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

Kiana Jones, along with thousands of other claimants, initiated dispute-resolution proceedings against Starz Entertainment, LLC, alleging violations of federal and state privacy laws. The arbitration provider, Judicial Arbitration and Mediation Services (JAMS), ordered the consolidation of these filings to be presided over by a single arbitrator. Jones petitioned the district court to compel individual arbitration, arguing that the consolidation violated the Starz Terms of Use, which she claimed required individual arbitration.The United States District Court for the Central District of California denied Jones's petition, holding that she was not "aggrieved" within the meaning of the Federal Arbitration Act (FAA) because Starz had not failed, neglected, or refused to arbitrate. The court also held that the consolidation did not present a gateway question of arbitrability for the courts to address.The United States Court of Appeals for the Ninth Circuit affirmed the district court's decision. The panel held that Jones was not a "party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate," as required by 9 U.S.C. § 4, because Starz never failed, neglected, or refused to arbitrate. The court distinguished this case from Heckman v. Live Nation Ent., Inc., noting that the consolidation by JAMS did not present a gateway question of arbitrability. The panel also held that the FAA did not allow Jones, as the party seeking arbitration, to raise the argument that the Terms of Use were unconscionable to the extent that they allowed pre-arbitration consolidation by JAMS. The decision of the district court was affirmed. View "JONES V. STARZ ENTERTAINMENT, LLC" on Justia Law

The plaintiff, Katherine Chabolla, purchased a one-month subscription from ClassPass, a company offering access to gyms and fitness classes, in January 2020. Due to the COVID-19 pandemic, ClassPass paused charges but resumed them when gyms reopened. Chabolla filed a lawsuit alleging that ClassPass violated California’s Automatic Renewal Law, Unfair Competition Law, and Consumers Legal Remedies Act by resuming charges without proper notice.The United States District Court for the Northern District of California denied ClassPass’s motion to compel arbitration, which argued that Chabolla had agreed to arbitrate any claims by using their website. The district court found that the website did not provide reasonably conspicuous notice of the Terms of Use, which included the arbitration clause, and that Chabolla did not unambiguously manifest assent to those terms.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court’s decision. The court held that ClassPass’s website, which resembled a sign-in wrap agreement, did not provide reasonably conspicuous notice of the Terms of Use on the landing page or the first screen. Even if the second and third screens provided such notice, Chabolla did not unambiguously manifest her assent to the Terms of Use on those screens. The court concluded that Chabolla’s use of the website did not amount to an unambiguous manifestation of assent to the Terms of Use, and therefore, she was not bound by the arbitration clause within those terms. The court affirmed the district court’s order denying ClassPass’s motion to compel arbitration. View "CHABOLLA V. CLASSPASS, INC." on Justia Law

Karl Hansen sued Tesla, Inc., its CEO Elon Musk, and U.S. Security Associates (USSA), alleging retaliation for reporting misconduct at Tesla. Hansen, initially hired by Tesla, was later employed by USSA. He reported thefts, narcotics trafficking, and improper contracts at Tesla, and filed a report with the SEC. After Musk saw Hansen at the Gigafactory and demanded his removal, USSA reassigned Hansen, which he claimed was retaliatory.The United States District Court for the District of Nevada ordered most of Hansen’s claims to arbitration, except his Sarbanes-Oxley Act (SOX) claim. The arbitrator dismissed Hansen’s non-SOX claims, finding no contractual right to work at the Gigafactory and no reasonable belief of securities law violations. The district court confirmed the arbitration award and dismissed Hansen’s SOX claim, holding that the arbitrator’s findings precluded relitigation of issues essential to the SOX claim.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The court held that while an arbitrator’s decision cannot preclude a SOX claim, a confirmed arbitral award can preclude relitigation of issues underlying such a claim. The court found that the arbitrator’s decision, which concluded Hansen had no reasonable belief of securities law violations, precluded his SOX claim. The court also held that the arbitrator’s findings on Hansen’s state law claims had a preclusive effect, as they were confirmed by the district court. Thus, the Ninth Circuit affirmed the dismissal of Hansen’s complaint. View "Hansen v. Musk" on Justia Law

