NINTH CIRCUIT

Armstrong v. Michaels Stores, Inc.. 59 F. 4th 1011

In October 2017, plaintiff filed a class action in a California court against Michaels alleging violation of state labor laws and then added a representative claim alleging a violation of the Private Attorneys General Act (PAGA), even though the arbitration agreement contained a class action waiver. Michaels filed an answer to both complaints that included the affirmative defense of arbitration. In a joint case management statement filed in February 2018, Michaels indicated that it intended to file a motion to compel arbitration after conducting discovery and immediately served discovery requests upon plaintiff relative to her non-arbitrable PAGA claim. While discovery was ongoing, the United States Supreme Court held in Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018) that an arbitration agreement that waived class action claims and only permitted individual claims was enforceable. Michaels then asked plaintiff to dismiss her non-PAGA claims, but she declined to do so. In a case management statement filed in July 2018, Michaels stated that it would move to dismiss the non-PAGA claims and file a motion to compel arbitration and it filed the latter motion in August. Plaintiff opposed the motion, arguing that Michaels, by litigating and conducting discovery had waived its right to arbitration. The trial court denied the motion and Michaels appealed. The Ninth Circuit reversed.

The burden for establishing waiver of an arbitration agreement is the same as the burden for establishing waiver in any other contractual context. The party asserting waiver must demonstrate: (1) knowledge of an existing right to compel arbitration and (2) intentional acts inconsistent with that existing right. The parties agreed that Armstrong satisfied the first prong, so the court considered only whether Armstrong has established that Michaels' intentional acts were inconsistent with its right to compel arbitration. A party generally acts inconsistently with exercising the right to arbitrate when it (1) makes an intentional decision not to move to compel arbitration and (2) actively litigates the merits of a case for a prolonged period of time in order to take advantage of being in court.

Neither of those circumstances was present here. First, Michaels pleaded arbitration as an affirmative defense in its answers to both the original complaint and amended complaint, and explicitly and repeatedly stated its intent to move to compel arbitration in both case management statements and in the initial case management conference before the district court. Additionally, Michaels moved to compel arbitration promptly after the Supreme Court decided Epic Systems and Armstrong declined to dismiss her non-PAGA claims voluntarily. Although a party's extended silence and delay in moving for arbitration may indicate a conscious decision to continue to seek judicial judgment on the merits of the arbitrable claims, Michaels was consistently vocal about its intent to move to compel arbitration. Second, Michaels did not actively litigate the merits of the case for a prolonged period to take advantage of being in court. Michaels never wavered from the view that it had a right to arbitration, as evidenced by Michaels moving to compel arbitration within a year after Armstrong filed the complaint, never seeking or obtaining a ruling on the merits, and never waffling about whether to arbitrate or stay in district court. Finally, Michaels's limited discovery requests did not evince a decision to take advantage of the judicial forum. The very limited requests were related at least in part to Armstrong's non-arbitrable PAGA claim.

Ayanian v. Garland, 64 F. 4th 1074

Petitioner Ayanian, for the second time, appealed from a decision of an immigration judge denying his request for relief from an order removing him to his native country. During oral argument, his counsel conceded that the appeal probably lacked merit and that it was filed to delay activating the removal order until the government could decide his request for adjustment of status to permanent resident. The government was willing to mediate the matter and so the real purpose of the appeal was the desire of both parties for an order to mediate the matter under the Ninth Circuit’s mediation program.

The Ninth Circuit denied the request. Ayanian's petition for review was not the sort of dispute that is appropriate for a court connected mediation. Ayanian did not seek nor need a creative solution to his claims, nor did he require a mediator to assist in preserving the parties' relationship or to overcome poor communications. The parties did not indicate how a mediator's assistance in negotiating, defining the relevant issues, or exploring alternatives would assist Ayanian in achieving his goal. Rather, it appeared the parties viewed mediation as a device for putting Ayanian's dispute into a holding pattern. Such use of mediation would not serve the strong judicial policy that favors settlements of disputes but would instead involve staying the case for an indeterminate period, thus letting it linger on the court’s docket, asleep but not dead. It is an abuse of the court’s mediation process to use it for a purpose unrelated to resolving disputes and as a substitute for the issuance of a stay.

