Joseph Dylag v. West Las Vegas Surgery Center ( 2017 )

FILED
NOT FOR PUBLICATION
DEC 13 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOSEPH DYLAG, No. 16-15869
Plaintiff-Appellant, D.C. No.
2:16-cv-00120-APG-VCF
v.
WEST LAS VEGAS SURGERY MEMORANDUM*
CENTER, LLC; TEAMWORKS
PROFESSIONAL SERVICES, INC.;
STEVEN KOZMARY; ROBERT BIEN,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
Andrew P. Gordon, District Judge, Presiding
Submitted October 10, 2017**
San Francisco, California
Before: O’SCANNLAIN, TASHIMA, and BYBEE, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Plaintiff-appellant Joseph Dylag filed suit against his former joint
employers, West Las Vegas Surgery Center (“WLVSC”) and Teamworks
Professional Services, Inc. (“Teamworks”), as well as two WLVSC shareholders
(collectively “Defendants”). Defendants moved the district court to dismiss the
complaint and compel arbitration based on an arbitration provision in the
employment contract between Dylag and WLVSC. The court granted the motion
in an oral ruling.1
“We have jurisdiction under 9 U.S.C. § 16(a)(3)” and review the district
court’s decision to compel arbitration de novo. Ziober v. BLB Res., Inc., 839 F.3d
814, 816 (9th Cir. 2016), cert. denied, 137 S. Ct. 2274 (2017). “A party seeking to
compel arbitration has the burden under the [Federal Arbitration Act (“FAA”)] to
show (1) the existence of a valid, written agreement to arbitrate; and, if it exists, (2)
that the agreement to arbitrate encompasses the dispute at issue.” Ashbey v.
Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015).
1. The district court correctly held that Dylag must arbitrate his ADEA and
ADA claims against WLVSC. “[I]ndividuals generally may contractually agree to
arbitrate employment disputes and thereby waive certain statutory rights to which
1
Dylag has not appealed the court’s order compelling arbitration against the
two WLVSC shareholders.
2
they would otherwise be entitled.” Nelson v. Cyprus Bagdad Copper Corp., 119
F.3d 756, 760 (9th Cir. 1997). However, an employee can only waive his right to
litigate federal employment-discrimination claims in a judicial forum if “he does so
knowingly.” Ashbey, 785 F.3d at 1323 (internal quotation marks and citation
omitted).
By entering into an employment contract with an arbitration provision that
encompasses “any dispute aris[ing] out of” that contract, Dylag knowingly
bargained away his right to litigate his ADEA and ADA claims against WLVSC.
Compare id. at 1325–26 (holding that the employee “knowingly waived his right to
a judicial forum for his Title VII claim” by signing a form acknowledging he
would “adhere to” the employee handbook, including an arbitration agreement that
the form explicitly cited), with Kummetz v. Tech Mold, Inc., 152 F.3d 1153, 1155
(9th Cir. 1998) (finding that a similar acknowledgment form contained “no explicit
reference to arbitration or waiver of right to sue” and therefore did not constitute a
knowing waiver), and Nelson, 119 F.3d at 760–61 (same).
2. In contrast, while it is undisputed that Teamworks was Dylag’s co-employer,
the two did not share a contractual relationship. “Generally, the contractual right
to compel arbitration may not be invoked by one who is not a party to the
agreement and does not otherwise possess the right to compel arbitration.” Kramer
3
v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (internal quotation
marks omitted). However, both signatories and “nonsignatories of arbitration
agreements may be bound by the agreement under ordinary contract and agency
principles[,]” including equitable estoppel. Comer v. Micor, Inc., 436 F.3d 1098,
1101 (9th Cir. 2006). Following the U.S. Supreme Court’s decision in Arthur
Andersen LLP v. Carlisle, 556 U.S. 624 (2009), courts must apply state law in
determining the applicability of these principles.2 Kramer, 705 F.3d at 1128.
