Carey Brennan v. Opus Bank

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CAREY M. BRENNAN, No. 13-35580
Plaintiff-Appellant,
D.C. No.
v. 2:13-cv-00094-
RSM
OPUS BANK, a California
corporation; STEPHEN H. GORDON,
Defendants-Appellees.
CAREY M. BRENNAN, No. 13-35598
Plaintiff-Appellee,
D.C. No.
v. 2:13-cv-00094-
RSM
OPUS BANK, a California
corporation,
Defendant-Appellant, OPINION
and
STEPHEN H. GORDON,
Defendant.
Appeal from the United States District Court
for the Western District of Washington
Ricardo S. Martinez, District Judge, Presiding
2 BRENNAN V. OPUS BANK
Argued and Submitted
May 8, 2015—Seattle, Washington
Filed August 11, 2015
Before: J. Clifford Wallace, Andrew J. Kleinfeld,
and Ronald M. Gould, Circuit Judges.
Opinion by Judge Wallace
SUMMARY*
Arbitration
The panel affirmed the district court’s dismissal of
plaintiff’s diversity action in favor of arbitration; reversed the
district court’s denial, as moot, of Opus Bank’s motion for
reconsideration of the district court’s implicit denial of its
motion to seal plaintiff’s complaint; and remanded for the
district court to decide Opus Bank’s motion to seal the
complaint in the first instance.
The plaintiff was the Executive Vice President of Opus
Bank when he signed an Employment Agreement that
contained an arbitration clause. Plaintiff alleged that Opus
Bank breached the Agreement and wrongfully terminated
him, and Opus Bank sought to compel arbitration.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
BRENNAN V. OPUS BANK 3
The panel held that federal law governed the arbitrability
question by default because the Agreement was covered by
the Federal Arbitration Act, and the parties did not clearly
and unmistakenly designate that nonfederal arbitrability law
applied.
The panel held that the Agreement’s express
incorporation of the Rules of the American Arbitration
Association (the Delegation Provision), as part of the
arbitration provision, constituted clear and unmistakable
evidence that the contracting parties agreed to arbitrate
arbitrability. The panel held that Rent-A-Center, West, Inc.
v. Jackson, 561 U.S. 63 (2010), applied to this case, and
required plaintiff to challenge the specific Delegation
Provision inside of the arbitration clause in order for the
district court – rather than the arbitrator – to determine the
validity of the arbitration clause. The panel concluded that
because plaintiff failed to make any arguments specific to the
Delegation Provision, and instead argued that the arbitration
clause as a whole was unconscionable under state law, the
court need not consider that claim because it was for the
arbitrator to decide in light of the parties’ delegation of that
question.
The panel held that the district court’s dismissal of
plaintiff’s claims did not moot Opus Bank’s motion to seal
the complaint because final judgment and the filing of a
notice of appeal did not divest the district court of its
jurisdiction over matters ancillary to the appeal, such as
protective orders.
4 BRENNAN V. OPUS BANK
COUNSEL
Michael David Hunsinger (argued), The Hunsinger Law
Firm, Seattle, Washington, for Plaintiff-Appellant/Cross-
Appellee.
Daniel L. Thieme (argued) and Jennifer S. Pirozzi, Littler
Mendelson, P.C., Seattle, Washington, for Defendant-
Appellee/Cross-Appellant Opus Bank.
Julian Mack (argued), San Francisco, California; Patrick M.
Madden and Mark. S. Filipini, K&L Gates LLP, Seattle,
Washington, for Defendant-Appellee Stephen Gordon.
OPINION
WALLACE, Senior Circuit Judge:
Brennan appeals from the district court’s order dismissing
his action in favor of arbitration. Opus Bank cross appeals
from the district court’s implicit denial of its motion to seal
Brennan’s complaint, and the district court’s denial of its
motion for reconsideration as moot. We have jurisdiction of
both appeals pursuant to 28 U.S.C. § 1291. We affirm the
district court’s dismissal in favor of arbitration, but we
reverse the district court’s denial of Opus Bank’s motion for
reconsideration as moot. Because the district court has
inherent supervisory authority over its own records even after
final judgment and the filing of a notice of appeal, we remand
for the district court to decide Opus Bank’s motion to seal in
the first instance.