Bielski v. Coinbase, Inc., 87 F. 4th 1003

Bielski sued Coinbase under the Electronic Transfer Act after it declined to reimburse him for funds stolen from his account. Coinbase moved to compel arbitration and argued that, pursuant to a delegation clause in the arbitration agreement, arbitrability was to be decided by the arbitrator. The District Court denied the motion, holding that the delegation clause was unconscionable. Coinbase appealed, arguing that Bielski did not properly challenge the delegation clause because he used the same arguments to attack the delegation clause as he did in asserting that the arbitration agreement was not enforceable. The Ninth Circuit rejected Coinbase’s argument concerning the delegation issue, but it reversed because it found that neither the delegation clause nor the agreement itself was unconscionable.

The Court first discussed the delegation clause. Under Rent-A-Center West, Inc. v. Jackson, (2010) 561 U.S. 63, the plaintiff only argued that the arbitration agreement as a whole was substantively unconscionable and did not even mention the delegation provision in his opposition motion. This was fatal to the plaintiff's claim. But the Court suggested that had the plaintiff challenged the delegation provision by arguing that these common procedures as applied to the delegation provision rendered the delegation clause unconscionable, the challenge should have been considered by the court. Rent-ACenter made clear that a party must at least mention a delegation provision to challenge it. The Court distilled Rent-A-Center into two principles. First, a party resisting arbitration must mention that it is challenging the delegation provision and make specific arguments attacking the provision in its opposition to a motion to compel arbitration. Second, a party may challenge the delegation provision and the arbitration agreement for the same reasons, so long as the party specifies why each reason renders the specific provision unenforceable. Nothing in Rent-A-Center required fashioning completely distinct arguments.

The Court then turned to the issue of whether the delegation clause was unconscionable. The District Court had found the delegation clause to be unconscionable because the agreement required Bielski to proceed through an informal and then a formal dispute resolution process before filing the demand for arbitration. The Ninth Circuit did not find the provision to be unconscionable. The procedure was not hidden but was clearly presented in the agreement. It was written in plain language and in a legible-sized font. The procedures were not onerous nor beyond the reasonable expectation of the user. The agreement laid out the steps a user needed to take if he or she has a dispute with Coinbase. Coinbase had obligations under the process too. It had to acknowledge receipt of the complaint; review and evaluate it; and within fifteen business days, resolve the issue in the way requested by the user, reject the user's complaint and provide reasons why, or offer an alternative solution. Pre-arbitration dispute resolution procedures are commonplace and can be both reasonable and laudable.

Boshears v. People Connect, Inc., 76 F. 4th 858

Plaintiff sued People Connect, alleging that it violated his right of publicity by using his photo on its website. People Connect filed both a motion to compel arbitration and a motion to dismiss. The latter was based on a claim of immunity under Section 230 of the Communications Decency Act. In a 26-page document, the district court denied both motions. People Connect filed an interlocutory appeal, asserting that the court had jurisdiction under Section 16(a) of the FAA.

The Ninth Circuit ruled that it did not have jurisdiction of the Section 230 appeal. Courts frequently issue multiple orders in the same document, particularly when a party requests multiple forms of relief at the same time, as People Connect did here. And it is also common for a district court to label such a document a singular "order," as the district court did here.
Notwithstanding its label as a single "order," the document clearly contained multiple orders.

In Blair v. Rent-A-Center, Inc., 928 F.3d 819, 832 (9th Cir. 2019), the court held that § 16(a) did not grant jurisdiction to review a denial of a motion for a discretionary stay even though the district court denied that motion in the same document in which it denied a motion to compel arbitration. Thus, two orders do not become one "order" for the purpose of § 16(a) solely by virtue of the fact that they appear in the same document. The district court's denial of § 230 immunity was plainly not part of the reasoning it articulated in support of its denial of People Connect's motion to compel arbitration. Nor did the motion to compel arbitration turn on whether People Connect was entitled to § 230 immunity. Because § 16(a) grants jurisdiction to review only an order denying a motion to compel arbitration, and because the district court's denial of § 230 immunity was not part of such an order, the court lacked jurisdiction to review it.

