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

The plaintiff entered into a lease agreement with a car dealership to lease a Jeep Grand Cherokee. The lease included an arbitration agreement containing a delegation clause, which specified that disputes about the scope of the arbitration agreement would be decided in arbitration. Later, the plaintiff filed a federal class action lawsuit against the vehicle’s manufacturer, alleging defects in the headrest. The manufacturer, however, was not a party to the lease agreement and did not claim to be an employee, agent, successor, or assign of the dealership.After the lawsuit was filed in the United States District Court for the Eastern District of California, the manufacturer moved to compel arbitration, arguing that the delegation clause required an arbitrator—not the court—to decide whether the manufacturer could enforce the arbitration agreement. In the alternative, the manufacturer asserted that either the plain language of the agreement or the doctrine of equitable estoppel entitled it to compel arbitration. The district court denied the motion, finding that the manufacturer could not enforce the arbitration agreement because it was not a party to the contract and none of the exceptions allowing enforcement by a non-signatory applied.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court’s denial of the motion to compel arbitration. The appellate court held that, absent a relevant exception, a non-party to an arbitration agreement cannot enforce the agreement’s terms against a signatory. It found that the language of the arbitration agreement did not cover disputes with the manufacturer, and under California law, the manufacturer could not use equitable estoppel to compel arbitration because the plaintiff’s claims were not founded in or intertwined with the lease agreement. The court’s disposition was to affirm the district court’s order. View "OLSON V. FCA US, LLC" on Justia Law

Former employees of a travel-nursing agency brought a putative class action against the agency, alleging wage-related violations. Each employee had signed an arbitration agreement with the agency that contained a delegation clause requiring an arbitrator—not a court—to decide on the validity of the agreement. Four initial plaintiffs had their disputes sent to arbitration: two arbitrators found the agreements valid, while two found them invalid due to unconscionable fee and venue provisions.After these initial arbitrations, the United States District Court for the Southern District of California confirmed three out of four arbitral awards. At this stage, an additional 255 employees joined the action as opt-in plaintiffs under the Fair Labor Standards Act. The agency moved to compel arbitration for these additional plaintiffs under their individual agreements. However, a different district judge raised the issue of whether non-mutual offensive collateral estoppel barred the enforcement of the arbitration agreements. After briefing, the district court denied the agency’s motion, concluding that the two arbitral awards finding the agreements invalid precluded arbitration for all 255 employees, effectively rendering their agreements unenforceable.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s judgment. The Ninth Circuit held that the application of non-mutual offensive collateral estoppel to preclude the enforcement of arbitration agreements is incompatible with the Federal Arbitration Act (FAA). The court reasoned that such an approach undermined the principle of individualized arbitration and the parties’ consent, which are fundamental to the FAA. The Ninth Circuit concluded that the FAA does not permit using non-mutual offensive collateral estoppel to invalidate arbitration agreements and remanded the case for further proceedings. View "O'DELL V. AYA HEALTHCARE SERVICES, INC." on Justia Law

An individual brought suit against her employer, a Delaware corporation, alleging various claims of discrimination based on age and disability under state and federal law. The employment contract between the parties included an arbitration provision, specifying that all employment-related disputes were to be resolved through binding arbitration under the Federal Arbitration Act (FAA), in accordance with procedures outlined in the California Arbitration Act. The contract also incorporated JAMS rules, which assign the arbitrator authority to resolve issues regarding the validity and enforceability of the arbitration agreement itself.The United States District Court for the Southern District of California reviewed the employer’s motion to compel arbitration. The court recognized that the arbitration agreement, by incorporating the JAMS rules, delegated questions about the agreement's validity to an arbitrator. However, relying on California state court decisions, the district court determined that the presence of a severability clause—allowing a court or other competent body to sever invalid provisions—negated a “clear and unmistakable” delegation to the arbitrator. Consequently, the district court concluded it was responsible for determining validity and found the arbitration agreement unconscionable, denying the motion to compel arbitration.The United States Court of Appeals for the Ninth Circuit reviewed the district court’s judgment de novo. The appellate court held that the contract’s delegation clause, by clearly incorporating JAMS rules, unmistakably reserved the issue of the arbitration agreement’s validity for the arbitrator. The existence of a severability clause did not undermine this delegation. The Ninth Circuit reversed the district court’s denial of the motion to compel arbitration, vacated its unconscionability judgment, and remanded with instructions to compel arbitration and stay the case pending arbitration. View "SANDLER V. MODERNIZING MEDICINE, INC." on Justia Law

