Opinion
Case No. 2:23-cv-03166-WLH-JC
2023-07-24
Alva Dennis LYTTON, Plaintiff, v. SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY (aka SCRAA Metrolink); National Railroad Passenger Corporation (aka Amtrak); and Does 1 to 10, Defendant.
Martin Isaac Aarons, Samuel Hauser, Shannon Helene-Pagel Ward, Aarons Ward APC, Calabasas, CA, for Plaintiff. Brandie N. Charles, Zeeshan Kabani, Littler Mendelson PC, Los Angeles, CA, for Defendants Southern California Regional Rail Authority, National Railroad Passenger Corporation.
Martin Isaac Aarons, Samuel Hauser, Shannon Helene-Pagel Ward, Aarons Ward APC, Calabasas, CA, for Plaintiff. Brandie N. Charles, Zeeshan Kabani, Littler Mendelson PC, Los Angeles, CA, for Defendants Southern California Regional Rail Authority, National Railroad Passenger Corporation.
ORDER DENYING DEFENDANTS' MOTION TO COMPEL ARBITRATION PURSUANT TO THE FEDERAL ARBITRATION ACT AND STAY PROCEEDINGS (DOCKET NO. 16)
WESLEY L. HSU, UNITED STATES DISTRICT JUDGE
On June 20, 2023, Defendants Southern California Regional Rail Authority ("Metrolink") and National Railroad Passenger Corporation ("Amtrak") (collectively the "Defendants") filed the instant Motion to Compel Arbitration and Stay Proceedings (the "Motion"). (Mot., Docket No. 16). Plaintiff, Alva Dennis Lytton ("Plaintiff") filed an opposition to the Motion on June 30, 2023. (Opp'n, Docket No. 20). Defendants filed their reply on July 7, 2023. (Reply, Docket No. 25). The matter is fully briefed. On July 21, 2023, the Court held a hearing and heard oral arguments from all parties.
The Court, having carefully considered the parties' arguments and submissions, for the reasons stated below, DENIES Defendants' Motion.
I. BACKGROUND
A. Procedural History
On March 24, 2023, Plaintiff filed a Complaint against Defendants in the Superior Court of the State of California captioned under Alva Dennis Lytton v. Southern California Regional Rail Authority (aka SCRAA Metrolink); National Railroad Passenger Corporation (aka Amtrak); and Does 1 to 10, Case No. 22STCV20884. (Not. of Removal, Docket No. 1 ¶ 1). Specifically, Plaintiff alleged two causes of action under California state law for: (1) violation of Cal. Lab. Code § 1102.5; and (2) wrongful termination in violation of public policy. (See id.). On April 26, 2023, Defendants subsequently removed this action to this Court based on original jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1349. (See id.).
B. Factual Background
Plaintiff was formerly employed by Amtrak as a Safety Manager from approximately June 29, 2020, to July 19, 2022. (See Compl., Docket No. 1-1 ¶ 10; see also Declaration of Tiffany Baynard "Baynard Decl.," Docket No. 16-2 ¶ 4). As part of Plaintiff's new hire application and onboarding process, Plaintiff received several documents including a standalone document entitled "Mutual Mandatory Binding Arbitration Agreement" (the "Arbitration Agreement"). (Docket No. 16-2 ¶ 4, Exh. A). The Arbitration Agreement contains, in relevant part:
2.0 PURPOSE
. . . this Agreement establishes a program of mutual mandatory binding arbitration for resolving covered legal claims that may arise between Amtrak and its Employees and Independent contractors. DISPUTES AND CLAIMS COVERED BY THIS AGREEMENT SHALL BE RESOLVED BY ARBITRATION INSTEAD OF A COURT TRIAL BEFORE A JUDGE OR JURY.
3.0 COVERED INDIVIDUALS
3.1 "Employee includes any person who applies for, accepts, or continues in his/her employment with Amtrak . . .
