NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 22 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
BRIAN NETZEL; TRAVIS SMITH; ERIC No. 23-16083 LANGKAMP; NANCY LARSON, individually, and on behalf of others D.C. No. 2:22-cv-01423-SMB similarly situated,
Plaintiffs-Appellants, MEMORANDUM*
v.
AMERICAN EXPRESS COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the District of Arizona Susan M. Brnovich, District Judge, Presiding
Argued and Submitted June 12, 2024 San Francisco, California
Before: SCHROEDER, GOULD, and R. NELSON, Circuit Judges.
Brian Netzel, Travis Smith, Eric Langkamp, and Nancy Larson (collectively,
“Appellants”) appeal a grant of a motion filed by American Express Company
(AmEx) to compel arbitration and dismiss Appellants’ complaint. Appellants
contend the arbitration agreements are unenforceable. Although AmEx’s arbitration
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. policy includes a New York choice-of-law provision, Appellants (except for
Langkamp)1 argue that their arbitration agreements are governed by California law
because New York law violates California’s fundamental policy against waivers of
“public injunctive relief” as set forth in McGill v. Citibank, N.A., 393 P.3d 85, 93–
94 (Cal. 2017). Appellants argue that AmEx’s arbitration policy’s “Individual
Claims Only” provision waives public injunctive relief. Because such a waiver is
invalid under the McGill rule, Appellants argue that their arbitration agreements are
unenforceable under the arbitration policy’s “poison pill provision.”2 Appellants
(including Langkamp) also argue that their arbitration agreements are unenforceable
on unconscionability grounds. We have jurisdiction under 28 U.S.C. § 1291 and
affirm the district court. We conclude that New York law governs Appellants’
arbitration agreements because the “Individual Claims Only” provision does not
prohibit Appellants from seeking public injunctive relief, and we also conclude that
Appellants’ arbitration agreements are not unconscionable.
We review de novo a district court’s order to compel arbitration and
interpretation of an arbitration policy. Patrick v. Running Warehouse, LLC, 93 F.4th
1 At oral argument, counsel for Appellants clarified that Langkamp does not contest the district court’s holding that New York law governs his arbitration agreement. 2 AmEx’s arbitration policy states that it is unenforceable if “any portion” of the first subsection of the “Individual Claims Only” provision is “deemed invalid, void or unenforceable.”
2 468, 475 (9th Cir. 2024). We review the district court’s factual findings for clear
error. Id.
1. New York law governs Appellants’ arbitration agreements because its
application does not violate California’s McGill rule. We “must look to the forum
state’s choice of law rules to determine the controlling substantive law,” and Arizona
follows the Restatement Second of Conflict of Laws (Restatement) to assess the
validity of choice-of-law provisions. Lazar v. Kroncke, 862 F.3d 1186, 1194 (9th
Cir. 2017) (quoting Zinser v. Accufix Rsch. Inst., Inc., 253 F.3d 1180, 1187 (9th Cir.
2001)). Under the Restatement, the law of the state chosen by the parties will not be
applied if: (1) the law of a different state would be “the applicable law in the absence
of an effective choice of law by the parties”; (2) that state “has a materially greater
interest than the chosen state in the determination of the particular issue”; and (3)
that state has a fundamental policy that is contrary to the application of the law of
the chosen state. Id. (quoting Restatement § 187). Even if Appellants demonstrate
the first two factors, they do not satisfy the third.
Applying New York law is not contrary to California’s McGill rule because
AmEx’s arbitration policy does not bar Appellants from seeking public injunctive
relief. AmEx’s arbitration policy contains an “any remedy” clause stating that “The
arbitrator shall have the authority to grant any remedy or relief . . . he or she deems
just and equitable and which is authorized by and consistent with applicable law”
3 (emphasis added). This clause is limited by the “Individual Claims Only” provision.
But the fact that claims subject to arbitration must “be submitted on an individual
basis” does not prohibit Appellants from seeking public injunctive relief. As stated
in McGill, a claim for public injunctive relief can be filed by an individual. 393 P.3d
at 92–93; see also DiCarlo v. MoneyLion, Inc., 988 F.3d 1148, 1156–57 (9th Cir.
