Kevin Shelby v. Brookdale Senior Living, Inc. ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 25 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEVIN M. SHELBY, No. 21-15547
Plaintiff-Appellant, D.C. No. 2:20-cv-00804-MTL
v.
MEMORANDUM*
BROOKDALE SENIOR LIVING, INC., an
Arizona corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Arizona
Michael T. Liburdi, District Judge, Presiding
Argued and Submitted April 13, 2022
Pasadena, California
Before: CALLAHAN and VANDYKE, Circuit Judges, and ARTERTON,**
District Judge.
Kevin Shelby appeals the district court’s order dismissing his Title VII claims
against Brookdale Senior Living, Inc., and compelling arbitration of those claims
pursuant to the Employment Binding Arbitration Agreement (“Arbitration
*
This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
**
The Honorable Janet Bond Arterton, United States District Judge for the District
of Connecticut, sitting by designation.
Agreement”) Shelby signed. On appeal, Shelby argues that the Arbitration
Agreement is invalid and unenforceable because it lacks mutual assent and is
unconscionable. Shelby also argues that the district court erred by not holding a
summary jury trial under 9 U.S.C. § 4. We have jurisdiction pursuant to 28 U.S.C.
§ 1291 and, reviewing de novo, affirm for the reasons given below. Bushley v. Credit
Suisse First Boston, 360 F.3d 1149, 1152 (9th Cir. 2004).
I. Enforceability of the Arbitration Agreement
The enforceability of the Arbitration Agreement is governed by the Federal
Arbitration Act (“FAA”), which provides that such an agreement “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for
the revocation of any contract.” 9 U.S.C. § 2. Applying Arizona contract law, we
consider each of Shelby’s arguments, and conclude that each fails. See Dr.’s
Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996); Shivkov v. Artex Risk Sols.,
Inc., 974 F.3d 1051, 1058 (9th Cir. 2020) (“State law governs the validity,
revocability, and enforceability of a contract.”).
A. Mutual Assent
First, Shelby argues that the Arbitration Agreement lacks mutual assent and
is unenforceable because his employer, Brookdale Employee Services, LLC, was
not a signatory to the Arbitration Agreement since it was signed by a “company
representative” whose name is illegible. But just under the Arbitration Agreement’s
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title on the first page it reads: “Binding Arbitration Agreement for Associates of
Brookdale affiliated communities.” Shelby’s employer, Brookdale Employee
Services, LLC (a wholly owned subsidiary of Brookdale Senior Living Inc., which
operated the senior living community where Shelby worked), is a Brookdale
affiliated community. The Arbitration Agreement goes on to clarify that Shelby’s
assent is a “condition of [his] employment,” and that it applies to any claims “made
against us, any parent, subsidiary, or affiliated entities.” Shelby does not dispute
that he signed the Arbitration Agreement or that he was employed by a Brookdale
affiliated community. Under Arizona contract law, mutual assent is assessed based
on objective evidence. See Hill-Shafer P’ship v. Chilson Family Tr., 165 Ariz. 469,
473 (1990); Buckholtz v. Buckholtz, 246 Ariz. 126, 129 (Ct. App. 2019). Shelby has
offered no objective evidence that indicates a misunderstanding. Accordingly, the
district court did not err by finding the Arbitration Agreement was formed with
mutual assent.1
1
Shelby appears to argue that the policy favoring arbitration undermines Title VII’s
purpose. But that argument has already been rejected by our court. See EEOC v.
Luce, Forward, Hamilton & Scripps, 345 F.3d 742, 746–50 (9th Cir. 2003) (en banc)
(observing that “the view that compulsory arbitration weakens Title VII conflicts
with the Supreme Court’s stated position that arbitration affects only the choice of
forum, not substantive rights”). Shelby also argues that the Arbitration Agreement’s
carve-out for claims seeking “injunctive or other equitable relief” deprives him of
rights under Title VII. But the Arbitration Agreement does not exclude any type of
relief; it gives the arbitrator explicit authority to award “all remedies that could be
awarded by a court or administrative agency,” which includes injunctive or other
equitable remedies.
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B. Unconscionability
Shelby also argues that the Arbitration Agreement is unenforceable because
it is both procedurally and substantively unconscionable. In Arizona, procedural
unconscionability addresses the fairness of the bargaining process, and substantive
unconscionability concerns the actual terms of the contract, examining the relative
fairness of the obligations assumed. Gullett ex rel. Estate of Gullett v. Kindred
Nursing Ctrs. West, L.L.C., 241 Ariz. 532, 535, 540 (Ct. App. 2017) (quotation
marks and citations omitted). As federal courts in Arizona have previously
acknowledged, under Arizona law plaintiffs “have a high bar to meet in
demonstrating that an arbitration agreement is unconscionable.” Longnecker v. Am.
