Bazine v. Kelly Services Global, LLC

Background

Samy Bazine brought a proposed class action against Kelly Services Global, LLC, Kelly Services USA, LLC, and Medi Mall, Inc. He asserted one claim under California’s unfair competition law, based on alleged violations of California wage-and-hour laws concerning minimum wages, overtime pay, meal periods, and related matters.

Bazine completed Kelly’s online hiring-registration process in 2018 and again in 2020. He electronically signed an arbitration agreement during each registration. Both agreements covered statutory and common-law employment claims, including unpaid-wage claims, and required binding arbitration instead of court proceedings. The 2020 agreement also stated that arbitration was optional for people who lived or worked in California and that employment was not conditioned on signing it.

Kelly moved to compel arbitration and either dismiss or stay the lawsuit. Medi Mall joined the motion. Bazine opposed it.

Agreement to Arbitrate

The court applied California contract-formation principles. The agreements contained Michigan choice-of-law provisions, but Kelly agreed that those provisions could not be enforced against Bazine under California Labor Code section 925. The court therefore agreed that California law applied and that the Michigan provisions were automatically severed under the agreements’ severability clause.

Bazine did not dispute the authenticity of his electronic signatures or deny that he entered into the agreements. The parties disagreed about which agreement controlled. The court held that the 2020 agreement superseded the 2018 agreement because it was the later agreement and differed in an important respect regarding whether California residents and workers had to arbitrate.

Medi Mall was not a signatory to the 2020 agreement. The court nevertheless concluded that all defendants could seek arbitration. Kelly argued that Medi Mall was a third-party beneficiary of the agreement and that the complaint described the defendants as agents of one another. Because Bazine did not address that argument in his opposition, the court treated him as having conceded Medi Mall’s right to enforce the agreement.

Delegation of Arbitrability

The court distinguished between deciding whether an arbitration agreement exists and deciding whether a particular dispute falls within its scope. It found that the 2020 agreement incorporated the employment dispute-resolution rules of the American Arbitration Association. Under the court’s cited Ninth Circuit precedent, incorporating those rules was clear and unmistakable evidence that the parties agreed to let an arbitrator decide arbitrability—the question whether the dispute must be arbitrated.

Bazine argued that the agreement did not adequately incorporate the American Arbitration Association rules because the rules available when arbitration was filed could not have been known when he signed the agreement. The court rejected that argument because the agreement identified the rules and stated that they were available on Kelly’s website or upon request. The court also rejected Bazine’s argument that the agreement used an incorrect title for the rules.

Bazine further argued that incorporation of the rules should not delegate arbitrability because he characterized himself as unsophisticated. The court found the defendants’ contrary authorities more persuasive and held that the incorporation was sufficient even accepting that characterization for purposes of the motion.

Because arbitrability was delegated, the court held that the arbitrator—not the court—should decide whether Bazine’s unfair competition claim fell within the agreement’s covered claims, including the effect of contractual language excluding unfair competition claims. The court also held that Bazine’s unconscionability challenge was for the arbitrator because it challenged the arbitration agreement as a whole rather than the delegation provision specifically.

Disposition

The court GRANTED the defendants’ motion to compel arbitration. It chose to stay, rather than dismiss, the complaint pending arbitration. The parties were ordered to begin arbitration within 60 days of the order or show cause why they had not done so. The case was stayed, the Clerk was directed to administratively close it, and either party could request that it be reopened after arbitration if appropriate.