Jose Diaz Hermosillo v. Davey Tree Surgery Company ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 24 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOSE DIAZ HERMOSILLO; OSCAR No. 18-16522
DIAZ HERMOSILLO,
D.C. No. 5:18-cv-00393-LHK
Plaintiffs-Appellees,
v. MEMORANDUM*
DAVEY TREE SURGERY COMPANY;
THE DAVEY TREE EXPERT COMPANY,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Lucy H. Koh, District Judge, Presiding
Submitted February 13, 2020**
San Francisco, California
Before: GOULD and MURGUIA, Circuit Judges, and FEINERMAN,*** District
Judge.
Dissent by Judge FEINERMAN
*
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).
***
The Honorable Gary Feinerman, United States District Judge for the
Northern District of Illinois, sitting by designation.
Defendants-Appellants Davey Tree Surgery Company and The Davey Tree
Expert Company (together, “Davey Tree”) appeal the district court’s order
compelling arbitration. We lack jurisdiction under the Federal Arbitration Act,
9 U.S.C. § 16, and therefore dismiss the appeal on that basis.
Plaintiffs-Appellees brought an employment-related class action against
Davey Tree in state court. Shortly thereafter, Davey Tree successfully removed
the case to federal court pursuant to the Class Action Fairness Act. 28 U.S.C. §
1332(d)(2). Davey Tree then moved to compel individual arbitration on all causes
of action—with the exception of the claim brought under California’s Private
Attorneys General Act (“PAGA”)—pursuant to (1) the arbitration clause in
Plaintiffs-Appellees’ employment applications, and (2) a stand-alone arbitration
agreement.
The district court denied in part and granted in part Davey Tree’s motion,
compelling arbitration on a classwide basis pursuant to the employment
applications but not the stand-alone arbitration agreement.1 The court then stayed
the non-arbitrable PAGA claim pending arbitration of the other claims, ordered the
parties to notify the court within seven days of the conclusion of arbitration
1
The district court’s reasoning as to why class, as opposed to individual,
arbitration was appropriate was reduced to a footnote. The court held: “Although
the [stand-alone arbitration agreement] contained a class action waiver, the
employment application did not. Thus, Plaintiffs’ class claims are subject to the
arbitration compelled by this order.”
2
proceedings, and ordered the clerk to “administratively close the file.” The court
did not expressly dismiss or stay any of the arbitrable claims.
Instead of filing a motion for reconsideration with the district court or
seeking an interlocutory appeal pursuant to 28 U.S.C § 1292(b), Davey Tree
immediately appealed the district court’s order to this Court. Specifically, Davey
Tree appeals the portion of the district court’s order compelling class arbitration
pursuant to the employment applications, and requests that we reverse the district
court and compel arbitration on an individual basis. Davey Tree does not appeal
the district court’s order insofar as it declined to order arbitration pursuant to the
stand-alone arbitration agreement. We asked the parties to file supplemental
briefing on whether 9 U.S.C. § 16 bars this appeal.
The Federal Arbitration Act limits the type of orders involving arbitration
that are immediately appealable. See 9 U.S.C. § 16. Generally, orders denying
arbitration are immediately appealable. See 9 U.S.C. § 16(a)(1)(B)–(C); Kilgore v.
KeyBank, Nat’l Ass’n, 718 F.3d 1052, 1057 (9th Cir. 2013) (en banc). On the other
hand, orders compelling arbitration and staying proceedings are not immediately
appealable absent certification under 28 U.S.C. § 1292(b). See 9 U.S.C. § 16(b);
Johnson v. Consumerinfo.com, Inc., 745 F.3d 1019, 1023 (9th Cir. 2014) (holding
that 28 U.S.C. § 1292(b) certification “provides the sole route for immediate
appeal of an order staying proceedings and compelling arbitration”). However, if a
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district court grants a motion to compel arbitration and dismisses the underlying
claims, the order constitutes “a final decision with respect to an arbitration” that is
immediately appealable under the Act. Lamps Plus, Inc. v. Varela, 139 S. Ct.
1407, 1414 (2019) (quoting 9 U.S.C. § 16(a)(3)).
Here, the district court compelled arbitration, explicitly stayed the non-
arbitrable claim, neither explicitly dismissed nor stayed the remainder of the
claims, and administratively closed the file. We presume that claims that are not
explicitly dismissed by the district court are stayed unless otherwise established.
See MediVas, LLC v. Marubeni Corp., 741 F.3d 4, 9 (9th Cir. 2014) (adopting “a
rebuttable presumption that an order compelling arbitration but not explicitly
dismissing the underlying claims stays the action as to those claims pending the
completion of the arbitration”). Davey Tree does not rebut this presumption.
Because the district court’s order is an order compelling arbitration and staying
proceedings, we lack appellate jurisdiction under the Act.
