Brandyn Ridgeway v. Nabors Completion and Prod. ( 2018 )

FILED
NOT FOR PUBLICATION
FEB 13 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
BRANDYN RIDGEWAY and TIM No. 15-56673
SMITH, on behalf of themselves and all
others similarly situated and the general D.C. No.
public, 2:15-cv-03436-DDP-VBK
Plaintiffs-Appellees,
MEMORANDUM*
v.
NABORS COMPLETION &
PRODUCTION SERVICES CO., a
Delaware corporation,
Defendant,
and
CITY OF LONG BEACH, a California
municipality; TIDELANDS OIL
PRODUCTION COMPANY, a Texas
General Partnership,
Defendants-Appellants.
BRANDYN RIDGEWAY and TIM No. 15-56675
SMITH, on behalf of themselves and all
others similarly situated and the general D.C. No.
public, 2:15-cv-03436-DDP-VBK
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Plaintiffs-Appellees,
v.
NABORS COMPLETION &
PRODUCTION SERVICES CO., a
Delaware corporation,
Defendant-Appellant,
and
CITY OF LONG BEACH, a California
municipality; TIDELANDS OIL
PRODUCTION COMPANY, a Texas
General Partnership,
Defendants.
Appeal from the United States District Court
for the Central District of California
Dean D. Pregerson, District Judge, Presiding
Argued and Submitted February 6, 2018
Pasadena, California
Before: GRABER and HURWITZ, Circuit Judges, and MARBLEY,** District
Judge.
Defendants Nabors Completion and Production Services Co., Tidelands Oil
Production Company, and the City of Long Beach timely appeal the district court’s
**
The Honorable Algenon L. Marbley, United States District Judge for the
Southern District of Ohio, sitting by designation.
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denial of their motion to compel Plaintiffs Brandyn Ridgeway and Tim Smith to
arbitrate their labor-related claims against Defendants. Reviewing de novo,
Kilgore v. KeyBank, N.A., 718 F.3d 1052, 1057 (9th Cir. 2013) (en banc), we
reverse and remand.
1. The district court correctly held that the arbitration agreement involved a
moderate level of procedural unconscionability because it was a nonnegotiable
requirement of Plaintiffs’ employment. Armendariz v. Found. Health Psychcare
Servs., Inc., 6 P.3d 669, 690 (Cal. 2000). But, with two exceptions, we disagree
that the provisions at issue were substantively unconscionable. See Poublon v.
C.H. Robinson Co., 846 F.3d 1251, 1261 (9th Cir. 2017) (discussing standards for
determining substantive unconscionability).
Section 11 of the Nabors Dispute Resolution Rules, which pertains to
discovery, is not substantively unconscionable because, by stating that the
arbitrator has "discretion to determine the form, amount and frequency of
discovery," it presupposes that the arbitrator will order discovery beyond the
required information about witnesses and documents. See Armendariz, 6 P.3d at
682 ("Such an arbitration agreement is lawful if it . . . provides for more than
minimal discovery . . . ." (internal quotation marks omitted)). Paragraphs A, B,
and G of section 32, the fees and expenses provision, are not unconscionable,
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because they contain the phrase "except as otherwise provided by law." And
paragraphs E and F of that section are not unconscionable because, when they are
read together with paragraph G, it is clear that an employee initiating arbitration
will pay only $150—the rest of the fees "shall be borne equally by the Parties who
are not Employees/Applicants." Section 6 of the Nabors Dispute Resolution
Program, which allows Nabors to modify the agreement unilaterally, is not
unconscionable because there is an implied covenant of good faith and fair dealing.
Poublon, 846 F.3d at 1269.
2. Paragraphs C and D of section 32, however, are substantively
unconscionable because they flatly prohibit the arbitrator from shifting discovery
costs and expert fees to the losing party, no matter the circumstances and even
when California law dictates a different result. But those provisions are severable
in their entirety. Section 32(G) fills in the gaps left by severing those paragraphs
because it governs "all other expenses, fees, and costs."
3. Private Attorneys General Act of 2004 ("PAGA") claims are not
waivable, but they can be arbitrated. See Sakkab v. Luxottica Retail N. Am., Inc.,
803 F.3d 425, 429, 438 (9th Cir. 2015) ("[P]arties are free to arbitrate [PAGA
claims] using the procedures of their choice."). Therefore, the amendment to
section 4(B) of the Nabors Dispute Resolution program is invalid, but section 4(C)
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is valid. On remand, the district court shall consider the limited issue of whether to
certify Plaintiffs’ PAGA claims.
4. Tidelands and the City of Long Beach have standing to enforce the
arbitration agreement because Plaintiffs alleged in their complaint that those
Defendants are agents of Nabors and the arbitration agreement defines "the
Company" subject to the arbitration agreement to include agents of Nabors. See
Dryer v. L.A. Rams, 709 P.2d 826, 833–34 (Cal. 1985).
REVERSED and REMANDED with instructions.
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