BRENNAN V. OPUS BANK 5
I.
Brennan became the Executive Vice President and
Director for Strategy and Corporate Development for Opus
Bank in December 2010, when he signed an Employment
Agreement with Opus Bank. The Employment Agreement
described Brennan’s duties in section 2 as those “customary,
appropriate and reasonable executive duties . . . normally
assigned to a person with such position at other similarly
situated banks, including such duties as are delegated to him
from time to time by the Chief Executive Officer,” Stephen
Gordon, to whom he was to report directly.
For the first several months of his employment, Brennan
performed executive-level duties that he considered
consistent with his position as Executive Vice President. But
by late 2011, Brennan said that he was beginning to be
excluded from many of the activities he had been hired to
perform, and that his involvement in important business
transactions had “steadily diminished.” Brennan also alleged
that although it was his responsibility to formulate Opus
Bank’s long-range strategic and financial objectives, Gordon
“began dismissing or rejecting Brennan’s . . . analyses of the
Bank’s . . . financial condition,” and “frequently relegate[d]
mundane tasks to Brennan that were not customary,
appropriate, and reasonable executive duties . . . normally
assigned to a person with such position at other similarly
situated banks.”
The Employment Agreement contained a provision
granting Brennan the right to terminate his employment for
“Good Reason,” whereupon he would be entitled to a
generous severance payment. “Good Reason” was defined in
the Employment Agreement to include a “material change in
6 BRENNAN V. OPUS BANK
[Brennan’s] function, duties, or responsibilities with the
Bank,” that “would cause [Brennan’s] position to become one
of substantially lesser responsibility or scope from the
position and attributes described in [s]ection 2 above, unless
consented to by [Brennan].” Believing that such a “material
change” had occurred with respect to his work
responsibilities, Brennan sent Opus Bank a Notice of
Termination with Good Reason on March 19, 2012.
Opus Bank subsequently placed Brennan on
“administrative investigatory suspension” while it retained an
independent attorney to investigate whether Brennan’s
termination was in fact for “Good Reason,” and whether,
based upon Brennan’s failure to attend certain mandatory
meetings, Opus Bank could terminate Brennan for “Cause,”
as defined in the Employment Agreement. After receiving the
attorney’s report, Opus Bank wrote a letter to Brennan on
April 18, 2012, notifying him that it was adopting the
attorney’s conclusions that Brennan did not have “Good
Reason” to terminate his employment, but that Opus Bank
also lacked “Cause” to terminate Brennan. Nonetheless, Opus
Bank told Brennan it was construing his March 19 Notice of
Termination as a voluntary resignation, and that Brennan
therefore was not entitled to a severance payment or other
termination benefits.
In January of the following year, Brennan sued Opus
Bank in federal district court under diversity jurisdiction. See
28 U.S.C. § 1332. Brennan’s complaint alleged that Opus
Bank breached the Employment Agreement and wrongfully
terminated him in violation of both California and
Washington state law. It also alleged that Opus Bank and
Gordon unlawfully withheld wages in violation of
Washington state law.
BRENNAN V. OPUS BANK 7
Brennan’s complaint acknowledged that section 16 of the
Employment Agreement (the Arbitration Clause), entitled
“Dispute Resolution Procedures,” was a mandatory
arbitration provision which provided in relevant part: “Except
with respect to any claim for equitable relief . . . any
controversy or claim arising out of this [Employment]
Agreement or [Brennan’s] employment with the Bank or the
termination thereof . . . shall be settled by binding arbitration
in accordance with the Rules of the American Arbitration
Association.” Nevertheless, Brennan argued that his “causes
of action should be resolved by litigation, rather than
arbitration,” because the Arbitration Clause was both
procedurally and substantively unconscionable, and therefore
unenforceable.