3.2 This Agreement applies to Amtrak and all Amtrak Employees whose job is not covered by a collective bargaining agreement.
. . .
3.4 This Agreement is mutual between Amtrak and its Employees. It applies to all Covered Claims (defined below) asserted
either by Amtrak or an Employee.(Id.) (emphasis in original).
4.0 COVERED CLAIMS
4.1 "Covered Claims" are any and all past, present and future legal claims, controversies, disputes, complaints, or causes of action (unless excluded in Section 5 below) arising out of, and/or directly or indirectly related to, this Agreement and/or the employment or independent contractor relationship between an Employee and Amtrak1 or an application for employment with Amtrak, including but not limited to alleged violations of any federal, state or local statute, regulation or common law. Covered Claims include, by way of example only and without limitation, claims relating to . . . discipline, . . . terms and conditions of employment . . . and the termination of the employment . . . and all other federal or state legal claims arising out of or relating to Employee's application for employment, employment or the termination of employment.
4.2 . . . all Covered Claims asserted between Amtrak and an Employee are subject to mutual mandatory final and binding arbitration. Covered Claims between Amtrak and the Employee may not be brought, pursued or litigated, by either Amtrak or the Employee, in a federal, state, local or tribal court of law or equity.
13. APPLICABLE LAW
In rendering the award, the arbitrator shall determine the rights and obligations of the parties according to the substantive laws applicable to the claims and defenses at issue in the case, including applicable statutes of limitations.
Amtrak and Employee expressly agree and stipulate that the Federal Arbitration Act (9 U.S.C. § 1 et seq.) will apply to this Agreement, which evidences a transaction involving commerce.
ALTHOUGH EMPLOYEE MAY BE ASKED TO ACKNOWLEDGE RECEIPT AND ACCEPTANCE OF THIS MUTUAL MANDATORY BINDING ARBITRATION AGREEMENT, THIS AGREEMENT DOES NOT REQUIRE EMPLOYEE'S SIGNATURE OR ACKNOWLEDGMENT TO BE EFFECTIVE AND BINDING ON EMPLOYEE AND THE COMPANY. BY SEEKING, ACCEPTING, OR CONTINUING EMPLOYMENT AFTER FIRST RECEIPT OF THIS AGREEMENT, EMPLOYEE ACCEPTS THIS AGREEMENT AND AGREES TO BE BOUND BY ITS TERMS. ACCORDINGLY, BOTH EMPLOYEE AND AMTRAK ARE BOUND BY THE AGREEMENT AND AGREE TO ARBITRATE CLAIMS COVERED BY THIS AGREEMENT.
On June 5, 2020, Plaintiff acknowledged the Arbitration Agreement when he submitted his application through Amtrak's website. (Id. ¶ 4). The Arbitration Agreement, which Amtrak does not require its employees to sign or otherwise acknowledge, is "deemed accepted by virtue of the employee choosing to remain employed after being presented with [the Arbitration Agreement]." (Id. ¶ 3). After submitting his application containing the Arbitration Agreement, Plaintiff remained employed with Amtrak until his termination on July 19, 2022. (See id.; see also Docket No. 1-1 ¶ 10).
Plaintiff does not dispute that he received and acknowledged the Arbitration Agreement when he submitted it via the Amtrak website, nor does he take issue with the language of the arbitration provisions. (See generally Opp'n, Docket No. 20).
Initially, Amtrak hired Plaintiff to assist Amtrak with its contract negotiations with Metrolink for train and engine services. (Docket No. 1-1 ¶ 10). After Metrolink awarded Amtrak the contract in October 2020, Plaintiff began working on that contract as a Safety Manager. (See id.). Plaintiff alleges that during monthly joint Amtrak and Metrolink Safety Committee meetings he raised several safety concerns to management including "train crew assaults, defective and dangerous rail cars and locomotives, trains striking people due to homeless encampments, as well as other issues related to the safe operation of train and engine services." (Id. ¶ 11). Plaintiff further alleges that he contacted federal regulators from the Federal Railroad Administration ("FRA") to report Metrolink for failing to consult Amtrak prior to instituting Metrolink's System Safety Program Plan ("SSPP") under 49 C.F.R. Part 270. (Id. ¶ 17). Ultimately, Amtrak fired Plaintiff on July 19, 2022. (Id. ¶ 18). Plaintiff alleges that he was fired in retaliation for his safety-related complaints and for reporting Metrolink's conduct to safety regulators. (Id.).