A group of former and current employees of a staffing agency alleged that the company misclassified recruiters as exempt from state overtime laws and failed to provide required meal and rest breaks. After the employees filed a putative class action in state court, which the company removed to federal court, the parties engaged in over a year of discovery and completed class certification briefing. Shortly after class certification briefing closed, the company implemented a new, mandatory arbitration agreement for internal employees, including the putative class members. This agreement required class members to either quit their jobs or affirmatively opt out of arbitration if they wished to remain in the class, effectively reversing the typical opt-out structure of class actions under Federal Rule of Civil Procedure 23.The United States District Court for the Northern District of California granted class certification and, after reviewing the company’s communications about the new arbitration agreement, found them misleading and potentially coercive. The court determined that the communications disparaged class actions, omitted key information, and confused recipients about their rights and deadlines, especially as the emails were sent during a holiday period. Consequently, when the company moved to compel arbitration against class members who had not opted out, the district court denied the motion, relying on its authority under FRCP 23(d) to ensure the fairness of class proceedings.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The Ninth Circuit held that district courts have broad authority under FRCP 23(d) to refuse to enforce arbitration agreements when a defendant’s conduct undermines the fairness of the class action process, especially where communications are misleading and subvert the opt-out mechanism. The court also held that the arbitration agreement’s delegation provision did not prevent the district court from ruling on enforceability in this context. View "AVERY V. TEKSYSTEMS, INC." on Justia Law

JB Viva Vegas, L.P. challenged the assessment of withdrawal liability imposed by the Nevada Resort Association-International Alliance of Theatrical Stage Employees and Moving Picture Machine Operators of the US and Canada Local 720 Pension Trust under the Multiemployer Pension Plan Amendments Act (MPPAA). JB had contributed to the Trust’s pension plan for stagehands working on a theatrical production, which later closed. The Trust asserted withdrawal liability, arguing that its plan no longer qualified for the entertainment industry exception due to a shift in employee work from entertainment to convention-related activities.After JB’s request for review went unanswered, it initiated arbitration. The arbitrator initially ruled in JB’s favor, finding the plan qualified for the entertainment exception and ordering rescission of the withdrawal liability. The Trust then sought to vacate the arbitration award in the United States District Court for the District of Nevada. The district court vacated the award, reasoning that the relevant year for determining the plan’s status was the year JB withdrew, not when it joined, and remanded to the arbitrator. On remand, the arbitrator granted summary judgment to the Trust, concluding that the MPPAA was ambiguous as to how much entertainment work was required and that the plan did not “primarily” cover entertainment employees because less than half earned most of their wages from entertainment work. The district court affirmed the arbitrator’s decision, granting summary judgment to the Trust.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed the district court’s summary judgment de novo. The court held that the MPPAA’s entertainment industry exception does not require a minimum amount of entertainment work for an individual to qualify as an “employee in the entertainment industry.” Therefore, the Trust’s plan primarily covers such employees if a majority perform any entertainment work. The Ninth Circuit reversed the district court’s decision and remanded the case. View "NEVADA RESORT ASSOCIATION-INTERNATIONAL ALLIANCE OF THEATRICAL STAGE EMPLOYEES AND MOVING PICTURE MACHINE OPERATORS OF THE US AND CANADA LOCAL 720 PENSION TRUST V. JB VIVA VEGAS, LP" on Justia Law