Opus Bank responded to Brennan’s complaint with a
motion to seal and to strike Brennan’s complaint, as well as
a motion to compel arbitration under the Arbitration Clause
and the Federal Arbitration Act (FAA). In its motion to
compel arbitration, Opus Bank argued that both the
employment dispute and the question whether the Arbitration
Clause was unconscionable had to be decided by the
arbitrator instead of the court. Opus Bank argued that the
unconscionability of the Arbitration Clause also had to be
decided by the arbitrator because the Employment Agreement
expressly incorporated the Rules of the American Arbitration
Association (AAA), one of which states that the “arbitrator
shall have the power to rule on his or her own jurisdiction,
including any objections with respect to the . . . validity of the
arbitration agreement.” Incorporation of the AAA rules, Opus
Bank contended, constituted clear and unmistakable evidence
that the parties intended to have this unconscionability
question decided by an arbitrator. The district court agreed
8 BRENNAN V. OPUS BANK
with Opus Bank, and, applying federal arbitrability law,
dismissed the action in favor of arbitration.
The district court’s dismissal order, however, did not
address Opus Bank’s motion to seal Brennan’s complaint.
Consequently, Opus Bank filed a motion for reconsideration
of that issue, but the district court denied the motion as
“moot[],” given the district court’s earlier dismissal of the
underlying action.
Brennan timely appealed from the district court’s
dismissal in favor of arbitration, and Opus Bank timely cross-
appealed from the district court’s denial of Opus Bank’s
motion for reconsideration regarding the request to seal
Brennan’s complaint.
“We review de novo the district court’s decisions about
the arbitrability of claims.” Momot v. Mastro, 652 F.3d 982,
986 (9th Cir. 2011). Moreover, although we typically “review
for abuse of discretion the district court’s decision not to seal
the judicial record,” Oliner v. Kontrabecki, 745 F.3d 1024,
1025 (9th Cir. 2014), here we review de novo because “the
district court failed to exercise its discretion” by “denying as
moot the bulk of [Opus Bank’s] motion without considering
its merits.” Clark v. Capital Credit & Collection Servs., Inc.,
460 F.3d 1162, 1178 (9th Cir. 2006).
II.
Brennan’s opening brief narrows his appeal to a single
issue: “[t]he only issue before this Court is who—an
arbitrator or a judge—should decide” whether the Arbitration
Clause is unconscionable. The thrust of Brennan’s appeal is
that California law should apply, and that under California
BRENNAN V. OPUS BANK 9
law the district court erred in concluding that the specific
provision of the Arbitration Clause incorporating the AAA
rules of arbitration (Delegation Provision) “clearly and
unmistakably” delegated to an arbitrator the question whether
the Arbitration Clause was unconscionable and therefore
unenforceable.
A.
We begin by addressing the applicable law. Brennan
argues that the district court erred in applying federal
law—rather than California law—to decide this question.
However, federal law governs the arbitrability question by
default because the Agreement is covered by the FAA,
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 626 (1985), and the parties have not clearly and
unmistakably designated that nonfederal arbitrability law
applies, see Cape Flattery Ltd. v. Titan Maritime, 647 F.3d
914, 921 (9th Cir. 2011).
Brennan concedes, as he must, that the FAA governs the
Employment Agreement because the FAA applies to any
contract, like the present one, “evidencing a transaction
involving commerce.” 9 U.S.C. § 2. For “any arbitration
agreement within the coverage of the [FAA],” “[t]he court is
to make th[e] [arbitrability] determination by applying the
federal substantive law of arbitrability,” Mitsubishi Motors,
473 U.S. at 626, “absent clear and unmistakable evidence that
the parties agreed to apply non-federal arbitrability law.”
Cape Flattery, 647 F.3d at 921 (internal quotation marks
omitted).
The Employment Agreement does not clearly and
unmistakably indicate that California’s law of arbitrability
10 BRENNAN V. OPUS BANK
should apply because it states only that “any controversy of
claim . . . shall be settled by binding arbitration”; that—in the
event of arbitration—“the parties shall retain the rights of all
discovery provided pursuant to the California Code of Civil
Procedure”; and that “[a]ll rights, causes of action, remedies
and defenses available under California law and equity . . . as
though in a court of law.” While the Employment Agreement
is clear that California’s procedural rules, rights, and
remedies apply during arbitration, it says nothing about
whether California’s law governs the question whether
certain disputes are to be submitted to arbitration in the first
place.
In Cape Flattery, we concluded that a similar arbitration
provision—which said “[a]ny dispute arising under this
Agreement shall be settled by arbitration . . . in accordance
with the English Arbitration Act 1996,”—was “ambiguous
concerning whether English law also applies to determine
whether a given dispute is arbitrable in the first place.”