Nevada recognizes equitable estoppel’s application in the arbitration
context.3 Truck Ins. Exch. v. Palmer J. Swanson, Inc., 189 P.3d 656, 660 (Nev.
2008). In a recent unpublished disposition, the Nevada Supreme Court applied the
“commonly used framework” for equitable estoppel, which includes two avenues
for compelling arbitration:
First, equitable estoppel applies when the signatory to a written
agreement containing an arbitration clause must “rely on the terms of the
written agreement in asserting its claims” against the nonsignatory.
When each of a signatory’s claims against a nonsignatory “makes
2
Prior to Arthur Andersen, courts applied federal common law in
addressing arbitration provisions governed by the FAA. See Kramer, 705 F.3d at
1130–32 nn.5–6 (discussing the required application of state law post–Arthur
Andersen).
3
Although the parties have not cited any state case law regarding this issue,
the contract’s choice-of-law provision selects Nevada law, which therefore applies.
Ferdie Sievers & Lake Tahoe Land Co. v. Diversified Mortg. Inv’rs, 603 P.2d 270,
273 (Nev. 1979).
4
reference to” or “presumes the existence of” the written agreement, the
signatory’s claims “arise out of and relate directly to the written
agreement,” and arbitration is appropriate. Second, “application of
equitable estoppel is warranted when the signatory to the contract
containing the arbitration clause raises allegations of substantially
interdependent and concerted misconduct by both the nonsignatory and
one or more of the signatories to the contract.”
Hard Rock Hotel, Inc. v. Eighth Judicial Dist. Court of State in & for Cty. of Clark,
390 P.3d 166, at *1 n.4, *2 (Nev. 2017) (unpublished) (citation omitted).4 In
regard to the second avenue, we are confident that, like most jurisdictions that
apply this framework, Nevada would require that the allegations of “substantially
interdependent and concerted misconduct” be “founded in or intimately connected
with the obligations of the underlying agreement.” See Kramer, 705 F.3d at
1128–29 (citation omitted); Rajagopalan v. NoteWorld, LLC, 718 F.3d 844, 847
(9th Cir. 2013) (“Where other circuits have granted motions to compel arbitration
on behalf of non-signatory defendants against signatory plaintiffs, it was essential
in all of these cases that the subject matter of the dispute was intertwined with the
contract providing for arbitration.” (internal quotation marks and citation omitted)).
4
The Nevada Supreme Court applied this framework in the context of
estopping a contract signatory from avoiding a contractual jury-trial waiver rather
than an arbitration provision, but the court noted that the same framework applies
in both contexts. Hard Rock Hotel, 390 P.3d 166, at *1 n.4; see also Ahlers v.
Ryland Homes Nev., LLC, 367 P.3d 743, at *2 (Nev. 2010) (unpublished) (citing to
the Eleventh Circuit’s widely-cited articulation of this framework in the arbitration
context).
5
Here, Dylag’s ADEA and ADA claims rely on and are founded in federal
anti-discrimination statutes, not his employment contract. See Kramer, 705 F.3d at
1230–31 (holding that claims under consumer-protection and unfair-competition
statutes did not rely on and were not “intimately founded in” the underlying
contract); Rajagopalan, 718 F.3d at 847 (holding that the plaintiff was not
equitably estopped from avoiding arbitration because his “statutory claims . . .
[were] separate from the contract itself” (alteration omitted)). Moreover, Dylag
has not alleged that WLVSC and Teamworks engaged in “substantially
interdependent and concerted misconduct” because he has not asserted that
Teamworks suspended or fired him, participated in these decisions, or
discriminated against him. And even if made, such allegations would not be
founded in or intertwined with the obligations in Dylag’s employment contract
with WLVSC.
Finally, Defendants have not argued that Dylag’s state-law claims against
Teamworks rely on his employment contract or that these claims, taken on their
own, would justify equitable estoppel. This argument is therefore waived. Clem v.