Davey Tree argues—without legal support—that we also have jurisdiction
under 9 U.S.C. § 16(a)(1)(B) because an order compelling arbitration constitutes
an order denying arbitration when the movant does not obtain arbitration according
to the terms it agreed to. It goes without saying that classwide and individual
arbitration have different attributes. But whether the parties here agreed to
individual or class arbitration is exactly the question presented by Davey Tree’s
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appeal on the merits. In other words, whether Davey Tree got the type of
arbitration that it bargained for requires our interpretation of the agreements. See
Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1632 (2018) (“This Court is not free to
substitute its preferred economic policies for those chosen by the people’s
representatives.”). Davey Tree’s view of 9 U.S.C. § 16(a)(1)(B) would therefore
require this court to consider the merits of Davey Tree’s appeal—a tempting but
unsupported invitation that would render the Act’s limitations on appellate
jurisdiction meaningless. See Bushley v. Credit Suisse First Bos., 360 F.3d 1149,
1153 (9th Cir. 2004); cf. Xi v. U.S. I.N.S., 298 F.3d 832, 839 (9th Cir. 2002) (“[A]
decision to [rearrange] or rewrite the statute falls within the legislative, not the
judicial, prerogative.”). We may not, in this procedural posture, opine on the
merits.
It is also worth briefly noting that this result is in part a creation of Davey
Tree’s own doing. Davey Tree could have pursued immediate review in a number
of ways without bypassing the jurisdictional limitations of the Act. For example, it
could have pursued an interlocutory appeal of the district court’s order pursuant to
28 U.S.C. § 1292(b). It also could have asked the district court to reconsider its
ruling, particularly since the court’s analysis of the issue on appeal was reduced to
a footnote. It could have sought clarification from the district court about whether
the underlying claims were dismissed, potentially guaranteeing an interlocutory
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appeal under 9 U.S.C. § 16(a)(3). If the district court denied the request for
dismissal, Davey Tree then could have sought reconsideration of that decision. Or
it could have also appealed the portion of the district court’s opinion denying
arbitration altogether under the stand-alone agreement, rendering its jurisdictional
argument more plausible. But instead of following any of those steps, Davey Tree
immediately appealed only the portion of the district court’s order compelling
arbitration, asking us to read 9 U.S.C. § 16(a)(1)(B) in an unprecedented manner in
order to circumvent the text of the statute and fast track a favorable decision. No
court has expanded appellate jurisdiction under the Act in the way advocated by
Davey Tree, 2 and we see no justification to do so here, particularly in light of these
alternative avenues for immediate review.
DISMISSED for lack of appellate jurisdiction.
2
The dissent makes much of the fact that our decision in Bushley involved
different circumstances and is not factually analogous. See 360 F.3d at 1154.
However, that Bushley presents the most analogous case—but is not directly on
point—does not cut in Davey Tree’s favor. Rather, it reinforces the conclusion
that Davey Tree’s take on the jurisdictional statute is unprecedented and has never
been adopted by any other court.
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FILED
Hermosillo v. Davey Tree Surgery Company, No. 18-16522
JUL 24 2020
FEINERMAN, District Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I agree with the court that we lack jurisdiction under 9 U.S.C. § 16(a)(3), but
respectfully disagree with its holding that we lack jurisdiction under § 16(a)(1)(B).
Section 16(a)(1)(B) provides that “[a]n appeal may be taken from an order
… denying a petition under section 4 of this title to order arbitration to proceed.” 9
U.S.C. § 16(a)(1)(B) (emphasis added). We addressed § 16(a)(1)(B) in Bushley v.
Credit Suisse First Boston, 360 F.3d 1149 (9th Cir. 2004). The defendant there
moved to compel arbitration before the National Association of Securities Dealers
(“NASD”), but the district court instead ordered arbitration before a different
arbitral body. Id. at 1150-52. We dismissed the defendant’s appeal, holding that
because “[t]he district court’s order compel[led] the parties to settle their dispute
by arbitration pursuant to 9 U.S.C. § 4, albeit not in the ‘first-choice’ NASD forum
requested by [the defendant],” § 16(a)(1)(B) did not provide appellate jurisdiction.
Id. at 1154. In so holding, we relied on Augustea Impb Et Salvataggi v. Mitsubishi
Corp., 126 F.3d 95 (2d Cir. 1997), which ruled that § 16(a)(1)(C)—whose text for
present purposes is materially identical to § 16(a)(1)(B)’s text—did not provide
jurisdiction over the defendant’s appeal of an order compelling arbitration in New
York when it had asked that the arbitration take place in London. Id. at 98-99.
