Hill v. Xerox Bus. Servs.
| Decision Date | 03 February 2023 |
| Docket Number | 20-35838 |
| Parties | TIFFANY HILL, individually and on behalf of all others similarly situated, Plaintiff-Appellee, v. XEROX BUSINESS SERVICES, LLC; LIVEBRIDGE INC, an Oregon Corporation; AFFILIATED COMPUTER SERVICES INC, a Delaware Corporation; AFFILIATED COMPUTER SERVICES LLC, a Delaware Limited Liability Company, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Argued and Submitted August 12, 2021 Seattle, Washington
Appeal from the United States District Court for the Western District of Washington John C. Coughenour, District Judge Presiding D.C. No. 2:12-cv-00717-JCC
Todd L. Nunn (argued), Daniel P. Hurley, Ryan D. Redekopp, and Patrick M. Madden, K&L Gates LLP, Seattle, Washington for Defendants-Appellants.
Daniel F. Johnson (argued), Breskin Johnson &Townsend PLLC Seattle, Washington; Toby J. Marshall, Terrell Marshall Law Group PLLC, Seattle, Washington; for Plaintiff-Appellee.
Before: Carlos T. Bea, Daniel A. Bress, and Lawrence VanDyke, Circuit Judges.
SUMMARY[*]
The panel affirmed the district court's order denying Xerox Business Services, LLC ("XBS")'s motion to compel arbitration pursuant to a 2002 Dispute Resolution Plan ("2002 DRP"), arising from a putative class action brought by XBS call center agents alleging Washington state law employment compensation claims based on diversity jurisdiction.
Appellee Tiffany Hill worked at an XBS call center and was compensated according to a proprietary system of differential pay rates known as Achievement Based Compensation ("ABC"). Section 4 of the 2002 DRP required XBS and its agents to submit "all disputes" to binding arbitration for final and exclusive resolution. Hill never signed the 2002 DRP. XBS issued an updated DRP ("2012 DRP"). Following a long course of litigation, XBS filed a motion to compel individual arbitration by 2,927 class members who had signed the 2002 DRP. The district court found that XBS had waived its right to compel arbitration.
The panel noted that following Morgan v. Sundance, 142 S.Ct. 1708 (2022), this Circuit's test for waiver of the right to compel arbitration consists of two elements: (1) knowledge of an existing right to compel arbitration; and (2) intentional acts inconsistent with that existing right. XBS challenged both prongs of the test.
XBS argued that until after class certification had been granted, and completion of the notice and opt-out period, there was no existing right to compel arbitration. XBS maintained that it lacked knowledge of an existing right to compel arbitration, and therefore it could not be charged with waiver of a non-existent right. The panel held that XBS was correct that the district court could not compel nonparties to the case to arbitrate until after a class had been certified and the notice and opt-out period were complete. However, XBS failed to appreciate that waiver was a unilateral concept. A finding of waiver by XBS looked only to the acts of XBS, and bound only XBS. Explicit relinquishment is not the only way to waive a right to arbitrate. The panel held that further undercutting XBS's position was its own actions throughout the course of the litigation, in which XBS raised the 2012 DRP as to putative class members before the class had been certified and before it had the ability to move to enforce that agreement against them. The panel concluded that it was clear that XBS had knowledge of and knew how to assert its right to compel arbitration under the 2012 DRP well before class certification and notice was complete. XBS similarly possessed knowledge of the right to compel arbitration as against the signatories of the 2002 DRP sufficient to satisfy the first prong of the waiver test.