Lomeli, 566 F.3d 1177, 1182 (9th Cir. 2009).
6
Accordingly, we reverse the district court only as to its order requiring
Dylag to arbitrate his claims against Teamworks, and we remand the case for
further proceedings.
AFFIRMED in part. REVERSED in part and REMANDED.
Each party shall bear its own costs on appeal.
7
FILED
DEC 13 2017
Dylag v. W. Las Vegas Surgery Ctr., No. 16-15869
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
O’SCANNLAIN, Circuit Judge, concurring in part and dissenting in part:
I join in Part 1 of the court’s memorandum and in the judgment affirming
the dismissal of Dylag’s claims against West Las Vegas Surgery Center (WLVSC).
I cannot join Part 2, which reverses the dismissal of Dylag’s claims against
Teamworks Professional Services, Inc. (Teamworks). I respectfully disagree with
the majority’s conclusion that the district court wrongly held that Dylag’s claims
against Teamworks were so intertwined with the claims against WLVSC as to
require arbitration.
I
The principal question regarding the claims against Teamworks is whether,
as a non-signatory, Teamworks can still compel Dylag to arbitrate his claims under
a theory of equitable estoppel. Specifically, the district court held that Teamworks
could compel arbitration because “the claims against Teamworks are identical to,
for the most part, the claims against West Las Vegas . . . . [T]hose claims are
intertwined and the relationship between those two entities . . . [is] so close that
Mr. Dylag should be estopped from denying arbitration against Teamworks.” In
doing so, the court relied on and followed a decision from the Second Circuit,
Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 127–28 (2d Cir. 2010).
The majority now holds that the district court’s application of the Ragone
standard for equitable estoppel was in error—although it does not even cite the
case. By the majority’s interpretation, equitable estoppel should not apply unless
the claims against the third party are “founded in or intimately connected with the
obligations underlying the agreement,” Mem. at 5—a requirement imposed in
some courts but not (as demonstrated by Ragone) in others. Without its really
addressing the issue, the majority’s view seems to be that the district court erred in
applying the more lenient estoppel standard of Ragone and other cases, rather than
the stricter standard preferred by the majority.
The primary difficulty with this argument is that Dylag himself has never
come close to making it. On appeal, Dylag states that “the District Court erred
allowing Teamworks, a non-signatory to the dispute resolution provision[,] to
require Mr. Dylag to arbitrate his employment discrimination claims.” But Dylag
never attempts to explain how the district court’s estoppel analysis was wrong,
much less to argue a competing theory of equitable estoppel. Indeed, he does not
discuss whatsoever whether (as the district court held) his allegations against
Teamworks are so “intertwined” with those against WLVSC as to require
arbitration. Instead, Dylag simply reiterates his primary argument that he never
validly waived his right to sue his employers for discrimination or civil rights
claims. He does not argue that Ragone is the wrong standard to apply, but rather
2
that Ragone is distinguishable specifically because (unlike here) it involved a valid
waiver of civil rights claims. That is an issue which has nothing to do with the
district court’s estoppel analysis, and indeed an argument the majority in fact
rejects with respect to Dylag’s claims against Teamworks. Mem. at 2–3.
The same was true in the district court. There, the court directly asked
Dylag’s attorney, “[W]hy aren’t the claims intertwined . . . such that he should be
estopped from denying arbitration?” Dylag’s attorney responded, “The claims
would be intertwined if we’re not dealing with an employment discrimination case.
But you have case law here that says these federal civil rights are important. . . .
[Y]ou have to make sure certain things are done [to waive them].” In other words,
Dylag essentially conceded that the district court’s general understanding of
equitable estoppel was correct and that the doctrine would apply to his case, if he
raised non-discrimination claims. He once again simply reiterated his primary
argument that he did not knowingly waive his discrimination claims in the
arbitration agreement, and thus even if the claims were intertwined with those
against WLVSC, he could not be required to arbitrate them.