647 F.3d at 921. The Employment Agreement at issue here is
similarly “ambiguous” because it does not expressly state that
California law governs the question of arbitrability. We
therefore hold that federal arbitrability law applies in the
present case.
Brennan’s argument is not assisted by Volt Information
Sciences, Inc. v. Board of Trustees of Leland Stanford Junior
University, 489 U.S. 468, 475–76 (1989). Volt dealt with a
dispute about whether the parties’ agreement to conduct
arbitration in accordance with the procedural rules of the
California Arbitration Act was enforceable even though the
agreement fell within the scope of the FAA. Although the
FAA preempts “state laws which ‘require a judicial forum for
the resolution of claims which the contracting parties agreed
BRENNAN V. OPUS BANK 11
to resolve by arbitration,’” id. at 478, quoting Southland
Corp. v. Keating, 465 U.S. 1, 10 (1984), the Court held that
the FAA does not “prevent[] the enforcement of agreements
to arbitrate under different rules than those set forth in the
[FAA] itself,” id. at 479 (emphasis added), because “[t]here
is no federal policy favoring arbitration under a certain set of
procedural rules,” id. at 476. However, the parties here do not
dispute which procedural rules are applicable during
arbitration. Rather, they dispute which substantive law
governs the arbitrability question. Volt’s holding does not
address this question and does not alter our conclusion that
federal law of arbitrability applies.
B.
Brennan next contends that even if federal arbitrability
law applies, the district court erred by concluding that
incorporation of the AAA rules constitutes “clear and
unmistakable” evidence that the parties intended to delegate
the arbitrability question to an arbitrator. We disagree.
Generally, in deciding whether to compel arbitration, a
court must determine two “gateway” issues: (1) whether there
is an agreement to arbitrate between the parties; and
(2) whether the agreement covers the dispute. Howsam v.
Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002).
However, these gateway issues can be expressly delegated to
the arbitrator where “the parties clearly and unmistakably
provide otherwise.” AT&T Techs., Inc. v. Commc’ns Workers
of Am., 475 U.S. 643, 649 (1986) (emphasis added); see also
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944
(1995) (“Courts should not assume that the parties agreed to
arbitrate arbitrability unless there is ‘clea[r] and
unmistakabl[e]’ evidence that they did so”).
12 BRENNAN V. OPUS BANK
The district court agreed with Opus Bank that under
federal arbitrability law, the Delegation Provision “clearly
and unmistakably” delegated to an arbitrator the question
whether the Arbitration Clause was enforceable by expressly
incorporating the AAA arbitration rules, one of which
provides that the “arbitrator shall have the power to rule on
his or her own jurisdiction, including any objections with
respect to the . . . validity of the arbitration agreement.”
In Oracle America, Inc. v. Myriad Group A.G., 724 F.3d
1069 (9th Cir. 2013) we observed that “[v]irtually every
circuit to have considered the issue has determined that
incorporation of the [AAA] arbitration rules constitutes clear
and unmistakable evidence that the parties agreed to arbitrate
arbitrability.” Id. at 1074. We found this consensus
persuasive in holding that incorporation of the UNCITRAL
rules—which contain a jurisdictional provision “almost
identical” to the one in the AAA rules—constituted “clear
and unmistakable evidence that the parties agreed the
arbitrator would decide arbitrability.” Id. at 1074–75. Now
that the question regarding incorporation of the AAA rules is
squarely before us, we hold that incorporation of the AAA
rules constitutes clear and unmistakable evidence that
contracting parties agreed to arbitrate arbitrability.
The issue of the sophistication of the parties was raised at
oral argument. Our holding today should not be interpreted to
require that the contracting parties be sophisticated or that the
contract be “commercial” before a court may conclude that
incorporation of the AAA rules constitutes “clear and
unmistakable” evidence of the parties’ intent. Thus, our
holding does not foreclose the possibility that this rule could
also apply to unsophisticated parties or to consumer contracts.