Caremark LLC v. Chickasaw Nation, 43 F. 4th 1021

The Nation filed suit against Caremark, alleging that it violated the Recovery Act in connection with contracts covering its pharmacies that contained arbitration agreements. Caremark moved to compel arbitration. The Nation countered that arbitration agreements are a waiver of sovereign immunity and since the Nation did not clearly waive sovereign immunity in the agreements, they were unenforceable. The district court granted the motion and the Nation appealed. The Ninth Circuit affirmed.

The Nation argued that, because an arbitration agreement would waive its sovereign immunity, the agreement must contain clear and unequivocal evidence that the Nation did not agree to arbitration. The premise of the Nation's argument—that an arbitration agreement always and necessarily waives tribal sovereign immunity—was incorrect, so its argument fell apart at the threshold. An arbitration agreement may or may not have implications for a tribe's sovereign immunity, and courts need not resolve the sovereignimmunity implications (if any) before deciding whether an agreement to arbitrate exists at all. Ute Indian Tribe of the Uintah & Ouray Rsrv. v. Utah, 790 F.3d 1000, 1010 (10th Cir. 2015). explains how a forum-selection clause—which, like an arbitration provision, is an agreement to bring any disputes to a particular forum—does not necessarily waive sovereign immunity; rather, the forum-selection clause may simply designate a forum for resolving disputes for which immunity is waived. In that case, the tribe had agreed that "original jurisdiction to hear and decide any disputes or litigation" under the contract "shall be in the United States District Court for the District of Utah." The court declined to find an immunity waiver because a different provision of the contract stated that "no acquiescence in or waiver of claims of rights, sovereignty, authority, boundaries, jurisdiction, or other beneficial interests is intended by this Agreement." The court concluded that the tribe had agreed to proceed in the designated forum for any dispute for which it waived tribal immunity, but that it had reserved its right to stand on its claim of immunity on a case-bycase basis. Thus, a tribal organization might agree to arbitrate any disputes for which it has waived sovereign immunity but still reserve its ability to choose whether to waive immunity in any given case.

Carmona v. Domino’s Pizza LLC.. 73 F. 4th 1135

Plaintiffs, delivery drivers for Domino’s, filed a class action against Domino’s alleging various labor law violations. Domino's sold pizza to the public primarily through franchisees. It bought various goods that were used by its franchisees in making pizzas from suppliers outside of California. Those goods were then delivered by third parties to Domino’s supply center. At the supply center, Domino's employees reapportioned, weighed and packaged the goods to be sent to franchisees. Domino's franchisees in Southern California ordered the goods either online or by calling the supply center, and the plaintiff drivers then delivered the goods to the franchisees. Domino’s moved to compel arbitration, based on arbitration agreements subject to the FAA. The district court denied the motion, holding that plaintiff workers were transportation workers and were the “last leg” in the delivery of the products from out of state to the franchisees and were exempt from arbitration pursuant to Section1 of the FAA. Domino’s appealed.

The Ninth Circuit affirmed, based on its reading of Rittman v. Amazon.com, Inc., 971 F 3d 904 (9th Cir. 2020). The Supreme Court granted Domino’s petition for a writ of certiorari and remanded the matter to the Ninth Circuit to determine whether Rittman had continued validity in light of the high court’s decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022).

The Ninth Circuit affirmed again. It found no clear conflict between Rittmann and Saxon. Rittmann confronted whether delivery drivers who transported goods from Amazon warehouses to in-state consumers were exempt from the FAA under Section 1. The central inquiry was what the relevant class of workers actually did, It concluded that, because the Amazon goods shipped in interstate commerce were not transformed or altered at the warehouses, the entire journey represented one continuous stream of commerce. Thus, in the prior opinion in this case, the court also focused heavily on what the class of workers to which the plaintiffs belonged actually did. Because the drivers, like the Amazon package delivery drivers in Rittman,, transported interstate goods for the last leg to their final destinations, they were engaged in interstate commerce under Section 1.