Plaintiffs brought a putative class action against Live Nation Entertainment, Inc., and Ticketmaster LLC, alleging anticompetitive practices in violation of the Sherman Act. The plaintiffs had purchased tickets through Ticketmaster’s website, which required them to agree to Ticketmaster’s Terms of Use. These terms included an arbitration agreement mandating that disputes be resolved by an arbitrator from New Era ADR, using expedited/mass arbitration procedures.The United States District Court for the Central District of California denied the defendants' motion to compel arbitration. The court found that the clause delegating the authority to determine the validity of the arbitration agreement to the arbitrator was unconscionable under California law, both procedurally and substantively. The court also held that the entire arbitration agreement was unconscionable and unenforceable. The defendants appealed this decision.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The appellate court held that the delegation clause and the arbitration agreement as a whole were unconscionable under California law. The court found that the delegation clause was part of a contract of adhesion and that the terms on Ticketmaster’s website exhibited extreme procedural unconscionability. Additionally, the court identified several features of New Era’s arbitration rules that contributed to substantive unconscionability, including the mass arbitration protocol, lack of discovery, limited right of appeal, and arbitrator selection provisions.The Ninth Circuit also held that the application of California’s unconscionability law to the arbitration agreement was not preempted by the Federal Arbitration Act (FAA). As an alternate and independent ground, the court held that the FAA does not preempt California’s prohibition of class action waivers in contracts of adhesion in large-scale small-stakes consumer cases, as established in Discover Bank v. Superior Court. The court concluded that Ticketmaster’s Terms and New Era’s Rules were independently unconscionable under Discover Bank. The decision of the district court was affirmed. View "HECKMAN V. LIVE NATION ENTERTAINMENT, INC." on Justia Law

The case involves International Petroleum Products and Additives Company (IPAC), a California-based company, which entered into sales and distribution agreements with Black Gold S.A.R.L., a Monaco-based company. Black Gold breached these agreements by using IPAC’s confidential information to develop competing products. IPAC won an arbitration award of over $1 million against Black Gold. However, Black Gold declared bankruptcy in Monaco, complicating IPAC’s efforts to collect the award.The United States District Court for the Northern District of California confirmed the arbitration award and entered judgment against Black Gold. During post-judgment discovery, Black Gold engaged in misconduct, leading the district court to sanction Black Gold and add Lorenzo and Sofia Napoleoni, Black Gold’s owners, as judgment debtors on the grounds that they were Black Gold’s alter egos. Black Gold’s petition for recognition of its Monaco bankruptcy proceedings was initially denied by the bankruptcy court, but this decision was later reversed by the Bankruptcy Appellate Panel (BAP), which mandated recognition of the Monaco proceedings.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the automatic bankruptcy stay under 11 U.S.C. § 1520 did not retroactively apply to the date of the bankruptcy court’s initial denial of Black Gold’s petition. The court also held that the automatic stay did not extend to IPAC’s alter ego claim against the Napoleonis. The court affirmed the district court’s judgment and the award of attorneys’ fees and costs in favor of IPAC, concluding that the alter ego claim was not the property of Black Gold’s estate under California law. View "International Petroleum Products and Additives Co, Inc. v. Black Gold S.A.R.L." on Justia Law

The plaintiff, Jose Emilio Ronderos, applied for a job with USF Reddaway, Inc. and Yellow Corporation (collectively, "Reddaway") and was required to sign an arbitration agreement as part of the application process. Ronderos later filed employment-related claims against Reddaway, alleging age and disability discrimination, retaliation, and other violations under California law. Ronderos claimed that the arbitration agreement was procedurally and substantively unconscionable and therefore unenforceable.The United States District Court for the Central District of California denied Reddaway's motion to compel arbitration. The court found that the arbitration agreement was procedurally unconscionable because it was a contract of adhesion presented on a take-it-or-leave-it basis, involved significant oppression, and contained a substantively opaque cost-splitting provision. The court also found that the agreement was substantively unconscionable due to its one-sided filing provision and preliminary injunction carve-out, which unfairly favored Reddaway. The district court declined to sever the unconscionable provisions and enforce the remainder of the agreement.The United States Court of Appeals for the Ninth Circuit affirmed the district court's decision. The appellate court agreed that the arbitration agreement was both procedurally and substantively unconscionable. It held that the agreement involved significant oppression and some surprise, making it procedurally unconscionable. The court also found that the one-sided filing provision and preliminary injunction carve-out were substantively unconscionable. The Ninth Circuit concluded that the district court did not abuse its discretion by declining to sever the unconscionable provisions and affirmed the denial of Reddaway's motion to compel arbitration. View "Ronderos v. USF Reddaway, Inc." on Justia Law

Danny Lopez, an airline fuel technician, filed a wage-and-hour lawsuit under California law against his employer, Menzies Aviation (USA), Inc. Lopez alleged that Menzies violated state requirements for meal periods, rest periods, overtime wages, minimum wages, and other employment conditions. Menzies sought to compel arbitration based on an arbitration agreement Lopez signed as part of his employment.The United States District Court for the Central District of California denied Menzies' motion to compel arbitration. The court found that Lopez, as a transportation worker engaged in foreign or interstate commerce, was exempt from the Federal Arbitration Act (FAA) under 9 U.S.C. § 1. The court reasoned that Lopez’s role in fueling airplanes used in interstate and foreign commerce was integral to the transportation process, thus qualifying him for the exemption.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 fuel technician who places fuel in planes used for foreign and interstate commerce is a transportation worker engaged in commerce. The court emphasized that such a worker plays a direct and necessary role in the free flow of goods across borders. The court clarified that there is no requirement for the worker to have hands-on contact with goods or be directly involved in their transportation to fall within the FAA exemption. Consequently, the Ninth Circuit concluded that Lopez was exempt from the arbitration requirements of the FAA and affirmed the district court’s denial of Menzies' motion to compel arbitration. View "LOPEZ V. AIRCRAFT SERVICE INTERNATIONAL, INC." on Justia Law

