Michael Ashbey v. Archstone Property Management , 785 F.3d 1320 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICHAEL ASHBEY, No. 12-55912
Plaintiff-Appellee,
D.C. No.
v. 8:12-cv-00009-
DOC-RNB
ARCHSTONE PROPERTY
MANAGEMENT, INC., a corporation,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Central District of California
David O. Carter, District Judge, Presiding
Argued and Submitted
March 4, 2014—Pasadena, California
Filed May 12, 2015
Before: Jay S. Bybee, Carlos T. Bea,
and Morgan Christen, Circuit Judges.
Opinion by Judge Bea
2 ASHBEY V. ARCHSTONE PROP. MGMT.
SUMMARY*
Arbitration
The panel held that employee Michael Ashbey knowingly
waived his right to a judicial forum for his Title VII claim
and equivalent state-law claims, reversed the district court’s
order denying Archstone Property Management, Inc.’s
motion to compel arbitration, and remanded for entry of an
order granting Archstone’s motion.
The scope of the Federal Arbitration Act is narrowed by
federal statutes, such as Title VII of the Civil Rights Act of
1964, which limits “the enforcement of arbitration
agreements with regard to claims arising under” the statute.
Kummetz v. Tech Mold, Inc., 152 F.3d 1153, 1155 (9th Cir.
1998).
The panel held that the case was distinguishable from
Kummetz and Nelson v. Cyprus Bagdad Copper Corp., 119
F.3d 756 (9th Cir. 1997), because Archstone presented its
employee the “express” choice lacking in Kummetz and
Nelson where the employee signed an acknowledgment that
explicitly notified him that Archstone’s Company Policy
Manual contained a Dispute Resolution Policy section
explaining Archstone’s arbitration policy, and the employee
expressly agreed to adhere to the policy. The panel
concluded that the arbitration provision was enforceable.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
ASHBEY V. ARCHSTONE PROP. MGMT. 3
COUNSEL
Henry D. Lederman (argued), Littler Mendelson, P.C.,
Walnut Creek, California; Connie L. Michaels and Sarah E.
Ross, Littler Mendelson, P.C., Los Angeles, California, for
Defendant-Appellant.
Avi Burkwitz (argued) and Diana Ratcliff, Peterson Bradford
Burkwitz, Burbank, California, for Plaintiff-Appellee.
Susan R. Oxford (argued), Attorney, P. David Lopez, General
Counsel, Carolyn L. Wheeler, Acting Associate General
Counsel, and Lorraine C. Davis, Assistant General Counsel,
United States Equal Employment Opportunity Commission,
Washington, D.C., for Amicus Curiae Equal Employment
Opportunity Commission.
OPINION
BEA, Circuit Judge:
Defendant Archstone Communities LLC (“Archstone”)
appeals from the district court’s denial of its Motion to
Compel Arbitration. We reverse the district court’s order and
remand for entry of an order granting Archstone’s Motion to
Compel Arbitration.
I.
Michael Ashbey was employed at Archstone from
December 1996 until November 2010, when he was fired. He
began as a Service Technician and was promoted to Regional
Service Manager in 2003.
4 ASHBEY V. ARCHSTONE PROP. MGMT.
In 2009, Ashbey signed a document entitled
“Acknowledgment of Receipt of Archstone Company Policy
Manual 2009” (“Acknowledgment”). The Acknowledgment
contained the following language:
I acknowledge that I have received directions
as to how I may access the Archstone
Company Policy Manual, including the
Dispute Resolution Policy. I understand that
Archstone can administer, interpret,
discontinue, supplement, amend or withdraw
any of the employment and personnel policies
and procedures set forth in this Company
Policy Manual. I understand that it is my
responsibility to understand the Archstone
Company Policy Manual, including the
Dispute Resolution Policy, and to adhere to all
of the policies contained herein.
...
I also understand that this Company Policy
Manual does not alter the employment-at-will
relationship discussed in the Archstone
Company Policy Manual or create any
contractual rights. I understand that, as an
employee-at-will, either Archstone or I may
terminate the employment relationship at any
time, with or without notice or cause. I
understand that if at any time I have any
questions regarding this Company Policy
Manual I can discuss them with my
supervisor, office manager, the Legal
Department or a Human Resources
ASHBEY V. ARCHSTONE PROP. MGMT. 5
representative. During my employment, I
agree to abide by the provisions in this
Company Policy Manual.