Domino's primarily argued that Rittmann did not control because, unlike Amazon customers, Domino's franchisees did not order the goods until after they arrived at the warehouse. But the court stressed that the issue was not how the purchasing order was placed, but rather whether the drivers operated in a single, unbroken stream of interstate commerce that rendered interstate commerce a central part of their job description.

Domino's also argued that the interstate journey ended at the supply center because the goods were repackaged there. But the relevant ingredients in this case were unaltered from the time they arrived in the supply center until they were delivered to franchisees. Immediato v. Postmates, Inc., 54 F.4th 67 (1st Cir. 2022), upon which Domino’s relied, was inapposite. The products delivered in that case were transformed from their constituent ingredients into meals before the plaintiff drivers delivered them.

Chamber of Commerce of the United States v. Bonta, 62 F. 4th 473

In 2019, the California Legislature passed and the Governor signed AB 51, which provided that an employer committed a misdemeanor by demanding that a proposed employee execute an arbitration agreement as a condition of employment. However, in an attempt to avoid preemption, the bill further provided that if the employee signed the agreement, the agreement would be enforceable. Plaintiffs filed suit seeking to enjoin enforcement of the statute, asserting that it was preempted. The District Court granted the injunction and defendants appealed, arguing that the statute was not preempted because it related only to formation of a contract.

The Ninth Circuit affirmed. The Supreme Court has made clear that the FAA's preemptive scope is not limited to state rules affecting the enforceability of arbitration agreements, but also extends to state rules that discriminate against the formation of arbitration agreements. See Kindred Nursing, 581 US 246 (2017); Doctor's Assocs. v. Casarotto, 517 U.S. 681(1996). Nothing in Casarotto or Kindred Nursing suggested that a state rule targeting only the formation of an arbitration agreement fell outside of the FAA's preemptive scope. If a state could criminalize the conduct of entering into an arbitration agreement, it could entirely defeat the FAA's purpose and would allow states to wholly eviscerate Congressional intent to place arbitration agreements upon the same footing as other contracts. There is no doubt that AB 51 disfavored the formation of agreements that have the essential terms of an arbitration agreement. AB 51 prevents an employer from entering into a contract that includes non-negotiable terms requiring an employee to waive "any right, forum, or procedure for a violation of any provision of the [FEHA] or [the California Labor Code]," including "the right to file and pursue a civil action." Because a person who agrees to arbitrate disputes must necessarily waive the right to bring civil actions regarding those disputes in any other forum, AB 51 burdened the defining feature of arbitration agreements. The burden imposed on the formation of arbitration agreements was severe. AB 51 deterred an employer from including non-negotiable arbitration requirements in employment contracts by imposing civil and criminal sanctions on any employer who does so. The threat of criminal and civil liabilities was intended to have a deterrent effect, and so it is clear that the penalties imposed by AB 51 inhibit an employer's willingness to create an arbitration contract with employees.

Note. On January 3, 2024, the dispute was settled when the State agreed to an injunction which barred enforcement of the statutes created by AB 51 where the underlying agreement was covered by the FAA. Thus, the statutes will still apply to contracts in intrastate commerce, contracts which state that they are entirely covered by the law of the State of California, and contracts covering transportation workers.

Hill v. Xerox Business Services, LLC, 59 F. 4th 457

Hill, who was employed by XBS in 2011 and 2012, filed a class action alleging violation of the Washington Minimum Wage Act (MWA). XBS paid its employees under its “ABC Plan” where their compensation depended upon the nature of each task they performed. Thus, it claimed that its employees were “piecemeal” workers, whose compensation was not subject to the MWA. XBS also had a dispute resolution policy (DRP) that included a class action waiver and an arbitration provision that was in place since 2002. However, some of its employees, including Hill, did not sign the DRP. In 2012, after Hill left XBS’ employ but prior to her filing of an amended complaint, XBS developed a new DRP. Hill conceded that employees who signed the 2012 DRP were not part of the class. For the first several years of the litigation, XBS made no reference to excluding employees who signed the 2002 DRP from the class and devoted its entire defense to the issue of whether the MWA covered the ABC plan. Only after the Ninth Circuit referred the issue to the Washington Supreme Court, which ruled that the MWA covered the ABC plan, did XBS move to compel individual arbitration of the claims by members of the class who signed the 2002 DRP. The district court denied the motion on the ground of waiver. XBS appealed.

