Daisy Alvarez v. Sheraton Operating Corporation

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 14, 2023
• Docket: 22-55749
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAR 14 2023 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

DAISY ALVAREZ, No. 22-55749

Plaintiff-Appellee, D.C. No. 2:20-cv-03608-TJH-JC

v. MEMORANDUM* SHERATON OPERATING CORPORATION, a Delaware corporation; MARRIOTT INTERNATIONAL, INC.,

Defendants-Appellants

Appeal from the United States District Court for the Central District of California Terry J. Hatter, Jr., District Judge, Presiding

Submitted March 10, 2022** San Francisco, California

Before: W. FLETCHER, RAWLINSON, and OWENS, Circuit Judges.

Defendants-appellants Sheraton Operating Corporation and Marriot

International, Inc. (“Appellants”) appeal from the district court’s denial of their

renewed motion to compel arbitration. We have jurisdiction under

* 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). 28 U.S.C. § 1291. Newirth by & through Newirth v. Aegis Senior Communities,

LLC, 931 F.3d 935, 939 (9th Cir. 2019). We affirm.

“We review de novo the district court’s denial of a motion to compel

arbitration, including its determination that a party has waived the right to

arbitrate.” Hill v. Xerox Bus. Servs., 59 F.4th 457, 468 (9th Cir. 2023) (quoting

Newirth, 931 F.3d at 939). A party seeking to establish waiver of the right to

arbitrate must show two things: “(1) knowledge of an existing right to compel

arbitration; and (2) intentional acts inconsistent with that existing right.” Id.

The district court did not err in concluding that Appellants knew of an

existing right to compel arbitration. “Under well-established principles of agency,

a principal is bound by the knowledge of its agent concerning a matter upon which

it is the agent’s duty to give the principal information.” United States v. Georgia-

Pacific Co., 421 F.2d 92, 97 n.9 (9th Cir. 1970). Appellants do not dispute that

knowledge of the right to compel arbitration is properly imputed to them.

The district court likewise did not err in concluding that Appellants engaged

in acts inconsistent with the right to arbitrate. “There is no concrete test to

determine whether a party has engaged in acts that are inconsistent with its right to

arbitrate.” Martin v. Yasuda, 829 F.3d 1118, 1125 (9th Cir. 2016). Rather, the

2 Court deploys a “holistic approach” and considers the “totality of the parties’

actions.” Newirth, 931 F.3d at 941.

In the totality of their actions, Appellants acted in a manner inconsistent with

the right to arbitrate. First, Appellants sought a decision on the merits by moving

to dismiss Alvarez’s complaint without leave to amend for failure to state a claim

under Federal Rule of Civil Procedure 12(b)(6). See Martin, 829 F.3d at 1125

(noting that “although filing a motion to dismiss that does not address the merits of

the case is not sufficient to constitute an inconsistent act, seeking a decision on the

merits of an issue may satisfy this element”); see also Federated Dep’t Stores v.

Moitie, 452 U.S. 394, 399 n.3 (1981) (“[D]ismissal for failure to state a claim

under Federal Rule of Civil Procedure 12(b)(6) is a ‘judgment on the merits.’”).

Second, Appellants asserted preemption by the Federal Arbitration Act as an

affirmative defense in their answer and then waited eight months before moving to

compel arbitration. See Martin, 829 F.3d at 1125 (reasoning that an “extended

silence and delay in moving for arbitration” may indicate action inconsistent with

the right to arbitrate); see also id. at 1121 (stating defendants did not move to

compel arbitration despite asserting arbitration as one of forty-three affirmative

defenses). Third, Appellants engaged in some (albeit limited) discovery. Cf.

Martin, 829 F.3d at 1122; Newirth, 931 F.3d at 939.

3 The district court’s denial of Appellants’ renewed motion to compel

arbitration is therefore

AFFIRMED.