Claudia Garcia v. Iss Facility Services, Inc. ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 30 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CLAUDIA GARCIA, individually and on No. 20-15633
behalf of all others similarly situated,
D.C. No. 3:19-cv-07807-RS
Plaintiff-Appellee,
v. MEMORANDUM*
ISS FACILITY SERVICES, INC., a
Delaware corporation; ISS FACILITY
SERVICES CALIFORNIA, INC., a
Delaware Corporation; BROADRIDGE
FINANCIAL SOLUTIONS, INC., a
Delaware Corporation,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, Chief District Judge, Presiding
Argued and Submitted March 4, 2021
San Francisco, California
Before: BALDOCK,** WARDLAW, and BERZON, Circuit Judges.
ISS Facility Services, Inc., ISS Facility Services California, Inc., and
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Bobby R. Baldock, United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
Broadridge Financial Solutions, Inc. (“Defendants”) appeal the district court’s
order denying their motion to compel arbitration of a putative wage-and-hour class
action brought by Claudia Garcia. The district court determined that the parties’
agreement to mediate all disputes (“Mediation Agreement”) was fully integrated
and superseded the parties’ prior agreement to arbitrate disputes (“Arbitration
Agreement”). We have jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(C), and we
affirm.
1. “We review de novo district court decisions about the arbitrability of
claims.” Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013)
(internal citation omitted). When determining whether an agreement to arbitrate
exists, “we apply ‘general state-law principles of contract interpretation.’”
Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733, 743 (9th Cir. 2014) (quoting
Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1044 (9th Cir. 2009)).
Under California law, an agreement is integrated, and thereby supersedes
any prior oral or written agreements between the parties, if “the parties intended
their writing to serve as the exclusive embodiment of their agreement.” Masterson
v. Sine, 68 Cal. 2d 222, 225 (1968); see also Cal. Civ. Proc. Code § 1856(a)–(b).
Although “[t]he instrument itself may help to resolve that issue,” any “collateral
agreement itself must be examined . . . to determine whether the parties intended
the subjects of negotiation it deals with to be included in, excluded from, or
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otherwise affected by the writing. Circumstances at the time of the writing may
also aid in the determination of such integration.” Masterson, 68 Cal. 2d at 226.
The language of both the Mediation Agreement and the prior Arbitration
Agreement demonstrate that the parties intended the Mediation Agreement to be
their exclusive agreement regarding dispute resolution. The language of the
integration clause provides strong support for integration. It states that the
Mediation Agreement is “the full and complete agreement relating to the resolution
of disputes covered by this Agreement.” The “disputes covered by [the Mediation]
[A]greement” are explicitly defined in paragraphs 1 and 2 of that Agreement. And
the disputes covered by the Mediation Agreement—“any dispute, past, present or
future, that EMPLOYER may have against EMPLOYEE or that EMPLOYEE may
have against: (1) EMPLOYER” or specified related entities for “any claims arising
out of or related to EMPLOYEE’s employment or separation of employment”—
are identical to the disputes that had been covered by the Arbitration Agreement.
Defendants contend that “covered by this agreement” modifies “resolution”
rather than “disputes.” That cannot be. As a matter of grammar, “qualifying
words or phrases modify the words or phrases immediately preceding them and not
words or phrases more remote, unless the extension is necessary from the context
or the spirit of the entire writing.” Black’s Law Dictionary 1533 (10th ed. 2014);
see also A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts
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144 (2012).
Beyond the integration clause, nothing in either Agreement requires the
conclusion that the Arbitration Agreement was intended to survive the effective
date of the Mediation Agreement. The Mediation Agreement exempts from the
requirement to “first” submit disputes to mediation any action “to a court of
competent jurisdiction for temporary or preliminary injunctive relief.” The
reference to “a court” rather than an arbitrator in the exception is inconsistent with
the survival of an obligation to arbitrate rather than litigate in court. In many
sections, the Mediation Agreement repeats the text of the Arbitration Agreement
verbatim, substituting the word “mediation” for “arbitration,” further supporting
the conclusion that the parties intended the later agreement to supersede the
earlier.1 The district court therefore did not err in determining that the Mediation
Agreement is completely integrated as to dispute resolution between the parties
and supersedes the Arbitration Agreement.
2. For the first time on appeal, Defendants argue that the district court erred
by failing to analyze the Mediation Agreement as a novation. Although
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The only references to arbitration in the agreement appear, in context,
erroneously to say “arbitration” and “arbitrator” when “mediate” and “mediator”
are meant. These sentences are identical to sentences in the Arbitration
Agreement; the sentences would be surplusage in one Agreement or the other if
both contracts could be enforced, as Defendants maintain. In any event, the
references to arbitration cannot be read to establish a general obligation to
arbitrate, or to preserve a preexisting requirement to do so.
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Defendants contend that the question whether district court should have applied a
novation analysis is purely a matter of law, they point to no statute or case law
requiring a later, integrated agreement to be analyzed under the standards
applicable to determining whether the parties intended to enter into a novation. To
the extent applying those standards would lead to a different result than
determining whether the second agreement is fully integrated as to the subject
matter covered—which we doubt it would—Defendants did not sufficiently raise
this argument in the district court, and we will not address it for the first time on
appeal. See In re E.R. Fegert, Inc., 887 F.2d 955, 957 (9th Cir. 1989).
3. Defendants also argue for the first time on appeal that the gateway issue
of arbitrability should have been decided by an arbitrator, not the district court,
under the delegation clause in the Arbitration Agreement. Defendants contend that
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), required Garcia to
“challenge[] the delegation provision specifically,” in the district court and by not
doing so, she left “any challenge to the validity of the [Arbitration] Agreement as a
whole for the arbitrator.” Id. at 68–70. But unlike the defendant in Rent-A-Center,
Defendants never sought enforcement of the delegation provision before the
district court. Instead, Defendants explicitly sought a “judicial judgment on the
merits” for the gateway questions of arbitrability, a “choice [that] was inconsistent
with the agreement to arbitrate those claims.” Van Ness Townhouses v. Mar Indus.
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Corp., 862 F.2d 754, 759 (9th Cir. 1988). Defendants’ newly raised argument
would penalize Garcia for not specifically challenging in the district court a
provision that Defendants never gave her notice they were seeking to enforce.
These circumstances satisfy the knowledge, inconsistent acts, and prejudice
elements for a waiver of arbitration. Martin v. Yasuda, 829 F.3d 1118, 1124 (9th
Cir. 2016).
AFFIRMED.
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