The Ninth Circuit affirmed. These actions present a clear narrative of XBS's strategic choice to engage the judiciary for resolution of the class claims rather than to obtain a resolution from an arbitrator. Taking them together, XBS treated its arbitration right under the 2002 DRP as akin to the other class claims that XBS viewed as meritless not because of any contractual right XBS held, but because XBS believed that its ABC payment structure was legally compliant with the Washington state wage law, which implied that no underpayment occurred. XBS repeatedly excluded the 2012 DRP but left the 2002 DRP to be litigated just the same as the non-arbitration bound class claims. XBS's behavior was inconsistent with its 2002 DRP arbitration right because it evinced a strong preference for judicial resolution of the 2002 DRP signatories' claims on the merits—namely, whether the ABC payment plan ran afoul of the MWA.

Holley-Gallegly v. TA Operating LLC, 74 F. 4th 997

Plaintiff filed suit against his former employer, TA, alleging violation of various employment laws. TA moved to compel arbitration, arguing that a delegation clause in the agreement required that the arbitrator decide arbitrability. The district court declined to enforce the delegation clause, holding that it was substantively unconscionable because the agreement provided that if the arbitration clause was found to be unenforceable, then plaintiff waived his right to a jury in a subsequent trial. It then found the arbitration agreement to be unenforceable for the same reason. TA appealed and the Ninth Circuit reversed.

The agreement's jury waiver provision applied only if the agreement was determined to be unenforceable. As such, it could not support the conclusion that an agreement to arbitrate enforceability (i.e., the delegation clause) was unenforceable. If the delegation clause was found to be valid, and the arbitrator agreed with Holley-Gallegly that the agreement was unenforceable, then Holley-Gallegly would be free to pursue his claims in either federal or state court. And, if TA were to try to enforce the jury waiver provision in that forum, Holley-Gallegly would have an opportunity to argue why the provision should not be enforced. On the other hand, if the arbitrator disagreed with Holley-Gallegly and concluded that the agreement was enforceable, the jury waiver provision becomes irrelevant, because Holley-Gallegly would have to pursue his claims in arbitration, and by doing so waived a jury trial anyway.

Neither of the above outcomes has any bearing on whether the delegation of arbitrability to the arbitrator would be unconscionable, because the jury waiver would only have an effect—if any—after it has been determined that the agreement was unenforceable. Accordingly, the district court erred in concluding that the provision made the delegation clause substantively unconscionable

.Jackson v. Amazon.com, Inc., 65 F. 4th 1093

Jackson, a driver for Amazon Flex, filed a class action alleging invasion of privacy arising from Amazon’s alleged monitoring of drivers’ Facebook accounts. Amazon’s motion to compel arbitration was denied and it appealed. Although Section 16 of the FAA permits an immediate appeal from a denial of a motion to compel arbitration, the FAA did not apply because the class members were transportation workers and Jackson argued the court had no jurisdiction to hear the appeal.