In its response brief on appeal, Teamworks first noted that Dylag
“completely fail[ed]” to make any argument regarding the court’s estoppel
analysis, and then explained why it believes the district court’s application of
3
estoppel was indeed correct. Yet Dylag did not even bother to file a reply brief to
respond to these arguments. In all, Dylag has not at any point attempted to grapple
with the district court’s analysis of the third-party arbitration issue or the issue of
estoppel.
The majority agrees that Dylag’s arguments with respect to the arbitrability
of employment discrimination claims are meritless. Mem. at 2–3. Because these
are the only arguments Dylag has ever raised to contest arbitration of his claims
against both WLVSC and Teamworks, our analysis should end there. The
majority’s suggestion that the district court generally misinterpreted equitable
estoppel law and misapplied the test for arbitration of “intertwined” claims against
a non-signatory is simply not reflected anywhere in Dylag’s own arguments.
Regardless of the merits of that analysis, it is not an issue we should reach. Dylag
utterly failed to analyze or to argue the law underlying the district court’s
determination that Teamworks can enforce arbitration through estoppel, and he has
not made any argument remotely resembling that adopted by the majority. He
therefore has waived any such argument, and we should not build a new case for
him. See, e.g., Barnes v. FAA, 865 F.3d 1266, 1271 n.3 (9th Cir. 2017) (arguments
not raised in opening brief are waived); SeaView Trading, LLC v. Comm’r of
Internal Revenue, 858 F.3d 1281, 1288 (9th Cir. 2017) (same); McKay v. Ingleson,
4
558 F.3d 888, 891 n.5 (9th Cir. 2009) (“Because this argument was not raised
clearly and distinctly in the opening brief, it has been waived.”).
II
Further, even if we were to consider the merits of the district court’s
estoppel analysis, I cannot agree that Nevada would not adopt the Ragone standard,
as applied by the district court.
The majority confidently predicts that, “like most jurisdictions that apply
[the equitable estoppel] framework, Nevada would require that the allegations of
interdependent and concerted misconduct be founded in or intimately connected
with the obligations of the underlying agreement.” Mem. at 5 (internal quotation
marks omitted). The problem, of course, is that Nevada itself has not said anything
of the sort. And although the majority only cites cases supporting its more
restrictive framework, it does not even mention those that do not—most notably, of
course, Ragone itself.
Under the more lenient Ragone standard, a plaintiff may be forced to
arbitrate claims raised against a non-signatory where such claims are “factually
intertwined with” a dispute against a signatory, and where there is a close
relationship between the signatory and non-signatory defendants. See Ragone, 595
F.3d at 127–28. There is little doubt that the district court was correct that the
5
claims against Teamworks satisfy such standard. Indeed, Ragone itself and many
cases applying it have required plaintiffs to arbitrate claims against third parties in
circumstances remarkably similar to this case. See, e.g., id.; Barreto v. JEC II,
LLC, 2017 WL 3172827, at *6 (S.D.N.Y. July 25, 2017); Colon v. Conchetta, Inc.,
2017 WL 2572517, at *6 (E.D. Pa. June 14, 2017); Bonner v. Mich. Logistics Inc.,
250 F. Supp. 3d 388, 398–99 (D. Ariz. 2017).
The majority clearly disagrees with the Ragone standard. However, that
standard is not such a minority view, or so obviously disfavored, as to make it clear
that Nevada would disagree as well. Furthermore, the parties have not even had
the opportunity to brief which standard Nevada courts would or should apply
(again, because Dylag himself never challenged this issue). Because the applicable
standard may be critical to the outcome of this case, I do not believe that we should
decide such issue without at least full briefing from the parties or, perhaps,
certification to the Nevada Supreme Court itself.
For the foregoing reasons, I respectfully dissent from Part 2.
6