Joseph Dylag v. West Las Vegas Surgery Center ( 2017 )


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  •                                                                             FILED
    NOT FOR PUBLICATION
    DEC 13 2017
    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    JOSEPH DYLAG,                                    No.   16-15869
    Plaintiff-Appellant,               D.C. No.
    2:16-cv-00120-APG-VCF
    v.
    WEST LAS VEGAS SURGERY                           MEMORANDUM*
    CENTER, LLC; TEAMWORKS
    PROFESSIONAL SERVICES, INC.;
    STEVEN KOZMARY; ROBERT BIEN,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the District of Nevada
    Andrew P. Gordon, District Judge, Presiding
    Submitted October 10, 2017**
    San Francisco, California
    Before: O’SCANNLAIN, TASHIMA, and BYBEE, Circuit Judges.
    *
    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).
    Plaintiff-appellant Joseph Dylag filed suit against his former joint
    employers, West Las Vegas Surgery Center (“WLVSC”) and Teamworks
    Professional Services, Inc. (“Teamworks”), as well as two WLVSC shareholders
    (collectively “Defendants”). Defendants moved the district court to dismiss the
    complaint and compel arbitration based on an arbitration provision in the
    employment contract between Dylag and WLVSC. The court granted the motion
    in an oral ruling.1
    “We have jurisdiction under 9 U.S.C. § 16(a)(3)” and review the district
    court’s decision to compel arbitration de novo. Ziober v. BLB Res., Inc., 
    839 F.3d 814
    , 816 (9th Cir. 2016), cert. denied, 
    137 S. Ct. 2274
    (2017). “A party seeking to
    compel arbitration has the burden under the [Federal Arbitration Act (“FAA”)] to
    show (1) the existence of a valid, written agreement to arbitrate; and, if it exists, (2)
    that the agreement to arbitrate encompasses the dispute at issue.” Ashbey v.
    Archstone Prop. Mgmt., Inc., 
    785 F.3d 1320
    , 1323 (9th Cir. 2015).
    1.     The district court correctly held that Dylag must arbitrate his ADEA and
    ADA claims against WLVSC. “[I]ndividuals generally may contractually agree to
    arbitrate employment disputes and thereby waive certain statutory rights to which
    1
    Dylag has not appealed the court’s order compelling arbitration against the
    two WLVSC shareholders.
    2
    they would otherwise be entitled.” Nelson v. Cyprus Bagdad Copper Corp., 
    119 F.3d 756
    , 760 (9th Cir. 1997). However, an employee can only waive his right to
    litigate federal employment-discrimination claims in a judicial forum if “he does so
    knowingly.” 
    Ashbey, 785 F.3d at 1323
    (internal quotation marks and citation
    omitted).
    By entering into an employment contract with an arbitration provision that
    encompasses “any dispute aris[ing] out of” that contract, Dylag knowingly
    bargained away his right to litigate his ADEA and ADA claims against WLVSC.
    Compare 
    id. at 1325–26
    (holding that the employee “knowingly waived his right to
    a judicial forum for his Title VII claim” by signing a form acknowledging he
    would “adhere to” the employee handbook, including an arbitration agreement that
    the form explicitly cited), with Kummetz v. Tech Mold, Inc., 
    152 F.3d 1153
    , 1155
    (9th Cir. 1998) (finding that a similar acknowledgment form contained “no explicit
    reference to arbitration or waiver of right to sue” and therefore did not constitute a
    knowing waiver), and 
    Nelson, 119 F.3d at 760
    –61 (same).
    2.    In contrast, while it is undisputed that Teamworks was Dylag’s co-employer,
    the two did not share a contractual relationship. “Generally, the contractual right
    to compel arbitration may not be invoked by one who is not a party to the
    agreement and does not otherwise possess the right to compel arbitration.” Kramer
    3
    v. Toyota Motor Corp., 
    705 F.3d 1122
    , 1126 (9th Cir. 2013) (internal quotation
    marks omitted). However, both signatories and “nonsignatories of arbitration
    agreements may be bound by the agreement under ordinary contract and agency
    principles[,]” including equitable estoppel. Comer v. Micor, Inc., 
    436 F.3d 1098
    ,
    1101 (9th Cir. 2006). Following the U.S. Supreme Court’s decision in Arthur
    Andersen LLP v. Carlisle, 
    556 U.S. 624
    (2009), courts must apply state law in
    determining the applicability of these principles.2 
    Kramer, 705 F.3d at 1128
    .
