Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

Articles Posted in Contracts

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The Ninth Circuit reversed the dismissal of a putative class action seeking refunds of baggage fees based on preemption by the Airline Deregulation Act, 49 U.S.C. 1301 et seq. Plaintiff filed suit, alleging various breach of contract claims, seeking a refund of a $15 baggage claim fee, because her bag did not arrive on time and was consequently delivered to her the next day. American Airlines v. Wolens is controlling as to plaintiff's breach of contract claim. In this case, because plaintiff's claim was for breach of contract of a voluntarily assumed contractual undertaking, and she pleaded breach of contract, the claim was not preempted by the Airline Deregulation Act as construed by Wolens. View "Hickcox-Huffman v. US Airways" on Justia Law
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Plaintiff filed a class action against C.H. Robinson, alleging misclassification claims regarding overtime pay requirements. On appeal, C.H. Robinson challenged the district court's denial of its motion to compel arbitration. The court rejected plaintiff's argument that the Incentive Bonus Agreement at issue was procedurally and substantively unconscionable. In regards to procedural unconscionability, the court concluded that, under California law, the degree of procedural unconscionability of such an adhesion agreement is low. In regard to substantive unconscionability, the court concluded that any argument that the judicial carve-out was not substantively unconscionable has been waived; the waiver of representative claims was not substantively unconscionable where the unenforceability of the waiver of a Private Attorneys General Act (PAGA), Cal. Labor Code 2698-2699.5, representative action does not make this provision substantively unconscionable; and the venue provision, confidentiality provision, sanctions provision, unilateral modification provision, and discovery limitations are not substantively unconscionable. Therefore, the court concluded that the dispute resolution provision is valid and enforceable once the judicial carve-out clause is extirpated and the waiver of representative claims is limited to non-PAGA claims, and the district court erred in holding otherwise. The court reversed and remanded. View "Poublon v. C.H. Robinson Co." on Justia Law

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Plaintiff filed a class action against Samsung, alleging that it made misrepresentations as to the performance of the Galaxy S4 phone. The district court denied Samsung's motion to compel arbitration based on an arbitration provision contained in a warranty brochure included in the Galaxy S4 box. Determining that its analysis is governed by California contract, rather than warranty, law, the court concluded plaintiff did not assent to any agreement in the brochure, nor did he sign or otherwise act in a manner that showed he accepted the arbitration agreement. The court concluded that Samsung failed to demonstrate the applicability of any exception to the general California rule that an offeree’s silence does not constitute consent. Therefore, in the absence of an applicable exception, California’s general rule for contract formation applies. The court also concluded that, under the circumstances of this case, Samsung's inclusion of a brochure in the Galaxy S4 box, and plaintiff's failure to opt out, does not make the arbitration provision enforceable against plaintiff. Finally, the court concluded that Samsung's argument that plaintiff agreed to arbitrate his claims by signing the Customer Agreement with Verizon Wireless is meritless. The court explained that Samsung is not a signatory to the Customer Agreement between Verizon Wireless and its customer. Furthermore, Samsung is not a third-party beneficiary to the Customer Agreement. Accordingly, the court affirmed the judgment. View "Norcia v. Samsung Telecommunications" on Justia Law

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Pure Wafer, a facility that cleans silicon wafers, filed suit against the City, challenging Ordinance No. 4856-1313. The Ordinance imposes limits on the pollutants that industrial users, like Pure Wafer, are permitted to discharge into the City’s sewer system. Pure Wafer claims that by enacting the Ordinance, the City impaired the obligation of its contract with Pure Wafer and committed at least two different breaches of contract. The district court entered judgment for Pure Wafer and awarded Pure Wafer a permanent injunction. The court concluded that the City has not impaired the obligation of its contract with Pure Wafer in violation of the Contracts Clause of the Constitution, because the Ordinance has not altered the ordinary state-law remedies to which Pure Wafer would otherwise be entitled if it successfully proves a breach of contract. The court explained that the City might very well have breached its contract but that does not necessarily mean it has violated the Contracts Clause. Therefore, the court reversed as to the Contracts Clause claim. The court agreed, however, with Pure Wafer's alternative claim that the City has breached the contractual obligations it undertook in the Development Agreement. In this case, the City agreed to accept such effluent as the parties knew Pure Wafer would need to discharge in order to maintain a viable business, and the City agreed to bear the financial risk that State-initiated regulatory changes would make complying with such promise more costly than it was when the parties entered into the Agreement. Therefore, the court concluded that the City may not force Pure Wafer to absorb the costs needed to bring the City into line with the terms of its Aquifer Protection Permit. The court explained that enforcing the Ordinance against Pure Wafer would eviscerate the benefit of Pure Wafer’s bargain; the City cannot do so without putting itself in breach of the Agreement. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Pure Wafer Inc. v. City of Prescott" on Justia Law