Concerning the second prong of the test for arbitration waiver - acts inconsistent with the right to arbitrate - the panel considered the totality of the parties' actions. The panel held that here, there was little doubt that XBS acted inconsistently with its right to compel arbitration under the 2002 DRP. First, XBS many times explicitly asserted as a ground for obligatory arbitration the 2012 DRP without asserting the same for the 2002 DRP. Second, XBS further sought to take advantage of litigation in federal court by requesting extensive discovery on unnamed parties to the case-discovery which necessarily included signatories to the 2002 DRP. That Hill may not have been directly prejudiced by XBS's requests concerning 2002 DRP signatories was immaterial after Morgan. XBS's discovery behavior further substantiates the inferences drawn from the record suggesting that XBS was more interested in resolving this litigation, which included the 2002 DRP signatories' claims, in court rather than in arbitration. Third, XBS actively litigated this case through filing a motion for partial summary judgment on the issue whether unnamed class members subject to XBS's ABC pay scheme were "piecemeal" workers under Washington's Minimum Wage Act. The panel rejected XBS's argument that the language in the class notice itself demonstrated that it had not acted inconsistently with respect to the 2002 signatories. Considering the totality of the circumstances, the panel concluded that the district court properly found that XBS acted inconsistently with its right to compel arbitration under the 2002 DRP.
Finally, the panel rejected XBS's contentions that it would have been futile for it to have filed a motion to compel arbitration sooner than it did, and that, accordingly, its otherwise clear waiver of the right to compel arbitration should be excused. First, XBS argued that it would have been futile to file a motion to compel arbitration until after class certification because only then would unnamed class members be brought into the case, and only then would the district court have jurisdiction over those individuals. The panel held that waiver did not require a court to have jurisdiction over the beneficiaries of the waiver, it did not even require a lawsuit to have been filed. Second, XBS argued that it would have been futile to compel arbitration under the 2002 DRP before the Supreme Court decided Lamps Plus v. Varela, 139 S.Ct. 1407 (2019), because before Lamps Plus, it would not have been guaranteed individual arbitration under the 2002 DRP. The panel held that regardless whether arbitration were to be conducted individually or as a class, XBS would have had a valid right to compel arbitration under the 2002 DRP. In addition, XBS could not rely on Lamps Plus as establishing any new law with respect to arbitration agreements that are silent regarding class arbitration because that issue was decided nearly a decade earlier by Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010). The panel concluded that it would not have been futile for XBS to assert the 2002 DRP throughout the course of the litigation below in the same manner as it did the 2012 DRP.
Judge VanDyke dissented. He wrote that under this court's precedents, a defendant may waive a right to compel arbitration only by intentionally relinquishing it. That intention can be express or implied, but this court has refused to find implied waiver unless a defendant completes concrete acts inconsistent with the right to arbitrate. Here, XBS never took a single act inconsistent with its intent to arbitrate the claims of its call-center employees who had signed arbitration agreements, and this fact alone should end the analysis in this case. In addition, XBS advised named plaintiff Hill and the district court of its intent to compel arbitration against those employees should the putative class be defined to include them. During the extended litigation against Hill, XBS took no action that uniquely targeted class members and not Hill. Finally, XBS moved to compel arbitration against every class member with whom it had an arbitration agreement on literally the first day after it could do so.
Judge VanDyke wrote further that the majority avoids the outcome these facts require by transforming this court's clear waiver rule into an opaque forfeiture rule. This break from precedent is premised on the majority's misunderstanding of how much it may rely on its own preferences and instincts instead of on concrete acts to find waiver. None of the three purported "acts" of XBS the majority points to supports a conclusion of waiver because each "act" intentionally related to Hill, with whom XBS had no right to arbitrate. Further, the majority's new forfeiture rule fails even on its own terms. XBS did nothing in this case to evince that it affirmatively intended to waive its right to arbitrate-it merely litigated against the named plaintiff Hill and opposed her attempts to certify a class. That should not be enough to intentionally waive a merits defense wholly inapplicable to the named plaintiff.
We are called on to decide whether the district court correctly determined that the actions of Appellant Xerox Business Services, LLC constituted a waiver of its right to compel arbitration as against unnamed parties to the class action below. The Supreme Court's recent decision in Morgan v. Sundance, 142 S.Ct. 1708 (2022), has removed prejudice to the non-moving party as an element of waiver in the context of arbitration contracts. Accordingly, we take occasion to restate this Circuit's rule of waiver of the right to arbitrate, which is nothing more than the general rule of waiver of a contractual right: a party waives its right to compel arbitration when (1) it has knowledge of the right, and (2) it acts inconsistently with that right. Moreover, the body of caselaw in this Circuit applying these two elements remains good law following Morgan which by its own terms decided only...
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