    Nevada recognizes equitable estoppel’s application in the arbitration
    context.3 Truck Ins. Exch. v. Palmer J. Swanson, Inc., 
    189 P.3d 656
    , 660 (Nev.
    2008). In a recent unpublished disposition, the Nevada Supreme Court applied the
    “commonly used framework” for equitable estoppel, which includes two avenues
    for compelling arbitration:
    First, equitable estoppel applies when the signatory to a written
    agreement containing an arbitration clause must “rely on the terms of the
    written agreement in asserting its claims” against the nonsignatory.
    When each of a signatory’s claims against a nonsignatory “makes
    2
    Prior to Arthur Andersen, courts applied federal common law in
    addressing arbitration provisions governed by the FAA. See 
    Kramer, 705 F.3d at 1130
    –32 nn.5–6 (discussing the required application of state law post–Arthur
    Andersen).
    3
    Although the parties have not cited any state case law regarding this issue,
    the contract’s choice-of-law provision selects Nevada law, which therefore applies.
    Ferdie Sievers & Lake Tahoe Land Co. v. Diversified Mortg. Inv’rs, 
    603 P.2d 270
    ,
    273 (Nev. 1979).
    4
    reference to” or “presumes the existence of” the written agreement, the
    signatory’s claims “arise out of and relate directly to the written
    agreement,” and arbitration is appropriate. Second, “application of
    equitable estoppel is warranted when the signatory to the contract
    containing the arbitration clause raises allegations of substantially
    interdependent and concerted misconduct by both the nonsignatory and
    one or more of the signatories to the contract.”
    Hard Rock Hotel, Inc. v. Eighth Judicial Dist. Court of State in & for Cty. of Clark,
    
    390 P.3d 166
    , at *1 n.4, *2 (Nev. 2017) (unpublished) (citation omitted).4 In
    regard to the second avenue, we are confident that, like most jurisdictions that
    apply this framework, Nevada would require that the allegations of “substantially
    interdependent and concerted misconduct” be “founded in or intimately connected
    with the obligations of the underlying agreement.” See 
    Kramer, 705 F.3d at 1128
    –29 (citation omitted); Rajagopalan v. NoteWorld, LLC, 
    718 F.3d 844
    , 847
    (9th Cir. 2013) (“Where other circuits have granted motions to compel arbitration
    on behalf of non-signatory defendants against signatory plaintiffs, it was essential
    in all of these cases that the subject matter of the dispute was intertwined with the
    contract providing for arbitration.” (internal quotation marks and citation omitted)).
    4
    The Nevada Supreme Court applied this framework in the context of
    estopping a contract signatory from avoiding a contractual jury-trial waiver rather
    than an arbitration provision, but the court noted that the same framework applies
    in both contexts. Hard Rock Hotel, 
    390 P.3d 166
    , at *1 n.4; see also Ahlers v.
    Ryland Homes Nev., LLC, 
    367 P.3d 743
    , at *2 (Nev. 2010) (unpublished) (citing to
    the Eleventh Circuit’s widely-cited articulation of this framework in the arbitration
    context).
    5
    Here, Dylag’s ADEA and ADA claims rely on and are founded in federal
    anti-discrimination statutes, not his employment contract. See 
    Kramer, 705 F.3d at 1230
    –31 (holding that claims under consumer-protection and unfair-competition
    statutes did not rely on and were not “intimately founded in” the underlying
    contract); 
    Rajagopalan, 718 F.3d at 847
    (holding that the plaintiff was not
    equitably estopped from avoiding arbitration because his “statutory claims . . .
    [were] separate from the contract itself” (alteration omitted)). Moreover, Dylag
    has not alleged that WLVSC and Teamworks engaged in “substantially
    interdependent and concerted misconduct” because he has not asserted that
    Teamworks suspended or fired him, participated in these decisions, or
    discriminated against him. And even if made, such allegations would not be
    founded in or intertwined with the obligations in Dylag’s employment contract
    with WLVSC.