The court ruled that it had jurisdiction. It had held in 1985 that an order denying a motion to compel arbitration is immediately appealable as tantamount to a denial of injunctive relief under 28 U.S.C. § 1292(a)(1). See Int'l Ass'n of Machinists and Aerospace Workers, AFLCIO v. Aloha Airlines, 776 F.2d 812, 815 (9th Cir. 1985). It never overruled that decision. And although the decision in Aloha Airlines predated the enactment of Section 16, there was no indication that Congress intended to repeal it in enacting that statute. Jackson cited the decisions of other circuits that held that such denials were not immediately appealable under Section 1292(a)(1). Those circuits followed law that the Ninth Circuit did not follow. They were relying on Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988), which overruled an earlier doctrine, known as the Enelow-Ettelson rule, under which denials of motions to compel arbitration were routinely immediately appealable. In Gulfstream, the Supreme Court stated that it was "overturn[ing] the cases establishing the Enelow-Ettelson rule and hold[ing] that orders granting or denying stays of 'legal' proceedings on 'equitable' grounds are not automatically appealable under §1292(a)(1)." The Ninth Circuit never followed the Enelow-Ettelson rule. Instead, Aloha Airlines held that denials of motions to compel arbitration were immediately appealable.

Amazon also argued that the dispute was covered by a 2019 arbitration agreement (TOS) and that a delegation clause in the agreement required the arbitrator to decide arbitrability. Jackson countered that the dispute was covered by a 2016 TOS which did not have a delegation clause. Amazon asserted that the 2016 TOS was modified by the 2019 TOS. The 2016 TOS permitted modification if notice were given to the employee and the employee continued to work for it. The only evidence that Amazon supplied pertaining to Jackson’s receipt of the 2019 TOS was a declaration that the 2019 TOS was mailed to all employees.

The Ninth Circuit ruled that the 2016 TOS applied. There was no evidence that the email allegedly sent to drivers adequately notified drivers of the update. The district court did not have the email, so it could not evaluate whether the email (assuming it was received at all) sufficed to provide individualized notice. Nor did the court have other evidence that might allow it to assess notice, such as a description of the email. Amazon provided only a declaration with a vague statement that a notice of updated terms was sent via email. There was no evidence that the alleged notice Amazon sent to drivers in 2019 informed them that continuing to make deliveries would bind them to the new terms. While Amazon was not required to produce the actual verbatim content of the email it sent to Flex drivers notifying them of the 2019 TOS, the evidence that it did provide was insufficient to allow the court to determine whether the drivers had notice of the new terms. It was Amazon's burden to show assent, not Jackson's to show lack thereof. Given Amazon's limited proffer, the court could not determine that there was assent.

The court then discussed whether the 2016 TOS covered the dispute. It held that it did not. Jackson's claims did not depend on any terms of his contract as a driver for Amazon Flex. The harm Jackson alleged involved Amazon's alleged breach of wiretapping statutes and invasion of privacy. Although Jackson joined the Facebook groups because he was a Flex driver, other individuals who were not Flex drivers were permitted to join, such as spouses, union organizers or others interested in the subject matter of the discussions. Those persons could likely assert the same claims against Amazon. Thus, the allegations underlying Jackson's claims involved employer misconduct wholly unrelated to the parties' agreement. Resolving Jackson's claims would involve considerations relating to the Facebook groups such as whether the groups were in fact private and whether Amazon had been permitted to read the groups' posts. And although membership in Jackson's proposed class would require participation in the Amazon Flex program, the controversy in this case was not about any characteristics or conduct of class members, but whether Amazon was liable for wiretapping and invasion of privacy.

Johnson v. Walmart, Inc., 57 F. 4th 677

Plaintiff Johnson purchased a set of tires from Walmart.com, Walmart’s online platform. By making an online purchase, he assented to Walmart’s Terms of Use. Section 20 of the Terms of Use contained an arbitration agreement that required “all disputes arising out of or related to these Terms of Use or any aspect of the relationship between you and Walmart . . . will be resolved through final and binding arbitration." The tires were shipped to a Walmart Auto Care Center where they were installed. While Johnson was at the store, he purchased a lifetime tire rotating and balancing service agreement from a store employee at an additional cost. After Walmart declined to perform this service when Johnson requested it at another store, he filed a class action alleging breach of contract and breach of the duty of good faith and fair dealing. Walmart’s motion to compel arbitration was denied on the ground that the arbitration agreement did not cover the service agreement and Walmart appealed.