2021). The “Individual Claims Only” provision states that “the arbitrator’s authority
to make awards is limited to awards to [the arbitral] parties alone,” but California
courts have held only that such provisions prohibit arbitration of public injunctive
relief where they contain language further restricting the arbitrator’s authority to
grant relief. In Jack v. Ring LLC, the California Court of Appeal held that an
arbitration agreement prohibited the arbitrator from awarding public injunctive relief
because it provided that the arbitrator may award injunctive relief not only “on an
individual basis,” but also “only in favor of the individual party seeking relief and
only to the extent necessary to provide relief warranted by that party’s individual
claim.” 309 Cal. Rptr. 3d 130, 144 (Ct. App. 2023); see also id. at 145–46 (collecting
cases addressing arbitration agreements with similar additional, specific language,
including Blair v. Rent-A-Ctr., Inc., 928 F.3d 819, 831 (9th Cir. 2019)). We have
previously held that a provision stating, as here, that “No arbitration award or
decision will have any preclusive effect as to issues or claims in any dispute with
4 anyone who is not a named party to the arbitration,” does not preclude an arbitrator
from awarding public injunctive relief. Patrick, 93 F.4th at 478.
2. Appellants’ arbitration agreements are not unconscionable. Under New
York law, “[a] determination of unconscionability generally requires a showing that
the contract was both procedurally and substantively unconscionable when made.”
Gillman v. Chase Manhattan Bank, N.A., 534 N.E.2d 824, 828 (N.Y. 1988). We
assess Appellants’ claims of procedural unconscionability for each appellant
individually. First, that Smith does not recall seeing or being informed of the
arbitration agreement does not establish procedural unconscionability. Id. at 828–
29. And without more, arbitration agreements as a condition of employment are not
procedurally unconscionable. Sablosky v. Edward S. Gordon Co., Inc., 535 N.E.2d
643, 647 (N.Y. 1989). Second, Langkamp’s arbitration agreement was not
procedurally unconscionable because the district court did not clearly err in finding
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 22 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
BRIAN NETZEL; TRAVIS SMITH; ERIC No. 23-16083 LANGKAMP; NANCY LARSON, individually, and on behalf of others D.C. No. 2:22-cv-01423-SMB similarly situated,
Plaintiffs-Appellants, MEMORANDUM*
v.
AMERICAN EXPRESS COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the District of Arizona Susan M. Brnovich, District Judge, Presiding
Argued and Submitted June 12, 2024 San Francisco, California
Before: SCHROEDER, GOULD, and R. NELSON, Circuit Judges.
Brian Netzel, Travis Smith, Eric Langkamp, and Nancy Larson (collectively,
“Appellants”) appeal a grant of a motion filed by American Express Company
(AmEx) to compel arbitration and dismiss Appellants’ complaint. Appellants
contend the arbitration agreements are unenforceable. Although AmEx’s arbitration
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. policy includes a New York choice-of-law provision, Appellants (except for
Langkamp)1 argue that their arbitration agreements are governed by California law
because New York law violates California’s fundamental policy against waivers of
“public injunctive relief” as set forth in McGill v. Citibank, N.A., 393 P.3d 85, 93–
94 (Cal. 2017). Appellants argue that AmEx’s arbitration policy’s “Individual
Claims Only” provision waives public injunctive relief. Because such a waiver is
invalid under the McGill rule, Appellants argue that their arbitration agreements are
unenforceable under the arbitration policy’s “poison pill provision.”2 Appellants
(including Langkamp) also argue that their arbitration agreements are unenforceable
on unconscionability grounds. We have jurisdiction under 28 U.S.C. § 1291 and
affirm the district court. We conclude that New York law governs Appellants’
arbitration agreements because the “Individual Claims Only” provision does not
prohibit Appellants from seeking public injunctive relief, and we also conclude that
Appellants’ arbitration agreements are not unconscionable.
We review de novo a district court’s order to compel arbitration and
interpretation of an arbitration policy. Patrick v. Running Warehouse, LLC, 93 F.4th
1 At oral argument, counsel for Appellants clarified that Langkamp does not contest the district court’s holding that New York law governs his arbitration agreement. 2 AmEx’s arbitration policy states that it is unenforceable if “any portion” of the first subsection of the “Individual Claims Only” provision is “deemed invalid, void or unenforceable.”
2 468, 475 (9th Cir. 2024). We review the district court’s factual findings for clear
error. Id.
1. New York law governs Appellants’ arbitration agreements because its
application does not violate California’s McGill rule. We “must look to the forum
state’s choice of law rules to determine the controlling substantive law,” and Arizona
follows the Restatement Second of Conflict of Laws (Restatement) to assess the
validity of choice-of-law provisions. Lazar v. Kroncke, 862 F.3d 1186, 1194 (9th
Cir. 2017) (quoting Zinser v. Accufix Rsch. Inst., Inc., 253 F.3d 1180, 1187 (9th Cir.