A construction company in southern Nevada ceased contributing to a multiemployer pension plan after it stopped operating in the state. The pension plan’s trustees assessed the company for withdrawal liability, asserting the company owed over $2.8 million under the Multiemployer Pension Plan Amendments Act (MPPAA). The company challenged the assessment, arguing it was exempt from liability because its asbestos abatement work qualified for the “building and construction industry” exception in the MPPAA. The company pointed out that asbestos abatement involves removing or remediating hazardous materials from buildings, including demolition and substantial alterations to structures.An arbitrator initially ruled in favor of the pension plan’s trustees, interpreting the “building and construction industry” narrowly to include only work that literally builds new structures, and finding that asbestos abatement did not meet this definition. The company then brought suit in the United States District Court for the District of Nevada to vacate or modify the arbitration award. The district court rejected the arbitrator’s and trustees’ narrow construction, instead adopting a broader understanding of the industry that includes maintenance, repair, alteration, and demolition. The district court granted summary judgment to the company, holding that its asbestos abatement work qualified for the statutory exception, and ordered the return of payments made toward the assessed liability.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s judgment. The Ninth Circuit held that the phrase “building and construction industry” in the MPPAA incorporates the definition established by the National Labor Relations Board under the Taft-Hartley Act, which includes erection, maintenance, repair, and alteration of buildings and structures. Applying this definition, the court ruled that asbestos abatement is covered by the exception, exempting the company from withdrawal liability. View "WALKER SPECIALTY CONSTR., INC. V. BD. OF TR. OF THE CONSTR. INDUS. AND LABORERS JOINT PENSION TRUST" on Justia Law

Jennifer Gates, a former loan officer at VIP Mortgage, claimed that VIP violated the Fair Labor Standards Act (FLSA) and Arizona state law by failing to pay her required overtime wages. She alleged that she was made to work more than forty hours per week but was instructed to record only eight-hour days on her timesheet. After her resignation in September 2022, Gates initiated arbitration as required by her employment agreement. VIP responded with counterclaims for breach of fiduciary duty and breach of contract, but these were later settled, with both parties agreeing to bear their own attorneys’ fees and costs for the counterclaims.The arbitration took place under the Federal Arbitration Act, and the arbitrator ultimately issued an award in favor of Gates, granting her unpaid overtime, liquidated damages, and attorneys’ fees. Despite the prior stipulation regarding counterclaims, the arbitrator did not distinguish between time spent on Gates’s claims and VIP’s counterclaims when awarding attorneys’ fees. VIP petitioned the United States District Court for the District of Arizona to vacate the award, arguing that the arbitrator erred by awarding attorneys’ fees that included time spent on the counterclaims. The district court found the arbitrator’s decision to be detailed and reasoned, concluding that the arbitrator did not manifestly disregard the law or act irrationally.The United States Court of Appeals for the Ninth Circuit reviewed the case de novo and affirmed the district court’s rulings. The court held that federal courts may vacate arbitration awards based on a factual error only in rare cases where the error involves a “legally dispositive fact” that was obvious and intentionally ignored by the arbitrator. Here, although the factual error was legally dispositive, the arbitrator’s failure to recall the fee stipulation was not so obvious or intentional as to warrant vacatur. The arbitration award was confirmed. View "VIP MORTGAGE INCORPORATED V. GATES" on Justia Law