Indeed, the vast majority of the circuits that hold that
BRENNAN V. OPUS BANK 13
incorporation of the AAA rules constitutes clear and
unmistakable evidence of the parties’ intent do so without
explicitly limiting that holding to sophisticated parties or to
commercial contracts. See Petrofac, Inc. v. DynMcDermott
Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir. 2012);
Republic of Arg. v. BG Grp. PLC, 665 F.3d 1363, 1371 (D.C.
Cir. 2012); Fallo v. High–Tech Inst., 559 F.3d 874, 878 (8th
Cir. 2009); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366,
1373 (Fed. Cir. 2006); Terminix Int’l Co. v. Palmer Ranch
LP, 432 F.3d 1327, 1332 (11th Cir. 2005); Contec Corp. v.
Remote Solution Co., 398 F.3d 205, 208 (2d Cir. 2005);
Awuah v. Coverall N. Am., Inc., 554 F.3d 7, 10–12 (1st Cir.
2009).
Nevertheless, as in Oracle America, we limit our holding
to the facts of the present case, which do involve an
arbitration agreement “between sophisticated parties.” Oracle
America, 724 F.3d at 1075 & n.2. Indeed, it is undisputed that
Brennan was a sophisticated party, an experienced attorney
and businessman (a partner at Jones Day from 1984 to 2001,
and Senior Vice President, General Counsel, and Deputy
Chief Legal Officer of Washington Mutual from 2001 to
2008), who executed an executive-level employment contract
with Opus Bank, a sophisticated, regional financial
institution.
Of course, the contract at issue here is an at-will
employment contract, not a commercial contract like the one
at issue in Oracle America. Cf. Circuit City Stores, Inc. v.
Adams, 532 U.S. 105, 114 (2001) (holding that the FAA
covers not only commercial contracts but also employment
contracts, implying that there is a difference between the
two); see also O’Tool v. Genmar Holdings, Inc., 387 F.3d
1188, 1202 (10th Cir. 2004) (stating that “[i]t is beyond
14 BRENNAN V. OPUS BANK
dispute that at-will employment contracts . . . differ
significantly from commercial contracts,” and that the
differences between the two militate against implying a
covenant of good faith and fair dealing to at-will employment
contracts). However, we conclude that the differences
between the Employment Agreement at issue here and the
commercial contract at issue in Oracle America are irrelevant
to our determination whether these parties’ incorporation of
the AAA rules shows a clear and unmistakable intent to
delegate arbitrability to an arbitrator. We therefore hold that
the district court did not err in concluding that these parties’
incorporation of the AAA rules constituted “clear and
unmistakable” evidence of their intent to submit the
arbitrability dispute to arbitration. But we need not decide nor
do we decide here “the effect [if any] of incorporating [AAA]
arbitration rules into consumer contracts” or into contracts of
any nature between “unsophisticated” parties. Oracle
America, 724 F.3d at 1075 & n.2.
Brennan contends that despite the Delegation Provision,
the Arbitration Clause itself removes the unconscionability
question from its scope because it carves out “any claim for
equitable relief”and “unconscionability is an equitable matter
under California law.” We disagree for two reasons. First,
although courts have held that a defendant’s reliance on an
arbitration clause to avoid litigation is an equitable defense,
see, e.g., Mediterranean Enters., Inc. v. Ssangyong Corp.,
708 F.2d 1458, 1462 (9th Cir. 1983), it is not a claim for
equitable relief. Second, accepting Brennan’s argument
would directly contradict the fact that Brennan and Opus
Bank “clearly and unmistakably” delegated the
unconscionability determination to the arbitrator in the
Delegation Provision located in that very same Arbitration
Clause.
BRENNAN V. OPUS BANK 15
C.
Because a court must enforce an agreement that, as here,
clearly and unmistakably delegates arbitrability questions to
the arbitrator, the only remaining question is whether the
particular agreement to delegate arbitrability—the Delegation
Provision—is itself unconscionable. See Rent-A-Center, West,
Inc. v. Jackson, 561 U.S. 63 (2010). Brennan argues that the
district court erred in holding that Rent-A-Center required
him to challenge the specific Delegation Provision inside of
the Arbitration Clause in order for the court—rather than the
arbitrator—to determine the validity of the Arbitration
Clause. According to Brennan, Rent-A-Center did not alter
the general rule that as long as a party challenges the
enforceability of an arbitration clause specifically—rather
than the entire contract generally—the enforceability of the
arbitration clause is for the court, not the arbitrator, to decide.