Express Co., 23 F. Supp. 3d 1099, 1108 (D. Ariz. 2014) (quoting Coup v. Scottsdale
Plaza Resort, LLC, 823 F. Supp. 2d 931, 947 (D. Ariz. 2011)); Phoenix Baptist Hosp.
& Med. Ctr. v. Aiken, 179 Ariz. 289, 293 (Ct. App. 1994) (“A bargain is
‘unconscionable’ if it is ‘such as no man in his senses and not under delusion would
make on the one hand, and as no honest and fair man would accept on the other.’”)
(quoting Broemmer v. Otto, 169 Ariz. 543, 547 (Ct. App. 1991)).
Shelby argues the Arbitration Agreement is procedurally unconscionable
because it was a contract of adhesion (offered on a “take-it-or-leave-it” basis) and
that he was not given a copy of the rules governing arbitration. But under Arizona
law a finding of adhesion does not render an agreement procedurally
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unconscionable. Broemmer v. Abortion Servs. of Phoenix, Ltd., 173 Ariz. 148, 151
(1992) (“Our conclusion that the contract was one of adhesion is not, of itself,
determinative of its enforceability.”); Aiken, 179 Ariz. at 293–94. Further, the
arbitration rules that Shelby complains he was not given a copy of were explicitly
referenced and incorporated into the Arbitration Agreement, which undermines his
argument for procedural unconscionability. Shelby offers no other argument to meet
the high bar of procedural unconscionability, which “bears a strong resemblance to
its common-law cousins of fraud and duress.” Maxwell v. Fid. Fin. Servs., Inc., 184
Ariz. 82, 89 (1995) (quotation marks and citation omitted).
Shelby also argues that several provisions of the Arbitration Agreement are
substantively unconscionable—including the confidentiality clause, mediation
requirement, limitations on relief and discovery, and the financial burden of
arbitration. Under Arizona contract law, substantive unconscionability can be
shown by “contract terms [that are] so one-sided as to oppress or unfairly surprise
an innocent party, an overall imbalance in the obligations and rights imposed by the
bargain, and significant cost-price disparity.” Maxwell, 184 Ariz. at 89. Shelby cites
to several decisions applying California contract law to support his argument for
substantive unconscionability, but he does not point to any binding authority that
would require such a finding. And some of Shelby’s arguments have been
specifically rejected by courts applying Arizona contract law. See Wernett v. Serv.
5
Phoenix, LLC, CIV 09-168-TUC-CKJ, 2009 WL 1955612, at *6–7 (D. Ariz. 2009)
(rejecting the argument that arbitration agreements limiting discovery are
substantively unconscionable).2 Accordingly, the district court did not err in
rejecting Shelby’s unconscionability arguments.
II. Denial of Summary Jury Trial
Finally, Shelby argues that the district court erred by not holding a summary
jury trial on the Arbitration Agreement’s formation. Under the FAA, “the party
alleged to be in default” may demand a jury trial if the relevant state contract law
places “the making of the arbitration agreement … in issue.” 9 U.S.C. § 4. The
making of the Arbitration Agreement is “in issue” only if Shelby identifies a material
issue of fact as to its formation. Three Valleys Mun. Water Dist. V. E.F. Hutton &
Co., Inc., 925 F.2d 1136, 1141 (9th Cir. 1991). But Shelby’s arguments—that the
Arbitration Agreement lacks mutual assent and is unconscionable—are legal
arguments that required no fact-finding to be resolved. See id. Shelby concedes that
he signed the Arbitration Agreement and does not dispute that he was employed by
a Brookdale affiliated community. Accordingly, the district court did not err in
finding as a matter of law that the Arbitration Agreement was valid and enforceable
2
Even if a portion of the Arbitration Agreement is ultimately deemed invalid by the
arbitrator, it would not render the entire Arbitration Agreement substantively
unconscionable or unenforceable on that basis alone. See Ting v. AT&T, 319 F.3d
1126, 1151 (9th Cir. 2003) (holding that an enforceable arbitration agreement
contained an unconscionable fee-splitting provision).
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because Shelby did not identify any genuine issue of material fact with respect to the
Arbitration Agreement’s formation. 9 U.S.C. § 4.
III. Conclusion
We do not reach Shelby’s remaining arguments, including whether the
Arbitration Agreement’s confidentiality clause should be struck as unenforceable
and severed.3 See Kilgore v. Keybank, N.A., 718 F.3d 1052, 1059 n.9 (9th Cir. 2013)
(opining that “[p]laintiffs are free to argue during arbitration that the confidentiality
clause is not enforceable”). The district court did not err in dismissing Shelby’s
claims and compelling arbitration. AFFIRMED.
3
Shelby’s counsel conceded at oral argument that “there is no Ninth Circuit
precedent directly on point” to support his argument that the confidentiality clause
is unconscionable. Nor is this court aware of any binding Arizona authority that
would compel a finding of unconscionability. The parties are free to raise before the
arbitrator any remaining challenges as to the enforceability or scope of the
Arbitration Agreement’s confidentiality clause.
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