1
Bushley and Augustea are clearly and straightforwardly correct. In both
cases, the defendant moved to compel arbitration of the plaintiff’s individual
claims, received from the district court an order compelling arbitration of those
claims, and quibbled only with incidental features—the arbitral body or location—
of the arbitration ordered. Under those circumstances, it could not reasonably be
said that the district court had issued an order “denying” the defendant’s motion to
compel arbitration. 9 U.S.C. § 16(a)(1)(B), (C).
This case presents a much closer question: When the defendant moves for
individual arbitration, but the district court orders classwide arbitration, does the
order qualify under § 16(a)(1) as one “denying” the defendant’s motion? The
Supreme Court in Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019)—where, as
here, the district court ordered classwide arbitration when the defendant moved for
individual arbitration—left open that question. See id. at 1413-14 (finding the
question “beside the point” because appellate jurisdiction was proper under
§ 16(a)(3)); cf. id. at 1426-27 (Breyer, J., dissenting) (answering the question in the
negative).
Recognizing that the question has no clearly correct answer, I believe the
better answer is yes. The Supreme Court has consistently held, time and again,
that classwide arbitration and individual arbitration are fundamentally different
proceedings. In Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S.
2
662 (2010), the Court characterized the “changes brought about by the shift from
bilateral arbitration to class-action arbitration” as “fundamental,” reasoning that the
arbitrator in a classwide arbitration “no longer resolves a single dispute between
the parties to a single agreement, but instead resolves many disputes between
hundreds or perhaps even thousands of parties.” Id. at 686. In AT&T Mobility
LLC v. Concepcion, 563 U.S. 333 (2011), the Court held that a state law
“[r]equiring the availability of classwide arbitration interferes with fundamental
attributes of arbitration and thus creates a scheme inconsistent with the FAA
[Federal Arbitration Act],” id. at 344, adding that “the switch from bilateral to
class arbitration sacrifices the principal advantage of arbitration—its informality—
and makes the process slower, more costly, and more likely to generate procedural
morass than final judgment,” id. at 348. In Epic Systems v. Lewis, 138 S. Ct. 1612(2018), the Court explained that “the individualized nature of … arbitration
proceedings” is “one of arbitration’s fundamental attributes.” Id. at 1622.
Reasonable minds can and have disagreed with the Supreme Court’s view
that classwide arbitration and individual arbitration are fundamentally different
proceedings. See Lamps Plus, 139 S. Ct. at 1427 (Sotomayor, J., dissenting)
(“This Court went wrong years ago in concluding that a shift from bilateral
arbitration to class-action arbitration imposes such fundamental changes that class-
action arbitration is not arbitration as envisioned by the [FAA].”) (citations and
3
internal quotation marks omitted); AT&T Mobility, 563 U.S. at 362 (Breyer, J.,
dissenting) (“Where does the majority get [the] … idea[] that individual, rather
than class, arbitration is a ‘fundamental attribut[e]’ of arbitration? The majority
does not explain. And it is unlikely to be able to trace its present view to the
history of the arbitration statute itself.”) (alteration in original) (citation omitted).
But that is the hand the Court has dealt. And having dealt that hand, it is not
surprising that the Court in Lamps Plus observed that when a defendant seeks “an
order compelling individual arbitration,” but receives “an order rejecting that relief
and instead compelling arbitration on a classwide basis,” it “d[oes] not secure the
relief it requested.” 139 S. Ct. at 1414.
So, too, here. When Davey Tree moved for individual arbitration of the
Hermosillos’ claims but received an order requiring arbitration of the claims of the
putative class the Hermosillos seek to represent, its motion to compel arbitration
was, in a fundamental and very real sense, denied. It follows that the district
court’s order falls within the scope of § 16(a)(1)(B), giving us jurisdiction over
Davey Tree’s appeal.
In reaching the contrary result, the court reasons that finding appellate
jurisdiction under § 16(a)(1)(B) would “require . . . consider[ing] the merits of
Davey Tree’s appeal” and deciding “whether Davey Tree got the type of
arbitration that it bargained for.” That is incorrect. The jurisdictional question
4
turns not on whether Davey Tree is entitled to individual arbitration, but on
whether it sought individual arbitration and instead received something
fundamentally different. In my view, the answer to that question is yes, which
means that Davey Tree’s request for arbitration was denied, which in turn gives us
appellate jurisdiction under § 16(a)(1)(B).
The court also observes that Davey Tree had at its disposal alternate routes
for seeking review of the district court’s arbitration order. Even putting aside the
fact that three of those routes—an interlocutory appeal under 28 U.S.C. § 1292(b),
an appeal under § 16(a)(3) upon the district court’s clarifying that it had dismissed
the Hermosillos’ underlying claims, and a motion for reconsideration—would have
depended on favorable action by the district court, the presence or absence of
alternate routes is irrelevant to whether § 16(a)(1)(B) provides an appropriate
jurisdictional hook in this instance. Because it does, I respectfully dissent from the
dismissal of Davey Tree’s appeal for want of appellate jurisdiction.
5