The Ninth Circuit affirmed. Walmart agreed that Johnson did not consent to an arbitration agreement at the time he purchased the service agreement at the Walmart Auto Care Center. Nonetheless, Walmart argued that Johnson's in-store purchase was subject to the same pre-existing arbitration agreement that he accepted when he purchased tires from Walmart.com and agreed to the Terms of Use. Section 2 of the FAA requires arbitration of controversies that arise out of a contract containing a valid, enforceable arbitration provision. But Johnson's claim against Walmart did not arise out of the contract containing the arbitration agreement. It arose out of an entirely separate transaction at a Walmart store. Thus, only if the service agreement itself were subject to the Terms of Use did an agreement to arbitrate claims arise out of that in-store purchase.

The Terms of Use had a clear, delineated purpose—to regulate use of Walmart's online resources and content. The introductory text of the Terms of Use provides: "These Terms of Use govern your access to and use of all Walmart Sites." The agreement's provisions, therefore, applied only to a consumer's use of and access to Walmart Sites. The Terms of Use defined "Walmart Sites" to mean:

“www.walmart.com, and the Walmart mobile site https://mobile.walmart.com, the
Walmart Apps, and all related functionality, services, and Content offered by or for Walmart on or through www.walmart.com and the Walmart Apps or the systems, servers, and networks used to make the Walmart Sites available.”

A Walmart Auto Care Center was not a "Walmart Site" under this definition. Moreover, theTerms of Use covered subject matter such as online user accounts, the content of Walmart Sites and their use, monitoring of user activity on Walmart Sites, the placing of online transactions, and the shipping and delivery of online orders. No provision of the Terms of Use addressed any form of in-store engagement with Walmart.

Kim v. Allison, 87 F. 4th 994

Kim filed a class action against Tinder, alleging that it engaged in age discrimination by charging a higher price to older people who used its dating service. Tinder’s motion to compel arbitration was granted and Kim appealed. While the appeal was pending, Kim and Tinder settled. The settlement included a substantial fee for Kim’s counsel. Allison filed an objection to the settlement, arguing that Kim was not an adequate class representative because her status as a client subject to an arbitration agreement created a conflict with 7000 class members who had not signed an arbitration agreement. The district court denied the objection and Allison appealed.

The Ninth Circuit reversed. Kim had a strong interest in settling her claim, even at the cost of a broad release of other claims that were not subject to arbitration, because unlike the 7,000 or more members who were not bound by arbitration, she had no chance of going to trial. Kim argued that any conflict between herself and the class was insignificant because the district court concluded that the 7,000-plus members for which there is no evidence of an agreement to arbitrate would only constitute five percent of the 240,000-member class. But there might be even more class members who were not subject to an arbitration agreement. But even if the district court's estimate were correct, courts have never determined adequacy by deferring to a percentage-of-the-class formula. And even assuming that could be a proper approach in some cases, it did not make sense to adopt that approach for the first time here, where five percent of a class represented a sizeable number of potential class members. Kim and her counsel's willingness to put even a minority of class members' claims at risk for a fee is precisely the kind of conflict Rule 23(a)(4) was designed to avoid.

Oberstein v. Live Nation Entertainment, Inc., 60 F. 4th 505

Plaintiffs filed a class action against Live Nation and its affiliate, Ticketmaster, alleging a violation of the Sherman Antitrust Act. Defendants’ motion to compel arbitration was granted. Plaintiffs appealed, alleging that they did not have constructive notice of defendants’ online agreement.

The Ninth Circuit affirmed. It held that defendants' terms were not pure clickwrap because they did not, upon some user action, request that users click on a box to confirm agreement before proceeding. Nor were they pure browsewrap, as they were not hidden in links located at the bottom of webpages. Rather, they lay somewhere in between and defendants did enough to provide constructive notice of the terms. At three independent stages—when creating an account, signing into an account, and completing a purchase—webpage users were presented with a confirmation button above which text informed the user that, by clicking on this button, "you agree to our Terms of Use." The "Terms of Use" hyperlink was written in bright blue font, distinguishing it from the surrounding text. By clicking on the blue "Terms of Use" text, users were transferred to a separate webpage containing the terms, which contained an arbitration provision. Crucially, the “Terms of Use" hyperlink was conspicuously distinguished from the surrounding text in bright blue font, making its presence readily apparent.