But the facts in Rent-A-Center required the Supreme
Court to take this principle a step further. Until Rent-A-
Center, the cases following this “specific challenge” principle
dealt primarily with contracts of a general subject matter (like
employment), which contained a single arbitration clause.
See, e.g., Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440 (2006). Rent-A-Center, however, involved a contract
whose exclusive subject matter was arbitration, and
embedded within that contract were “multiple written
provision[s] to settle by arbitration a controversy.” 561 U.S.
at 68 (internal quotation marks omitted). Two provisions
were relevant to the Court’s analysis. The first was an
agreement to arbitrate all disputes “arising out of Jackson’s
employment with Rent-A-Center.” Id. The second was an
agreement to delegate to an arbitrator resolution of “any
dispute relating to the . . . enforceability . . . of the
16 BRENNAN V. OPUS BANK
[Arbitration] Agreement.” Id. Jackson, an employee of Rent-
A-Center, challenged the entire Arbitration Agreement as
unconscionable. Id. In turn, Rent-A-Center sought to enforce
the specific delegation provision inside that contract to send
the question to an arbitrator. Id.The Supreme Court concluded that this delegation
provision was “simply an additional, antecedent agreement
the party seeking arbitration asks the federal court to enforce,
and the FAA operates on this additional arbitration agreement
just as it does on any other.” Id. The Court then clarified the
general rule requiring specificity in the plaintiff’s challenge,
and held that when considering a challenge to the validity of
one of multiple, severable arbitration provisions, the Court
would always “require the basis of the challenge to be
directed specifically to the agreement to arbitrate [at issue]
before the court will intervene.” Id. (emphasis added); see
also id. (“If a party challenges the validity . . . of the precise
agreement to arbitrate at issue, the federal court must
consider the challenge before ordering compliance with that
agreement.” (emphasis added)).
The Court concluded that the arbitration agreement “at
issue” in Rent-A-Center was the delegation provision,
because that was the provision “that Rent-A-Center asks us
to enforce.” Id. at 71. The “remainder of the contract,” held
the Court, “is the rest of the agreement to arbitrate claims
arising out of Jackson’s employment with Rent-A-Center.”
Id. The court held that it made “no difference” that “the
underlying contract is itself an arbitration agreement” rather
than a contract unrelated to arbitration. Id. at 72. A federal
court’s duty to enforce an arbitration provision, held the
Court, “operates on the specific ‘written provision’ . . . that
the party seeks to enforce,” so “unless Jackson challenged the
BRENNAN V. OPUS BANK 17
delegation provision specifically, [the Court] must treat it as
valid . . . and must enforce it . . . leaving any challenge to the
validity of the [arbitration] Agreement as a whole for the
arbitrator.” Id. The court held that although Jackson had
challenged the “entire arbitration agreement” as
unconscionable, he “did not make any arguments specific to
the delegation provision.” Id. at 74. Consequently, the Court
said it “need not consider [his unconscionability claim]
because none of Jackson’s substantive unconscionability
challenges was specific to the delegation provision.” Id. at 73.
In order to have the federal court address his
unconscionability challenge, Jackson would have had to
argue that the agreement to delegate to an arbitrator his
unconscionability claim was itself unconscionable. Id. at 74.
We conclude that Rent-A-Center controls the present case.
Here, three agreements—each nested inside the other—are
relevant to our analysis: (1) Brennan’s Employment
Agreement, (2) the Arbitration Clause (section 16), and
(3) the Delegation Provision (i.e., incorporation of the AAA
rules which delegates enforceability questions to the
arbitrator). The last two are separate agreements to arbitrate
different issues. Thus, just like in Rent-A-Center, multiple
severable arbitration agreements exist. The arbitration clause
at issue, as in Rent-A-Center, is the Delegation Provision
because that is the arbitration agreement Opus Bank seeks to
enforce. By Brennan’s own admission, the delegation
provision is the “specific ‘written provision’” at issue. Id. at
72. He states the “only issue before this Court is who—an
arbitrator or a judge—should decide the forum” for resolving
the validity of the Arbitration Clause as a whole, and that
question is resolved by determining the validity of the
Delegation Provision alone. But since Brennan failed to
“make any arguments specific to the delegation provision,”
18 BRENNAN V. OPUS BANK
id. at 74, and instead argued “that the [Arbitration Clause] as
a whole is unconscionable under state law,” id. at 75, “we
need not consider that claim,” id. at 73, because it is for the
arbitrator to decide in light of the parties’ “clear and
unmistakable” delegation of that question, as we held above.