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In 1963, USPS and Bellevue’s predecessor-in-interest entered into a twenty-year initial lease with five options to renew the lease and an option to purchase certain property. When USPS attempted to exercise the purchase option, Bellevue refused to honor it. The district court granted summary judgment for USPS and ordered specific performance of the sale of the property. The court applied Washington’s heightened evidentiary standard for specific performance and held that USPS has shown clearly and unequivocally that it has a contractual right to purchase the property. Even under Washington law’s high standard for awarding specific performance, USPS successfully provided “clear and unequivocal evidence” that it exercised its options to extend the term of the lease in strict compliance with the terms of the lease, and that the lease therefore continued to exist through the time it also properly exercised its purchase option. Finally, the court agreed with the district court that the 1963 lease remained valid. Accordingly, the court affirmed the district court’s order granting summary judgment to USPS and compelling specific performance for the sale of the property. View "USPS v. Bellevue Post Office" on Justia Law
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Plaintiffs Morris and McDaniel filed suit against Ernst & Young, alleging that the company misclassified Morris and similarly situated employees and denied overtime wages under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., and California laws. Ernst & Young subsequently moved to compel arbitration under the agreements signed by Morris and McDaniel. The district court ordered arbitration and dismissed the case. Morris and McDaniel argue that their employment agreements, where they signed a "concerted action waiver" with the company, violate federal labor laws and cannot be enforced. Plaintiffs claim that the “separate proceedings” clause in the agreement contravenes three federal statutes: the National Labor Relations Act (NLRA), 29 U.S.C. 151 et. seq., the Norris LaGuardia Act, 29 U.S.C. 101 et seq., and the FLSA. The court agreed with the Board's interpretation of section 7 and section 8 of the NLRA that an employer violates the NLRA when it requires employees covered by the Act, as a condition of their employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, arbitral or judicial. In this case, the terms of the concerted action waiver are unenforceable. The “separate proceedings” clause prevents concerted activity by employees in arbitration proceedings, and the requirement that employees only use arbitration prevents the initiation of concerted legal action anywhere else. The court also concluded that the Federal Arbitration Act, 9 U.S.C. 1 et seq., does not dictate a contrary result. Accordingly, the court vacated and remanded for the district court to determine whether the “separate proceedings” clause was severable from the contract. View "Morris v. Ernst & Young, LLP" on Justia Law

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Plaintiff filed claims alleging breach of contract and claims under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., against BAH and others. Under California law, a breach of a written contract must be brought within four years of the date of the alleged breach, Cal. Civ. Proc. Code 337. The court concluded that plaintiff's cause of action accrued in September 2003 and the filing of his complaint was untimely. Therefore, plaintiff's breach of contract claim is time barred. The court also concluded that the district court did not abuse its discretion by denying plaintiff a third opportunity to amend his complaint. Finally, the court held that the employer’s stock rights plan did not qualify as an employee pension benefit plan subject to ERISA under 29 U.S.C. 1002(2)(A) because its primary purpose was not to provide deferred compensation or other retirement benefits. Because, in this case, the stock rights plan was not designed or intended to provide retirement or deferred income, it is not covered by ERISA. Accordingly, the court affirmed the judgment. View "Rich v. Shrader" on Justia Law
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ItalFlavors filed suit against Caffe Vergnano, blaming the failure of an Italian cafe venture on Caffe Vergnano's failure to offer support. The parties had entered into an agreement, the Commercial Contract, which appears to be a franchise agreement setting forth the rights and responsibilities of the parties. The second agreement is the Hold Harmless Agreement. Caffe Vergnano filed a petition to compel arbitration and the district granted the petition. The court concluded that the declaration in the Hold Harmless Agreement signed contemporaneously with the Commercial Contract proves that the latter was a mere sham to help Hector Rabellino obtain a visa. Therefore, the court concluded that the Commercial Contract was not a contract and is thus unenforceable. Because the court found that the document the parties described as the Commercial Contract was a sham, the arbitration clause is no more enforceable than any other provision in that document. Accordingly, the court reversed the judgment. View "Casa del Caffe Vergnano v. ItalFlavors, LLC" on Justia Law

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FTB initiated a nonjudicial foreclosure on residential real property and sold the property at a foreclosure sale to DM. On appeal, DM challenged the district court's grant of summary judgment for FTB. The court concluded that there was a genuine issue of material fact as to whether DM could have discovered the defect at issue - lack of a utilities easement - prior to the foreclosure sale, which is the relevant inquiry under Karoutas v. HomeFed Bank. Nonetheless, the district court did not err in concluding on summary judgment that DM is not entitled to the equitable remedy of rescission where DM had a duty to investigate wrongdoing and FTB’s status as a foreclosing lender does not alter this conclusion because a foreclosing lender has the same duties of disclosure regarding the property as any other seller. Therefore, the court concluded that there is no genuine issue of material fact that DM was put on inquiry of wrongdoing at the time it discovered the lack of electricity, and therefore is deemed to know all facts that could be discovered from a reasonable investigation. Finally, the court concluded that because there is no genuine issue of material fact as to whether DM’s two-year delay deprived it of the equitable remedy of rescission, FTB is entitled to summary judgment on that issue. View "DM Residential Fund v. First Tennessee Bank" on Justia Law
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Plaintiffs filed a class action suit against Ford, alleging that Ford breached implied and express warranties and committed fraud in the sale of Ford Focus vehicles containing rear suspension defects. The court concluded that the district court's order granting summary judgment as to the Song-Beverly Consumer Warranty Act, Cal. Civ. Code 1792, claims of plaintiffs is reversed in light of Mexia v. Rinker Boat Co. Mexia held that “latent defects” may breach the implied warranty even when they are not discovered within the implied warranty’s duration. The court reversed the district court's order granting summary judgment as to the express warranty claims of plaintiffs given the ambiguous terms of Ford's express warranty. Finally, the court reversed the district court's order granting summary judgment on plaintiff's Consumers Legal Remedies Act, Cal. Civ. Code 1770(a), and Unfair Competition Law, Cal. Bus. & Prof. Code 17200, because plaintiffs have raised a genuine issue of fact as to reliance. The court declined to address additional issues raised by Ford. Because the court reversed plaintiffs’ implied and express warranty claims, the court also reversed the district court’s order granting summary judgment as to the Magnuson-Moss Warranty Act, 15 U.S.C. 2301–2312, claims. View "Daniel v. Ford Motor Co." on Justia Law