As the Acknowledgment twice mentioned, the Company
Policy Manual for 2009 (“Manual”) (as well as the Manual
for 2010)1 contained a detailed Dispute Resolution Policy
section explaining Archstone’s arbitration policy. The
Dispute Resolution Policy stated in relevant part:
This Policy is governed by the Federal
Arbitration Act, 9 U.S.C. § 1 et seq. . . .
Except as it otherwise provides, this Policy is
intended to apply to the resolution of disputes
that otherwise would be resolved in a court of
law, and therefore this Policy requires all such
disputes between Employee and the Company
to be resolved only by an arbitrator through
final and binding arbitration and not by way
of court or jury trial. . . . This Policy also
applies, without limitation, to disputes arising
out of the employment relationship or the
termination thereof including, without
limitation, disputes over . . . harassment and
claims arising under the . . . Civil Rights Act
of 1964 . . . and all other state statutory and
common law claims.
1
In March 2010, Ashbey signed a document entitled “Acknowledgment
of Receipt of Archstone Company Policy Manual 2010.” The 2010
Acknowledgment is identical to the 2009 Acknowledgment in all material
respects.
6 ASHBEY V. ARCHSTONE PROP. MGMT.
In November 2011, Ashbey filed a complaint in
California state court alleging, among other claims, unlawful
retaliation in violation of Title VII of the Civil Rights Act of
1964, 42 U.S.C. § 2000e et seq. (“Title VII”), and equivalent
state-law claims. In his complaint, Ashbey alleged that in
2006, Archstone employee Alex Winborn began harassing
Ashbey’s wife, who also worked for Archstone. In June
2010, shortly after Ashbey’s wife complained of Winborn’s
unlawful conduct, Archstone terminated her employment.
Ashbey further alleged that, following the termination of Mrs.
Ashbey’s employment, Archstone engaged in retaliatory
conduct towards him by first altering his employment
conditions and then by wrongfully terminating his
employment. Ashbey demanded a jury trial.
Archstone removed the case to federal district court on
the grounds of both diversity of citizenship and federal
question (Title VII) jurisdiction. Archstone then filed a
Motion to Compel Arbitration pursuant to the Manual’s
Dispute Resolution Policy. The district court denied
Archstone’s motion as to all of Ashbey’s claims. We address
here the district court’s refusal to compel arbitration of
Ashbey’s Title VII claim and its state-law equivalents on the
ground that Ashbey did not knowingly waive his Title VII
right to a jury trial. We address the district court’s refusal to
compel arbitration on Ashbey’s other claims in an
accompanying memorandum disposition.
II.
We review de novo a district court’s denial of a motion to
compel arbitration. Bushley v. Credit Suisse First Boston,
360 F.3d 1149, 1152 (9th Cir. 2004).
ASHBEY V. ARCHSTONE PROP. MGMT. 7
A.
The Federal Arbitration Act (“FAA”) provides:
A written provision in any . . . contract
evidencing a transaction involving commerce
to settle by arbitration a controversy thereafter
arising out of such contract or transaction . . .
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. A party seeking to compel arbitration has the
burden under the 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. Cox
v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir.
2008). In the accompanying memorandum disposition we
hold that these two elements are satisfied with regard to all of
Ashbey’s claims. But our task does not end there. The scope
of the FAA is narrowed by other federal statutes, such as Title
VII and the Americans with Disabilities Act (“ADA”), which
“limit the enforcement of arbitration agreements with regard
to claims arising under th[ose] statute[s].” Kummetz v. Tech
Mold, Inc., 152 F.3d 1153, 1155 (9th Cir. 1998).
Before 1991, “Title VII had been interpreted to prohibit
any waiver of its statutory remedies in favor of arbitration.”
Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299, 1304 (9th
Cir. 1994). But Congress reversed course with amendments
to Title VII in the Civil Rights Act of 1991. Id. Section 118
of the Act states: “Where appropriate and to the extent
authorized by law, the use of alternative means of dispute
resolutions, including settlement negotiations, conciliation,
8 ASHBEY V. ARCHSTONE PROP. MGMT.
facilitation, mediation, factfinding, minitrials, and arbitration,
is encouraged to resolve disputes arising under the Acts or
provisions of Federal law amended by this title.” See Pub. L.
No. 102–166, § 118, 105 Stat. 1071 (codified at Notes to
42 U.S.C. § 1981); see also Lai, 42 F.3d at 1304. We have
recognized that Section 118 was a “polite bow to the
popularity of alternative dispute resolution.” EEOC. v. Luce,
Forward, Hamilton & Scripps, 345 F.3d 742, 747 (9th Cir.
2003) (en banc) (quoting Pryner v. Tractor Supply Co.,
109 F.3d 354, 363 (7th Cir. 1997)). Nonetheless, we did not
read Section 118 in Lai as an unfettered endorsement of
alternative dispute resolutions for Title VII claims; such
resolutions are permissible only “where appropriate.” Lai,
42 F.3d at 1305. We concluded, based on a Senator’s floor
statement, that the phrase “where appropriate” signals a
plaintiff cannot waive his right to a judicial forum for Title
VII claims unless he does so “knowingly.” Id. (“[W]e
conclude that a Title VII plaintiff may only be forced to
forego her statutory remedies and arbitrate her claims if she
has knowingly agreed to submit such disputes to
arbitration.”). As a result, not only must there be a valid
agreement to arbitrate that encompasses the right at issue, that
agreement must also be “knowing.” Id.2
The district court here held the arbitration agreement was
unenforceable with respect to Ashbey’s Title VII and related
state-law claims because the Acknowledgment’s language did
not give Ashbey adequate notice for Ashbey “knowingly” to
have waived his right to a jury trial for those claims.
2
This “knowing” standard applies to Title VII’s state-law equivalents
also. See Lai, 42 F.3d at 1304 n.1.
ASHBEY V. ARCHSTONE PROP. MGMT. 9
B.
Our opinions in Nelson and Kummetz are instructive on
this issue. See Nelson v. Cyprus Bagdad Copper Corp.,
119 F.3d 756, 760 (9th Cir. 1997); Kummetz, 152 F.3d at
1155. In Nelson, the employer required Nelson to sign an
acknowledgment similar to the one in this case:
I have received a copy of the Cyprus Bagdad
Copper Corporation Handbook that is
effective July 1, 1993 and understand that the
Handbook is a guideline to the Company’s
policies and procedures. I agree to read it and
understand its contents. If I have any
questions regarding its contents I will contact
my supervisor or Human Resources
Representative.
See Nelson, 119 F.3d at 758. The handbook contained an
arbitration agreement. Id. at 758–59. Some time after Nelson
signed the acknowledgment, the employer reorganized its
operations and required Nelson to begin working 12-hour
shifts. Id. at 758. Nelson had difficulty with the new shifts
due to medical limitations and, after attempting to
accommodate Nelson, the employer fired him. Id. Nelson
filed a lawsuit in federal district court alleging the employer
violated the ADA. Id. at 759. The district court granted
summary judgment for the employer because it found the
arbitration clause in the handbook was enforceable and that
Nelson had knowingly agreed to waive his right to a judicial
forum. Id.
We reversed. We held the acknowledgment form did not
notify “Nelson either that the Handbook contained an
10 ASHBEY V. ARCHSTONE PROP. MGMT.
arbitration clause or that his acceptance of the Handbook
constituted a waiver of his right to a judicial forum in which
to resolve claims covered by the ADA.” Id. at 761. The fact
that Nelson continued to work for his employer did not cure
the notice failure: “Nelson’s continued employment after he
received the Handbook, and after he read it (and we assume
he did), did not amount to the type of ‘knowing agreement’”
required by our precedent. Id. at 762. We explained that
“[n]othing in either the acknowledgment form or the
Handbook itself put Nelson on notice that by not quitting his
job he was somehow entering into an agreement to waive a
specific statutory remedy afforded him by a civil rights
statute.” Id. We held, “[a]ny bargain to waive the right to a
judicial forum for civil rights claims . . . in exchange for
employment or continued employment must at the least be
express: the choice must be explicitly presented to the
employee and the employee must explicitly agree to waive
the specific right in question.” Id. The acknowledgment and
Handbook in Nelson failed that test.