II. LEGAL STANDARD
The Federal Arbitration Act ("FAA") governs the enforcement of private arbitration agreements between parties. See New Prime Inc. v. Oliveira, 586 U.S. 105, 139 S. Ct. 532, 536, 202 L.Ed.2d 536 (2019); see also Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). Section 2 of the FAA, which describes the statute's coverage, provides that a written agreement in "any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable . . . ." 9 U.S.C. § 2. Section 4 of the FAA states that "a party aggrieved by the alleged failure, neglect, or refusal of another to arbitration under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4.
A court reviewing a motion to compel arbitration under this section of the FAA, must determine: "(1) the existence of a valid, written agreement to arbitrate; and, if it exists, (2) that the agreement to arbitrate encompasses the dispute at issue." Ashbey v. Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015). Upon satisfaction of both elements, the court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3; see also New Prime, 139 S. Ct. at 537. In general, courts apply "ordinary state-law principles that govern the formation of contracts." First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Any doubts about the scope of arbitrable issues must be resolved in favor of arbitration. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).
Critically, Section 1 of the FAA states "nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. "The burden is on the party opposing arbitration . . . to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue." Rogers v. Royal Caribbean Cruise Line, 547 F.3d 1148, 1151 (9th Cir. 2008) (quoting Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 227, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987)).
III. DISCUSSION
Defendants argue that they are entitled to an order enforcing the parties' Arbitration Agreement because they entered into a valid and enforceable written Arbitration Agreement with Plaintiff, which encompasses Plaintiff's employment-related claims. (See generally Defs.' Mem. of P. & A., Docket No. 16-1). Defendants further argue that the Arbitration Agreement is also enforceable under California state law based on the factors enumerated in Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000). (See id. at 8). Plaintiff counters that he is exempt under Section 1 of the FAA, as a railroad employee. (See generally Opp'n, Docket No. 20). Furthermore, Plaintiff argues that even if the FAA applied, Plaintiff is not subject to the Arbitration Agreement because it is unconscionable and unenforceable. (See id.). Defendants reply that Plaintiff is not a transportation worker under the FAA because Plaintiff did not engage in the movement of goods in interstate commerce. (Reply, Docket No. 25 at 3). Plaintiff acted as Amtrak's safety liaison with Metrolink, was not a train operator, and was not directly or indirectly involved in the transportation of any goods. (See id.). Moreover, Defendants are "rail passenger operating systems" and are not involved in the business of transporting goods. (Id.).
As an initial matter, the Court must "decide for itself" if Plaintiff falls into the category of exempt employees under Section 1 of the FAA. See New Prime, 139 S. Ct. at 537 (finding that before compelling arbitration "a court must first know whether the contract itself falls within or beyond the boundaries of §§ 1 and 2 [of the FAA]."). Section 1 of the FAA contains three categories of employment contracts which are exempt from the FAA: (1) "seamen"; (2) "railroad employees"; and (3) "any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1.
Here, the Court finds that this case involves "a contract of employment" of a "railroad employee[ ]" and thus is plainly and squarely exempted from application of the FAA by 9 U.S.C. § 1. The plain language of Section 1 categorically exempts all "contracts of employment of . . . railroad employees" without any qualification. Id.