    Finally, Defendants have not argued that Dylag’s state-law claims against
    Teamworks rely on his employment contract or that these claims, taken on their
    own, would justify equitable estoppel. This argument is therefore waived. Clem v.
    Lomeli, 
    566 F.3d 1177
    , 1182 (9th Cir. 2009).
    6
    Accordingly, we reverse the district court only as to its order requiring
    Dylag to arbitrate his claims against Teamworks, and we remand the case for
    further proceedings.
    AFFIRMED in part. REVERSED in part and REMANDED.
    Each party shall bear its own costs on appeal.
    7
    FILED
    DEC 13 2017
    Dylag v. W. Las Vegas Surgery Ctr., No. 16-15869
    MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    O’SCANNLAIN, Circuit Judge, concurring in part and dissenting in part:
    I join in Part 1 of the court’s memorandum and in the judgment affirming
    the dismissal of Dylag’s claims against West Las Vegas Surgery Center (WLVSC).
    I cannot join Part 2, which reverses the dismissal of Dylag’s claims against
    Teamworks Professional Services, Inc. (Teamworks). I respectfully disagree with
    the majority’s conclusion that the district court wrongly held that Dylag’s claims
    against Teamworks were so intertwined with the claims against WLVSC as to
    require arbitration.
    I
    The principal question regarding the claims against Teamworks is whether,
    as a non-signatory, Teamworks can still compel Dylag to arbitrate his claims under
    a theory of equitable estoppel. Specifically, the district court held that Teamworks
    could compel arbitration because “the claims against Teamworks are identical to,
    for the most part, the claims against West Las Vegas . . . . [T]hose claims are
    intertwined and the relationship between those two entities . . . [is] so close that
    Mr. Dylag should be estopped from denying arbitration against Teamworks.” In
    doing so, the court relied on and followed a decision from the Second Circuit,
    Ragone v. Atl. Video at Manhattan Ctr., 
    595 F.3d 115
    , 127–28 (2d Cir. 2010).
    The majority now holds that the district court’s application of the Ragone
    standard for equitable estoppel was in error—although it does not even cite the
    case. By the majority’s interpretation, equitable estoppel should not apply unless
    the claims against the third party are “founded in or intimately connected with the
    obligations underlying the agreement,” Mem. at 5—a requirement imposed in
    some courts but not (as demonstrated by Ragone) in others. Without its really
    addressing the issue, the majority’s view seems to be that the district court erred in
    applying the more lenient estoppel standard of Ragone and other cases, rather than
    the stricter standard preferred by the majority.
    The primary difficulty with this argument is that Dylag himself has never
    come close to making it. On appeal, Dylag states that “the District Court erred
    allowing Teamworks, a non-signatory to the dispute resolution provision[,] to
    require Mr. Dylag to arbitrate his employment discrimination claims.” But Dylag
    never attempts to explain how the district court’s estoppel analysis was wrong,
    much less to argue a competing theory of equitable estoppel. Indeed, he does not
    discuss whatsoever whether (as the district court held) his allegations against
    Teamworks are so “intertwined” with those against WLVSC as to require
    arbitration. Instead, Dylag simply reiterates his primary argument that he never
    validly waived his right to sue his employers for discrimination or civil rights
    claims. He does not argue that Ragone is the wrong standard to apply, but rather
    2
    that Ragone is distinguishable specifically because (unlike here) it involved a valid
    waiver of civil rights claims. That is an issue which has nothing to do with the
    district court’s estoppel analysis, and indeed an argument the majority in fact
    rejects with respect to Dylag’s claims against Teamworks. Mem. at 2–3.
    The same was true in the district court. There, the court directly asked
    Dylag’s attorney, “[W]hy aren’t the claims intertwined . . . such that he should be
    estopped from denying arbitration?” Dylag’s attorney responded, “The claims
    would be intertwined if we’re not dealing with an employment discrimination case.
    But you have case law here that says these federal civil rights are important. . . .
    [Y]ou have to make sure certain things are done [to waive them].” In other words,
    Dylag essentially conceded that the district court’s general understanding of
    equitable estoppel was correct and that the doctrine would apply to his case, if he
    raised non-discrimination claims. He once again simply reiterated his primary
    argument that he did not knowingly waive his discrimination claims in the
    arbitration agreement, and thus even if the claims were intertwined with those
    against WLVSC, he could not be required to arbitrate them.