Plaintiffs also argued that Ticketmaster, the entity whom they believed to be the ticket seller and real party in interest, was not a party to the agreement. The Ninth Circuit noted that Cal. Civil Code Section 1558 does not require that corporate parties to a contract use their full legal names. It requires only that it be possible for a reasonable user to identify the parties to the contract. Here, the terms' repeated references to Live Nation’s common trade names

would enable a reasonable user to identify Ticketmaster's full legal name and more than clear that low bar.

Perez v. Discover Bank, 74 F. 4th 1003

Perez, an undocumented immigrant, obtained a student loan from Citibank. The loan agreement contained an arbitration clause. Discover acquired the loan. Eight years after the loan was consummated, Perez attempted to enter into a loan consolidation agreement with Discover. This would have been an entirely new loan. Discover denied her application and she filed a class action alleging that Discover discriminated against undocumented immigrants. Discover’s motion to compel arbitration, based on the arbitration clause in the Citibank agreement, was denied and Discover appealed.

The Ninth Circuit affirmed. It would be absurd to find that Perez and Discover formed an agreement to arbitrate her discrimination claims via the Citibank agreement. In early 2010, Perez and Citibank agreed under the Citibank agreement that either party could submit to arbitration any case, controversy, etc. "arising out of or in connection with [Perez's Citibank] loan." More than eight years later, in July of 2018, Perez applied for the Discover consolidation loan—a new, distinct loan—and Discover allegedly denied that application because Perez was undocumented. Perez could not reasonably have expected that she would be forced to arbitrate the unrelated claim that Discover discriminated against her eight years later when it denied her application for a new, distinct loan.

Winkler v. McCloskey, 83 F. 4th 720

The SEC appointed plaintiff to be the receiver for Essex Capital, a purported equipment leasing business, to recover funds lost in a Ponzi scheme operated through Essex by Ralph Iannelli. Defendants were net winners in the Ponzi scheme and plaintiff sued them under the Uniform Fraudulent Transfer Act (UFTA) to recover those profits on behalf of the Ponzi scheme losers. Defendants moved to compel arbitration based on arbitration clauses in their operating agreements with Essex and a guarantee given to them by Essex and Iannelli. The district court denied the motion based on the holding in In re EPD Investment Co., 821 F. 3d 1126 (9th Cir. 2016), which involved a bankruptcy trustee.

Defendants appealed and the Ninth Circuit reversed and remanded. EPD did not control because a bankruptcy trustee's standing differs from a receiver's. 11 USC 544 explicitly authorizes a bankruptcy trustee to act on behalf of creditors to avoid a transfer of property by the debtor. By contrast, a receiver's authority derives from the court's equitable power. Unlike bankruptcy law, there is no explicit statutory authorization establishing that a receiver is acting on behalf of the receivership entity's creditors. The plaintiff contended that EPD applied to receiverships, based on the holdings in Scholes v. Lehmann, 56 F. 3d 750 (7th Cir. 1995) and Donell v. Kowell, 533 F. 3d 762 (9th Cir. 2008) that although a receiver generally stands in the shoes of the receivership entity, the receiver actually is acting on behalf of the entity's creditors, including defrauded investors, when it brings fraudulent transfer claims. While it is true that a receiver's actions ultimately will benefit defrauded investors, the receiver stands in the shoes of the receivership entities, not in the shoes of the creditors. The court acknowledged that the holdings of Scholes and Donell relied on the legal fiction that the receivership entity is a separate entity from the receivership corporation through which the Ponzi scheme was operated. This fiction is necessary because ordinarily, a debtor does not have standing to avoid his own transactions. Moreover, a receiver's standing to bring a UFTA claim also relies on the notion that the receivership entity, now freed from the wrongdoer, is in essence a defrauded creditor. This fiction is necessary because the California UFTA permits defrauded creditors to reach property in the hands of a transferee. Nonetheless, the receiver is acting on behalf of the receivership entities, not other defrauded creditors.