Although the parties focused much of their analysis on the third category of workers, also known as the "residual clause," that category is inapplicable here because there is no ambiguity about how Section 1's terms apply to these facts. Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 62 L.Ed.2d 199, (1979) (citing Burns v. Alcala, 420 U.S. 575, 580-81, 95 S.Ct. 1180, 43 L.Ed.2d 469 (1975)) ("A fundamental canon of statutory construction is that, unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning."); accord Brown v. Nabors Offshore Corp., 339 F.3d 391, 394 (5th Cir. 2003) (holding that plaintiff, who was employed as a seamen, was excluded from the FAA under Section 1 based on his position within an enumerated class of employee "even if he was not 'engaged in . . . commerce.' "). Additionally, the Court need not analyze the legislative history of Section 1 of the FAA because the meaning of the statute is clear on its face. See Bostock v. Clayton Cnty., Georgia, 590 U.S. 644, 140 S. Ct. 1731, 1749, 207 L.Ed.2d 218 (2020) (finding that an analysis of the legislative history of a statute is not necessary when there is no ambiguity with the plain language of the statute); see also Ratzlaf v. United States, 510 U.S. 135, 147-48, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994) ("[W]e do not resort to legislative history to cloud a statutory text that is clear"). In the absence of authority from any Circuit that this Court should ignore the plain terms of this statute, this Court declines to do so. Accordingly, the Court finds that the Plaintiff's claims are exempt from the FAA.
Plaintiff misstates that the entire exemption contained within Section 1 is known as the "residual clause." (Opp'n., Docket No. 20 at 2). The term "residual clause" only refers to the last category of employee described as "any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1; see also In re Grice, 974 F.3d 950, 955 (9th Cir. 2020).
At oral argument Defendants encouraged this Court to re-consider the Supreme Court's decision in Circuit City Stores Inv. v. Adams. Circuit City, however, supports the Court's view of Section 1. "Construing the residual phrase to exclude all employment contracts fails to give independent effect to the statute's enumeration of the specific categories of workers which precedes it; there would be no need for Congress to use the phrases 'seamen' and 'railroad employees' if those same classes of workers were subsumed within the meaning of the 'engaged in . . . commerce' residual clause." Circuit City, 532 U.S. at 114, 121 S.Ct. 1302. "Railroad employees" must mean something different than a "class of workers engaged in foreign or interstate commerce." Under Defendants' proposed meaning, all "railroad employees" would be fully subsumed under the residual clause, a result that runs contrary to the canons of statutory interpretation.
Nor does the Supreme Court's recent decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450, 142 S. Ct. 1783, 1791-92, 213 L.Ed.2d 27 (2022), support Defendants' counter-statutory interpretation. In that case the Court discussed the meaning of "seamen" and "railroad employees" in the context of defining the scope of "class of workers." While the Court found that in 1925, seamen "include[d] only those who work[ed] on board a vessel," the Court declined to similarly limit railroad employees. Id. (citation omitted) ("Regardless of whether 'railroad employees' include all rail-transportation workers, the narrow definition of 'seamen' shows that the two terms cannot share a 'common attribute' of identifying transportation workers on an industrywide basis."). Instead, the Court found that the concept of ejusdem generis "neither demands nor permits that we limit a broadly worded catchall phrase based on an attribute that inheres in only one of the list's preceding specific terms." Id.
Lastly, the Court cannot at this point, based on the briefing of this Motion, address the remainder of Defendants' arguments regarding the enforceability of the Arbitration Agreement under California law and the Armendariz factors. Defendants failed to establish why California law applies despite the Arbitration Agreement stating "[i]f the the [FAA] does not apply, Amtrak and Employee mutually stipulate and agree that the Texas Arbitration Act will apply." (Docket No. 16-3 at 10). In addition, because possible enforceability under Texas law implicates the Erie doctrine, about which the parties have not provided any briefing, the Court declines to opine on this issue. This decision is therefore without prejudice to a motion to compel arbitration on some basis other than the FAA.
IV. CONCLUSION
Based on the foregoing discussion, the Court DENIES Defendants' Motion.
IT IS SO ORDERED.