).

The court denied Marshalls’s request to dismiss the entire case. Instead, because the arbitrator would decide the agreement’s enforceability, the court granted the request to stay the action pending arbitration. The court also granted Marshalls’s request for judicial notice concerning the scope of proceedings in an earlier related class-action settlement proceeding. The parties were ordered to file periodic status reports about the arbitration and to notify the court after the arbitrator issued a final decision.