2001)). Under the Restatement, the law of the state chosen by the parties will not be
applied if: (1) the law of a different state would be “the applicable law in the absence
of an effective choice of law by the parties”; (2) that state “has a materially greater
interest than the chosen state in the determination of the particular issue”; and (3)
that state has a fundamental policy that is contrary to the application of the law of
the chosen state. Id. (quoting Restatement § 187). Even if Appellants demonstrate
the first two factors, they do not satisfy the third.
Applying New York law is not contrary to California’s McGill rule because
AmEx’s arbitration policy does not bar Appellants from seeking public injunctive
relief. AmEx’s arbitration policy contains an “any remedy” clause stating that “The
arbitrator shall have the authority to grant any remedy or relief . . . he or she deems
just and equitable and which is authorized by and consistent with applicable law”
3 (emphasis added). This clause is limited by the “Individual Claims Only” provision.
But the fact that claims subject to arbitration must “be submitted on an individual
basis” does not prohibit Appellants from seeking public injunctive relief. As stated
in McGill, a claim for public injunctive relief can be filed by an individual. 393 P.3d
at 92–93; see also DiCarlo v. MoneyLion, Inc., 988 F.3d 1148, 1156–57 (9th Cir.
2021). The “Individual Claims Only” provision states that “the arbitrator’s authority
to make awards is limited to awards to [the arbitral] parties alone,” but California
courts have held only that such provisions prohibit arbitration of public injunctive
relief where they contain language further restricting the arbitrator’s authority to
grant relief. In Jack v. Ring LLC, the California Court of Appeal held that an
arbitration agreement prohibited the arbitrator from awarding public injunctive relief
because it provided that the arbitrator may award injunctive relief not only “on an
individual basis,” but also “only in favor of the individual party seeking relief and
only to the extent necessary to provide relief warranted by that party’s individual
claim.” 309 Cal. Rptr. 3d 130, 144 (Ct. App. 2023); see also id. at 145–46 (collecting
cases addressing arbitration agreements with similar additional, specific language,
including Blair v. Rent-A-Ctr., Inc., 928 F.3d 819, 831 (9th Cir. 2019)). We have
previously held that a provision stating, as here, that “No arbitration award or
decision will have any preclusive effect as to issues or claims in any dispute with
4 anyone who is not a named party to the arbitration,” does not preclude an arbitrator
from awarding public injunctive relief. Patrick, 93 F.4th at 478.
2. Appellants’ arbitration agreements are not unconscionable. Under New
York law, “[a] determination of unconscionability generally requires a showing that
the contract was both procedurally and substantively unconscionable when made.”
Gillman v. Chase Manhattan Bank, N.A., 534 N.E.2d 824, 828 (N.Y. 1988). We
assess Appellants’ claims of procedural unconscionability for each appellant
individually. First, that Smith does not recall seeing or being informed of the
arbitration agreement does not establish procedural unconscionability. Id. at 828–
29. And without more, arbitration agreements as a condition of employment are not
procedurally unconscionable. Sablosky v. Edward S. Gordon Co., Inc., 535 N.E.2d
643, 647 (N.Y. 1989). Second, Langkamp’s arbitration agreement was not
procedurally unconscionable because the district court did not clearly err in finding
that he had notice of the arbitration policy before submitting his signed job
application. Third, Netzel’s agreement presents a closer case. But the district court’s
finding that Netzel received the offer letter with notice of AmEx’s arbitration policy
before his first day of work is plausible because the letter was dated April 9, 2010
(before Netzel’s start date at AmEx of May 3, 2010) and because Netzel could have
known how to report to work for his first day based on the instructions included in
the letter. See Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1196 (9th Cir. 2009).
5 Fourth, Appellants did not argue before the district court that Larson’s arbitration
agreement is procedurally unconscionable. Even if they had done so, they waived
that argument on appeal by not raising it in their opening brief. See Smith v. Marsh,
194 F.3d 1045, 1052 (9th Cir. 1999). Because the arbitration agreements were not
procedurally unconscionable, we do not address substantive unconscionability.
AmEx has maintained that the agreement permits arbitration of appellants’
claims for public injunctive relief. We agree and thus affirm with the understanding
that AmEx will not take a contrary position in future arbitration. See New Hampshire
v. Maine, 532 U.S. 742, 749 (2001) (explaining that “[t]he doctrine of judicial
estoppel prevents a party from asserting a claim in a legal proceeding that is
inconsistent with a claim taken by that party in a previous proceeding.” (citation
omitted)).
AFFIRMED.