Joann Wainwright v. Melaleuca, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 4, 2021
• Docket: 20-15329
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 4 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

JOANN WAINWRIGHT, No. 20-15329

Plaintiff-Appellant, D.C. No. 2:19-cv-02330-JAM-DB v.

MELALEUCA, INC., MEMORANDUM*

Defendant-Appellee.

Appeal from the United States District Court for the Eastern District of California John A. Mendez, District Judge, Presiding

Submitted February 2, 2021** San Francisco, California

Before: RAWLINSON and BUMATAY, Circuit Judges, and EATON,*** Judge, United States Court of International Trade.

Appellee Melaleuca, Inc. is a company incorporated and headquartered in

Idaho that designs, manufactures, and markets a variety of nutritional, personal care,

* 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). *** Richard K. Eaton, Judge of the United States Court of International Trade, sitting by designation. and household products. On June 8, 2019, Appellant Joann Wainwright, a California

citizen, enrolled as a Marketing Executive with Melaleuca. As part of her

enrollment, Wainwright signed an Agreement with the company which requires that

disputes between the parties be arbitrated. The Agreement includes a choice-of-law

provision which provides that the “Agreement shall be governed by the laws of the

State of Idaho and the Federal Arbitration Act (‘FAA’).” The Agreement also

contains a delegation clause, which provides that “[a]ll issues are for the arbitrator

to decide, including issues relating to the scope and enforceability of the arbitration

provision.”

After terminating her employment with Melaleuca, Wainwright filed suit in

the Superior Court of California for the County of Sacramento, alleging eight claims

on behalf of herself and a putative class. Melaleuca removed the case to federal

court under the Class Action Fairness Act. Thereafter, Melaleuca moved to compel

arbitration in accordance with the Agreement. On January 27, 2020, the district

court granted Melaleuca’s motion and dismissed Wainwright’s claims without

prejudice for refiling in the appropriate forum should the arbitrator find her claims

non-arbitrable.

The district court exercised jurisdiction pursuant to 28 U.S.C. §§ 1332(d),

1441(b), and 1446, and we have jurisdiction under 28 U.S.C. § 1291. We “review[]

the validity and scope of an arbitration clause de novo and the factual findings

2 underlying the district court’s decision for clear error.” Stover v. Experian Holdings,

Inc., 978 F.3d 1082, 1085 (9th Cir. 2020) (citation omitted).

The district court concluded that the Agreement’s choice-of-law provision is

enforceable and that the delegation clause was not unconscionable under Idaho law.

We affirm.

1. The district court did not err in applying Idaho law pursuant to the

Agreement’s choice-of-law provision. As a federal court sitting in diversity, the

district court applied the choice of law rules of California, the forum state. Coneff

v. AT & T Corp., 673 F.3d 1155, 1161 (9th Cir. 2012). When “determining the

enforceability of arm’s-length contractual choice-of-law provisions,” California

courts “apply the principles set forth in Restatement section 187, which reflect a

strong policy favoring enforcement of such provisions.” Nedlloyd Lines B.V. v.

Superior Ct., 3 Cal. 4th 459, 464–65 (1992). Under § 187, a choice-of-law provision

is enforceable unless one of two exceptions apply: (1) “the chosen state has no

substantial relationship to the parties or the transaction”; or (2) “application of the

law of the chosen state would be contrary to a fundamental policy of a state which

has a materially greater interest than the chosen state in the determination of a

particular issue and which, under the rule of § 188, would be the state of the

applicable law in the absence of an effective choice of law by the parties.”

Restatement (Second) of Conflicts of Laws § 187.

3 Applying this analysis, the district court correctly concluded that neither

exception applied here. First, Melaleuca has a substantial relationship with Idaho,

where it is incorporated and has its headquarters. Second, Wainwright fails to

identify a fundamental policy difference between California’s and Idaho’s

unconscionability laws. Under § 187, a “fundamental” policy difference must be a

“substantial one,” and courts “will not refrain from applying the chosen law merely

because this would lead to a different result than would be obtained under the local

law of the state of the otherwise applicable law.” Restatement (Second) Conflict of

Laws § 187, cmt. g.

Despite Wainwright’s claim that Idaho law’s treatment of contracts of

adhesion “is contrary to a fundamental policy of California,” “the California

Supreme Court has not adopted a rule that an adhesion contract is per se

unconscionable.” Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1261 (9th Cir.

2017); see Brinkley v. Monterey Fin. Servs., Inc., 242 Cal. App. 4th 314, 328 (2015).

Instead, both California and Idaho employ a multi-factored analysis to determine

whether a contract is procedurally unconscionable, where the contract’s adhesive

nature is one factor in that analysis. See Roman v. Superior Ct., 172 Cal. App. 4th

1462, 1470 n.2 (2009); Lovey v. Regence BlueShield of Idaho, 139 Idaho 37, 43

(2003). Thus, there does not appear to be a “substantial” or “fundamental” conflict

between the two states’ laws.

4 2. Wainwright next argues that the district court should have automatically

applied California’s unconscionability analysis to the delegation clause before

considering the Agreement’s choice-of-law provision. This is inconsistent with

California’s framework for evaluating choice-of-law clauses, which requires courts

to “evaluate the clause’s enforceability pursuant to the [Restatement Second

approach].” Wash. Mut. Bank, FA v. Superior Ct., 24 Cal. 4th 906, 916–17 (2001)

(confirming the Restatement’s choice-of-law framework applies even to “adhesion

contracts”).

3. Because the district court correctly applied Idaho law under the Agreement’s

choice-of-law provision, we do not consider Wainwright’s argument that the

delegation clause is unconscionable under California law. Further, Wainwright does

not argue that the delegation clause is unconscionable under Idaho law. Thus, we

affirm the district court’s conclusion that the delegation clause is not

unconscionable.

4. Finally, we do “not consider” Wainwright’s “arguments raised for the first

time on appeal[.]” See AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1213 (9th

Cir. 2020) (simplified).

AFFIRMED.