Jose Diaz Hermosillo v. Davey Tree Surgery Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 24, 2020
• Docket: 18-16522
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 24 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT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

3 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

4 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

5 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.

6 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.