Kummetz was similar to Nelson. There, the employer
gave Kummetz an Employment Information Booklet and an
Information Booklet Acknowledgment. Kummetz, 152 F.3d
at 1154. The Information Booklet Acknowledgment stated in
relevant part:
I understand and agree that I am covered by
and must abide by the contents of this
Booklet. I also understand and agree that this
Booklet in no way constitutes an employment
contract and that I remain an at-will
employee.
...
ASHBEY V. ARCHSTONE PROP. MGMT. 11
I understand that the policies, practices and
benefits set forth in this Booklet are subject to
change at any time and without prior notice at
the sole and unlimited discretion of the
Company. The Company also reserves the
right to interpret any ambiguity or any
confusion about the meaning of any term in
this Booklet, and that interpretation shall be
final and binding.
Id. The Employment Information Booklet contained an
arbitration clause. Id. Four months later, the employer
attempted to transfer Kummetz to a lower-paying position,
and Kummetz quit. Id. Kummetz sued the employer in
federal district court for violating the ADA, alleging the
employer transferred him because he had previously
undergone a kidney transplant. Id. The district court granted
summary judgment to the employer because it concluded that
Kummetz had waived his right to a judicial forum. Id. We
reversed on appeal. We held that the acknowledgment did
not constitute valid notice of a jury trial waiver because it
“did not notify Kummetz that the Booklet contained an
arbitration provision, nor did it mention or imply anything
about employment-related disputes, civil rights statutes, or
waivers of remedies.” Id. at 1155.
This case is distinguishable from Kummetz and Nelson.
The Acknowledgment that Ashbey signed stated:
I acknowledge that I have received directions
as to how I may access the Archstone
Company Policy Manual, including the
Dispute Resolution Policy. I understand that
Archstone can administer, interpret,
12 ASHBEY V. ARCHSTONE PROP. MGMT.
discontinue, supplement, amend or withdraw
any of the employment and personnel policies
and procedures set forth in this Company
Policy Manual. I understand that it is my
responsibility to understand the Archstone
Company Policy Manual, including the
Dispute Resolution Policy, and to adhere to
all of the policies contained herein.
...
During my employment, I agree to abide by
the provisions in this Company Policy
Manual.
In contrast to the acknowledgments in Kummetz and Nelson,
the Acknowledgment here explicitly notified Ashbey the
Manual contained a Dispute Resolution Policy, and it did so
in two places. And Ashbey expressly agreed “to adhere” to
the Manual and the Dispute Resolution Policy. That the
Acknowledgment did not list the terms of the Policy is not
fatal to the Policy’s enforcement. The full text of the Policy
was at Ashbey’s fingertips; he acknowledged he had received
directions on how to access both the Manual and the Dispute
Resolution Policy contained in the Manual. Anyone who
reviewed the Dispute Resolution Policy would immediately
realize he was “entering into an agreement to waive a specific
statutory remedy afforded him by a civil rights statute.”
Nelson, 119 F.3d at 762. The Dispute Resolution Policy was
not ambiguous on that point: (1) the policy stated it “is
governed by the Federal Arbitration Act”; (2) the policy
stated that “all . . . disputes between Employee and the
Company [are] to be resolved only by an arbitrator through
final and binding arbitration and not by way of court or jury
ASHBEY V. ARCHSTONE PROP. MGMT. 13
trial”; and (3) the policy stated it “applies, without limitation,
to disputes arising out of the employment relationship . . .
including, without limitation, disputes over . . . harassment
and claims arising under the . . . Civil Rights Act of 1964.”
In short, Archstone presented Ashbey the “express” choice
lacking in both Kummetz and Nelson. We hold that Ashbey
knowingly waived his right to a judicial forum for his Title
VII claim and equivalent state-law claims.
III.
The district court erred in denying Archstone’s Motion to
Compel Arbitration. The district court’s order denying
Archstone’s Motion to Compel Arbitration is REVERSED
and REMANDED for entry of an order granting Archstone’s
Motion to Compel Arbitration.