Gerlach v. Tickmark Inc.

Background

Glenn Gerlach, III sued Tickmark Inc. over alleged unpaid commissions from his employment. The complaint asserted five causes of action: breach of contract; violation of California Labor Code section 200; quantum meruit, meaning a claim for the reasonable value of services; unjust enrichment; and wrongful termination in violation of public policy.

Gerlach signed an employment agreement on December 20, 2018. The agreement required disputes relating to the agreement, his employment or termination, and his compensation, wages, or benefits to be submitted to binding individual arbitration under the Federal Arbitration Act. It also specified arbitration before a single neutral arbitrator under the American Arbitration Association's employment rules, in Miami, Florida, and barred combining his claims with those of other employees or other people.

Authentication and admissibility

Gerlach argued that Tickmark had not authenticated the arbitration agreement. Tickmark submitted evidence from Michael Mouriz, its co-founder and chief operating officer, describing the company's electronic-signature and onboarding process and providing records and emails showing that Gerlach reviewed and signed the employment agreement. The court found that Tickmark had shown Gerlach signed the agreement containing the arbitration clause.

The court also found the employment and onboarding records admissible under the business-record exception to the hearsay rule. It concluded that the records were made and kept in the ordinary course of Tickmark's business, near the relevant times, and based on information from a person with knowledge.

Delegation of arbitrability

A court ordinarily decides gateway questions of arbitrability—whether the parties agreed to arbitration and whether their dispute falls within that agreement. The court held that the agreement's incorporation of the American Arbitration Association's employment rules clearly and unmistakably delegated those questions to the arbitrator. Those rules give the arbitrator authority to decide questions about the existence, scope, validity, and arbitrability of claims.

The court rejected Gerlach's argument that this delegation rule applied only when both parties were sophisticated. The court found Gerlach sufficiently sophisticated to understand the agreement's consequences, relying in part on evidence that he had asked questions about stock options, contingencies, and investments. The court therefore ruled that the arbitrator—not the court—would decide whether the arbitration agreement was valid and whether the dispute fell within its scope. The court also stated that Gerlach's unconscionability argument would be decided by the arbitrator.

The opinion additionally states that a claim under California Labor Code section 229 was subject to the arbitration agreement. The earlier description of the complaint identifies a claim under section 200, so the opinion contains an apparent inconsistency on that statutory section.

Disposition

The court granted Tickmark's motion to compel arbitration. It found dismissal inappropriate at that stage because the court had delegated the gateway arbitrability questions to the arbitrator. Instead, it granted the alternative request to stay the action pending arbitration.

The court administratively closed the case for statistical purposes only. It directed the parties to file a joint status report within 14 days after the arbitrator's order and, if appropriate, seek to reopen the case. The order terminated Docket Number 12. The court did not decide the merits of Gerlach's claims for unpaid commissions or wrongful termination.