Accordingly, the district court did not err in dismissing
Brennan’s claims in favor of arbitration.
Brennan’s reliance on Quilloin v. Tenet Health Sys.
Phila., Inc., 673 F.3d 221 (3d Cir. 2012) does not help him.
Brennan reads Quilloin to foreclose the requirement that a
party must specifically challenge the delegation provision if
the contract “contain[s] only one agreement to arbitrate”
because in such cases “[t]here [is] no need to distinguish
between multiple agreements to arbitrate.” However, the
critical difference between this case and Quilloin is that the
agreement in Quilloin “d[id] not purport to contain a[]
[severable] agreement to arbitrate arbitrability,” so Rent-A-
Center, which dealt with multiple severable agreements to
arbitrate (including one to arbitrate arbitrability), did not
apply and “the question of arbitrability [was] one for the
court.” Id. at 229. Here, in contrast, like in Rent-A-Center,
there are multiple severable agreements to arbitrate, and
Brennan failed to challenge the specific one at issue—the
agreement to arbitrate arbitrability—as Rent-A-Center
requires. Quilloin is therefore distinguishable, and Rent-A-
Center controls.
Brennan also misinterprets our holding in Bridge Fund
Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996(9th Cir. 2010), which came after Rent-A-Center, as implying
that Rent-A-Center controls only in cases where the entire
contract deals exclusively with arbitration. We held in Bridge
Fund Capital that “as long as the plaintiff’s challenge to the
BRENNAN V. OPUS BANK 19
validity of an arbitration clause is a distinct question from the
validity of the contract as a whole, the question of
arbitrability is for the court to decide.” Id. at 998. Brennan
contends that Bridge Fund Capital stands for the proposition
that the plaintiff need not drill down into the global
arbitration provision—as required in Rent-A-Center—unless
the contract itself is one dealing exclusively with arbitration.
However, Bridge Fund Capital is distinguishable in the same
way Quilloin is distinguishable: it addressed a situation
involving a contract that was not exclusively about arbitration
(franchising), but that contained only one arbitration
provision. It did not address the situation here, which
involves a contract not exclusively about arbitration
(employment) but—critically—involves multiple severable
arbitration agreements. Rent-A-Center controls in cases like
the present one, where there are multiple severable arbitration
agreements, only one of which is “at issue.”
We therefore affirm the district court’s order dismissing
this action in favor of arbitration.
III.
On cross appeal, Opus Bank argues that the district court
erred in denying as moot its motion for reconsideration to
seal Brennan’s complaint. We agree.
A district court may seal its records pursuant to its
inherent supervisory power over such documents. Hagestad
v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 1995); Nixon v.
Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978) (“Every
court has supervisory power over its own records and files”).
Final judgment and even the filing of a notice of appeal does
not divest a district court of its jurisdiction over matters
20 BRENNAN V. OPUS BANK
ancillary to the appeal, such as protective orders. Cf. Griggs
v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982)
(“The filing of a notice of appeal is an event of jurisdictional
significance—it confers jurisdiction on the court of appeals
and divests the district court of its control over those aspects
of the case involved in the appeal.” (emphasis added)).
Therefore, the district court’s dismissal of Brennan’s claims
did not moot Opus Bank’s motion to seal Brennan’s
complaint. We vacate and remand for the district court to rule
on Opus Bank’s motion to seal, pursuant to its inherent
supervisory power over its own records.
Our order sealing certain of our records on appeal, which
we did only to maintain the status quo, should have no
bearing on the district court’s independent decision on
remand whether to seal its own records. The district court is
to examine the issue without reference to our sealing decision
and make its own decision.
AFFIRMED in part, and VACATED and REMANDED
in part.