Edvard Eshagh v. the Terminix Int'l Co. ( 2014 )

FILED
NOT FOR PUBLICATION DEC 22 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
EDVARD ESHAGH, No. 12-16718
Plaintiff - Appellant, D.C. No. 1:11-cv-00222-LJO-DLB
v.
MEMORANDUM*
THE TERMINIX INTERNATIONAL
COMPANY, L.P., a limited partnership;
TERMINIX INTERNATIONAL, INC., a
corporation,
Defendants - Appellees.
Appeal from the United States District Court
for the Eastern District of California
Lawrence J. O’Neill, District Judge, Presiding
Argued and Submitted October 7, 2014
San Francisco, California
Before: THOMAS, Chief Judge, and O’SCANNLAIN and McKEOWN, Circuit
Judges.
Edvard Eshagh appeals the district court’s order striking class allegations
from his complaint and compelling arbitration of his claims against The Terminix
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
International Company, L.P. and Terminix International, Inc. Specifically, Eshagh
contends that the district court erred (1) in concluding that Terminix did not waive
its right to compel arbitration, (2) in concluding that the parties’ arbitration
agreement was not illusory or unconscionable, and (3) by striking class claims
from Eshagh’s complaint.
I
Regardless of whether Terminix had knowledge of an existing right to
compel arbitration prior to AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740(2011), it did not act inconsistently with such a right by filing a motion to dismiss
prior to its motion to compel arbitration. See Lake Communications, Inc. v. ICC
Corp., 738 F.2d 1473, 1476–77 (9th Cir. 1984) (holding that a party which “had
not yet filed an answer,” filed counterclaims, filed a motion to dismiss, and
engaged in limited discovery did not waive its contractual arbitration rights),
overruled on other grounds by Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 632–35 (1985); Britton v. Co-op Banking
Grp., 916 F.2d 1405, 1407–09, 1413 (9th Cir. 1990) (concluding that a party who
actively avoided discovery and filed multiple motions to stay district court
proceedings did not act inconsistently with its arbitration rights).
II
2
The district court did not err in holding that the arbitration agreement was
not unconscionable. An arbitration clause is unenforceable under California law
only if it is both procedurally and substantively unconscionable. Ting v. AT&T,
319 F.3d 1126, 1148 (9th Cir. 2003). Eshagh has not provided any authority
suggesting that the arbitration clause itself—which merely addresses the parties’
ability to recover “indirect, special or consequential damages or loss of anticipated
rents and/or profits”—is substantively unconscionable.
Similarly, the district court properly determined that the arbitration
agreement was not illusory. A contract provision is illusory and not enforceable if
one of the parties can avoid the provision by unilaterally amending or terminating
the agreement. See Asmus v. Pac. Bell, 999 P.2d 71, 79 (Cal. 2000). The
termination provision is limited to a change in existing law regarding termite-
control services, and is thereby not so broad as to render the agreement illusory.
Cf. Casas v. Carmax Auto Superstores California LLC, 224 Cal. App. 4th 1233,
1237 (Cal. Ct. App. 2014) (holding that a provision permitting an employer to
modify unilaterally an arbitration agreement upon providing 30-days notice was
not illusory in light of the implied covenant of good faith and fair dealing).
III
3
Finally, the district court did not err in striking Eshagh’s class claims. Issues
that “contracting parties would likely have expected a court to have decided” are
considered “gateway questions of arbitrability” for courts, and not arbitrators, to
decide. Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011). The Supreme Court
has made it clear that “class-action arbitration changes the nature of arbitration to
such a degree that it cannot be presumed the parties consented to it by simply
agreeing to submit their disputes to an arbitrator.” Stolt-Nielsen S.A. v.
AnimalFeeds Int’l Corp., 559 U.S. 662, 685 (2010); see also Concepcion, 131 S.
Ct. at 1750–52 (emphasizing the “fundamental” changes implicated in the shift
from bilateral to class-action arbitration).
AFFIRMED.1
1
The Motion for Leave To File Brief of Amicus Curiae in Support of
Plaintiff-Appellant by Consumer Attorneys of California is GRANTED.
4