Robert Platt, an employee of Sodexo, Inc., sued his employer, claiming that a monthly tobacco surcharge on his employee health insurance premiums violated the Employee Retirement Income Security Act (ERISA). Platt brought claims on behalf of himself and other plan participants to recover losses under ERISA § 502(a)(1)(B) and § 502(a)(3), and a breach of fiduciary duty claim on behalf of the employer-sponsored health insurance plan (the Plan) for losses under ERISA § 502(a)(2). Sodexo sought to compel arbitration based on an arbitration provision it unilaterally added to the Plan after Platt joined.The United States District Court for the Central District of California denied Sodexo’s motion to compel arbitration, holding that there was no enforceable arbitration agreement because Sodexo unilaterally modified the Plan to add the arbitration provision without Platt’s consent. The court found that Platt did not agree to arbitrate his claims.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court agreed that an employer cannot create a valid arbitration agreement by unilaterally modifying an ERISA-governed plan to add an arbitration provision without obtaining consent from the relevant party. The court held that Platt is the relevant consenting party for claims under ERISA § 502(a)(1)(B) and § 502(a)(3) and that he did not consent to arbitration because he did not receive sufficient notice of the arbitration provision. However, the court held that the Plan is the relevant consenting party for the breach of fiduciary duty claim under ERISA § 502(a)(2) and that the Plan consented to arbitration.The Ninth Circuit affirmed the district court’s denial of Sodexo’s motion to compel arbitration for Platt’s claims under ERISA § 502(a)(1)(B) and § 502(a)(3). It reversed in part the district court’s denial of the motion to compel arbitration for the breach of fiduciary duty claim under ERISA § 502(a)(2) and remanded for the district court to consider Platt’s unconscionability defenses and the severability of the representative action waiver and any other arbitration clauses found unconscionable. View "PLATT V. SODEXO, S.A." on Justia Law

A group of current and former employees of Cracker Barrel Old Country Store, Inc. alleged that the company violated the Fair Labor Standards Act (FLSA) regarding wages for tipped workers. They sought preliminary certification for a collective action to include all servers in states where Cracker Barrel attempts to take a tip credit over the last three years. Cracker Barrel objected, arguing that notice should not be sent to employees who are subject to arbitration agreements or to out-of-state employees with no ties to Arizona.The United States District Court for the District of Arizona granted the plaintiffs' motion for preliminary certification and approved notice to the proposed group, including employees who might have entered into arbitration agreements and out-of-state employees. The court decided to reserve judgment on the arbitration issue until the second stage of proceedings and concluded that nationwide notice was permissible based on the participation of one Arizona-based plaintiff.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the district court did not abuse its discretion in following the two-step procedure for preliminary certification. It also held that where the existence and validity of an arbitration agreement are in dispute, the district court is not required to determine the arbitrability of absent employees' claims before authorizing notice. However, the Ninth Circuit joined other circuits in holding that the Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of California applies to FLSA collective actions in federal court. This means that for specific personal jurisdiction, the district court must assess whether each opt-in plaintiff's claim is sufficiently connected to the defendant's activities in the forum state. The court vacated the district court's order authorizing nationwide notice and remanded for further proceedings consistent with this opinion. View "HARRINGTON V. CRACKER BARREL OLD COUNTRY STORE, INC." on Justia Law

Defendants, alleged victims of a Ponzi scheme perpetrated by John Woods, sought to bring claims against Woods's employer, Oppenheimer & Co. Inc., in a FINRA arbitration forum. Defendants claimed they were customers of Oppenheimer because they transacted with Woods, an associated person of Oppenheimer. Oppenheimer filed a federal action seeking a declaration that Defendants were not its customers and a permanent injunction to prevent arbitration.The United States District Court for the Western District of Washington granted summary judgment in favor of Oppenheimer, concluding that Defendants were not customers of Oppenheimer or Woods. The court found that Defendants had no direct relationship with Oppenheimer and that their investments were facilitated by Michael Mooney, not Woods. The court also issued a permanent injunction prohibiting Defendants from arbitrating their claims.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court's decision. The Ninth Circuit held that a "customer" under FINRA Rule 12200 includes any non-broker and non-dealer who purchases commodities or services from a FINRA member or its associated person. However, the court agreed with the district court that Defendants did not transact with Woods, as their investments were facilitated by Mooney. The court also rejected Defendants' "alter ego" theory, which suggested that their investments in an entity controlled by Woods made them Woods's customers.The Ninth Circuit concluded that Defendants were not entitled to arbitrate their claims against Oppenheimer under FINRA Rule 12200 and upheld the permanent injunction. The court found no errors in the district court's analysis or factual findings and affirmed the decision in full. View "OPPENHEIMER & CO. INC. V. MITCHELL" on Justia Law