Quiroz v. ADS-Myers, Inc.

Background

Jenny Quiroz and Brayan Martinez Barrios sued ADS-Myers, Inc. and its founder and chief executive officer, Karoline Myers, on behalf of themselves and a proposed class of similarly situated employees. The claims arose under the Fair Labor Standards Act, the California Labor Code, California’s Unfair Competition Law, and the Private Attorneys General Act (PAGA). The opinion states that ADS provides janitorial services and that Quiroz and Barrios worked for ADS in 2019.

The order addressed ADS’s motion to compel arbitration of Quiroz’s claims other than her PAGA claim. ADS argued that Quiroz had agreed to arbitration in an employment contract. Quiroz argued that no agreement was formed because the document she signed was illegible. She also argued that, even if an agreement existed, it was unenforceable because it was unconscionable, meaning unfairly imposed or excessively one-sided.

Bench Trial and Findings

The court held a bench trial under Federal Rule of Civil Procedure 52 and the Federal Arbitration Act. The only trial issue was whether Quiroz and ADS entered into a binding arbitration agreement, with particular attention to the document’s legibility. The court heard testimony from four witnesses and admitted documents into evidence.

The court found that Quiroz was hired by ADS in November 2018 as a janitor; ADS required new employees to sign an Applicant’s Statement & Agreement; and the agreement contained an arbitration provision. Quiroz signed the agreement along with other employment documents during a break from a night job in a dark parking lot. She was in a hurry, did not read the documents, thought the agreement was blurry and hard to read, and did not tell ADS representatives that she could not read it. The original signed agreement was lost, and the exhibits were faxed copies with differing degrees of legibility.

The court nevertheless found that the agreement was sufficiently readable to the naked eye, even assuming the original looked like the faxed copy most favorable to Quiroz. It also noted that the arbitration and jury-trial waiver provisions were in larger, bolder type, and that the document warned her not to sign until she had read it. The court found no evidence that ADS representatives misled or confused Quiroz or denied her a fair opportunity to review the agreement.

Conclusions of Law

Applying California contract law, the court concluded that Quiroz’s signature objectively showed mutual consent to the employment agreement and its arbitration clause. The court relied on the principle that competent adults are bound by documents they sign whether or not they read them. It rejected Quiroz’s reliance on cases involving people with vision impairments or limited English ability, finding that the record showed neither circumstance here.

The court also concluded that the arbitration agreement was not unconscionable. Under California law, both procedural and substantive unconscionability must be present before a court may refuse to enforce a contract provision, although the required degree of each may vary. The court distinguished the California Supreme Court’s decision in OTO, L.L.C. v. Kho, finding that Quiroz’s agreement was shorter, highlighted the arbitration and jury-trial waiver, did not contain the same dense legal language or disputed cost provisions, and did not expressly waive a Labor Commissioner hearing. The court further found that the fact only Quiroz signed the writing did not prevent enforcement.

Disposition

The court concluded that Quiroz was obligated to arbitrate all of her claims against ADS except the PAGA claim, which the parties agreed was not subject to arbitration. Quiroz and her non-PAGA claims were ordered to arbitration. Her portion of the case was stayed and administratively closed pending arbitration, and the parties were directed to file joint status reports every 90 days.

The court did not decide how compelling Quiroz’s claims to arbitration would affect the proposed class. Because the parties had not addressed that issue and Barrios remained in the case after the court denied a motion to dismiss directed at him, the court stated that the class issue required later resolution. Pending further order, the arbitration ruling applied only to Quiroz herself.

Judge James Donato signed the order.