    In its response brief on appeal, Teamworks first noted that Dylag
    “completely fail[ed]” to make any argument regarding the court’s estoppel
    analysis, and then explained why it believes the district court’s application of
    3
    estoppel was indeed correct. Yet Dylag did not even bother to file a reply brief to
    respond to these arguments. In all, Dylag has not at any point attempted to grapple
    with the district court’s analysis of the third-party arbitration issue or the issue of
    estoppel.
    The majority agrees that Dylag’s arguments with respect to the arbitrability
    of employment discrimination claims are meritless. Mem. at 2–3. Because these
    are the only arguments Dylag has ever raised to contest arbitration of his claims
    against both WLVSC and Teamworks, our analysis should end there. The
    majority’s suggestion that the district court generally misinterpreted equitable
    estoppel law and misapplied the test for arbitration of “intertwined” claims against
    a non-signatory is simply not reflected anywhere in Dylag’s own arguments.
    Regardless of the merits of that analysis, it is not an issue we should reach. Dylag
    utterly failed to analyze or to argue the law underlying the district court’s
    determination that Teamworks can enforce arbitration through estoppel, and he has
    not made any argument remotely resembling that adopted by the majority. He
    therefore has waived any such argument, and we should not build a new case for
    him. See, e.g., Barnes v. FAA, 
    865 F.3d 1266
    , 1271 n.3 (9th Cir. 2017) (arguments
    not raised in opening brief are waived); SeaView Trading, LLC v. Comm’r of
    Internal Revenue, 
    858 F.3d 1281
    , 1288 (9th Cir. 2017) (same); McKay v. Ingleson,
    4
    
    558 F.3d 888
    , 891 n.5 (9th Cir. 2009) (“Because this argument was not raised
    clearly and distinctly in the opening brief, it has been waived.”).
    II
    Further, even if we were to consider the merits of the district court’s
    estoppel analysis, I cannot agree that Nevada would not adopt the Ragone standard,
    as applied by the district court.
    The majority confidently predicts that, “like most jurisdictions that apply
    [the equitable estoppel] framework, Nevada would require that the allegations of
    interdependent and concerted misconduct be founded in or intimately connected
    with the obligations of the underlying agreement.” Mem. at 5 (internal quotation
    marks omitted). The problem, of course, is that Nevada itself has not said anything
    of the sort. And although the majority only cites cases supporting its more
    restrictive framework, it does not even mention those that do not—most notably, of
    course, Ragone itself.
    Under the more lenient Ragone standard, a plaintiff may be forced to
    arbitrate claims raised against a non-signatory where such claims are “factually
    intertwined with” a dispute against a signatory, and where there is a close
    relationship between the signatory and non-signatory defendants. See 
    Ragone, 595 F.3d at 127
    –28. There is little doubt that the district court was correct that the
    5
    claims against Teamworks satisfy such standard. Indeed, Ragone itself and many
    cases applying it have required plaintiffs to arbitrate claims against third parties in
    circumstances remarkably similar to this case. See, e.g., id.; Barreto v. JEC II,
    LLC, 
    2017 WL 3172827
    , at *6 (S.D.N.Y. July 25, 2017); Colon v. Conchetta, Inc.,
    
    2017 WL 2572517
    , at *6 (E.D. Pa. June 14, 2017); Bonner v. Mich. Logistics Inc.,
    
    250 F. Supp. 3d 388
    , 398–99 (D. Ariz. 2017).
    The majority clearly disagrees with the Ragone standard. However, that
    standard is not such a minority view, or so obviously disfavored, as to make it clear
    that Nevada would disagree as well. Furthermore, the parties have not even had
    the opportunity to brief which standard Nevada courts would or should apply
    (again, because Dylag himself never challenged this issue). Because the applicable
    standard may be critical to the outcome of this case, I do not believe that we should
    decide such issue without at least full briefing from the parties or, perhaps,
    certification to the Nevada Supreme Court itself.
    For the foregoing reasons, I respectfully dissent from Part 2.
    6