The Choctaw Nation and several pharmacies it owns and operates entered into agreements with Caremark, LLC, and its affiliates to facilitate insurance reimbursements for the Nation’s costs for pharmacy services for its members. The Nation filed a lawsuit in the Eastern District of Oklahoma, alleging that Caremark unlawfully denied pharmacy reimbursement claims in violation of the Recovery Act. After the matter was stayed in the Eastern District of Oklahoma, Caremark petitioned to compel arbitration of the Nation’s claims in the District of Arizona. The district court granted the petition, concluding that the parties’ agreements included arbitration provisions with delegation clauses and therefore an arbitrator must decide the Nation’s arguments that its claims are not arbitrable.The Ninth Circuit Court of Appeals affirmed the district court’s decision. The court held that most of the Nation’s arguments challenging the district court’s arbitration order were foreclosed by a previous case, Caremark, LLC v. Chickasaw Nation, which addressed the enforceability of identical arbitration provisions. The court also held that the Nation’s remaining argument that the District of Arizona lacked subject-matter jurisdiction over the petition to compel arbitration failed because the Nation contractually agreed to arbitrate its claims against Caremark in Arizona, and in those contracts specifically “agree[d] to such jurisdiction.” Thus, the Nation expressly waived its tribal sovereign immunity as a bar to arbitration in the District of Arizona. View "CAREMARK, LLC V. CHOCTAW NATION" on Justia Law

Yuriria Diaz, a former employee of Macy's West Stores, Inc., filed a lawsuit under the California Private Attorneys General Act (PAGA) for alleged violations of California's labor code. Macy's appealed the district court's order compelling arbitration of all Diaz's claims. The United States Court of Appeals for the Ninth Circuit affirmed the district court's order compelling arbitration of Diaz's individual PAGA claims, but vacated the order to the extent it compels arbitration of her non-individual claims.Previously, the district court had compelled arbitration of all Diaz's claims, interpreting the arbitration agreement between Diaz and Macy's to include non-individual PAGA claims. The court denied Diaz's request for a stay and closed the case, stating there were no remaining claims before the court.The Ninth Circuit concluded that it had jurisdiction to review the district court's order as a final decision with respect to arbitration. The court found that at the time of contracting, the parties consented only to arbitration of individual claims relating to Diaz's own employment. The agreement's language was strongly indicative of an intent to exclude any amalgamation of employees’ claims—including non-individual PAGA claims—from arbitration.The court rejected Macy's request that the district court on remand be instructed to dismiss the non-individual claims because under a recent California Supreme Court decision, those claims cannot be dismissed. The court remanded with instruction to treat the non-arbitrable non-individual claims consistent with the California Supreme Court’s decision, anticipating that the parties will, per their agreement, request a stay with respect to those claims. View "Diaz v. Macy’s West Stores, Inc." on Justia Law

A group of individuals, including a minor, filed a class action lawsuit against Warner Bros. Entertainment, Inc. for alleged misrepresentations related to the mobile application Game of Thrones: Conquest (GOTC). The plaintiffs claimed that Warner Bros. engaged in false and misleading advertising within the game. In response, Warner Bros. moved to compel arbitration of all claims based on the GOTC Terms of Service, which users agree to by tapping a “Play” button located on the app’s sign-in screen. The district court denied Warner Bros.' motion, finding that the notice of the Terms of Service was insufficiently conspicuous to bind users to them.The case was appealed to the United States Court of Appeals for the Ninth Circuit. The lower court had found that Warner Bros. failed to provide reasonably conspicuous notice of its Terms of Service, thus denying the motion to compel arbitration. The district court focused on whether the context of the transaction put the plaintiffs on notice that they were agreeing to the Terms of Service, concluding that the app did not involve a continuing relationship that would require some terms and conditions.The Ninth Circuit Court of Appeals reversed the district court's decision. The appellate court held that the district court erred in finding that Warner Bros. failed to provide reasonably conspicuous notice. The court found that the context of the transaction and the placement of the notice were both sufficient to provide reasonably conspicuous notice. The court also rejected the plaintiffs' argument that the arbitration agreement was unconscionable due to its ban on public injunctive relief. The court concluded that the unenforceability of the waiver of one’s right to seek public injunctive relief did not make either this provision or the arbitration agreement unconscionable or otherwise unenforceable. The case was remanded for further proceedings. View "KEEBAUGH V. WARNER BROS. ENTERTAINMENT INC." on Justia Law