Martinez-Gonzalez v. Elkhorn Packing Co.

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Citation: 25 F.4th 613
• Docket Number: No. 19-17311,19-17311
• Parties: Dario MARTINEZ-GONZALEZ, on behalf of himself and other aggrieved employees, Plaintiff-Appellee, v. ELKHORN PACKING CO. LLC; D'Arrigo Bros. Co. of California, Defendants-Appellants.
• Decision Date: 03 November 2021

25 F.4th 613

Dario MARTINEZ-GONZALEZ, on behalf of himself and other aggrieved employees, Plaintiff-Appellee,
v.
ELKHORN PACKING CO. LLC; D'Arrigo Bros. Co. of California, Defendants-Appellants.

No. 19-17311

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 1, 2021 San Francisco, California
Filed November 3, 2021
Amended February 14, 2022

Regina Silva (argued) and Dan J. Bulfer, Atkinson Andelson Loya Ruud Romo, La Jolla, California; Geoffrey F. Gega, Law Offices of Geoffrey Gega, Santa Ana, California; for Defendants-Appellants.

Karla Gilbride (argued) and Rodolfo Padilla, Public Justice P.C., Washington, D.C.; Ana Vicente de Castro and Josephine B. Weinberg, California Rural Legal Assistance Inc., Salinas, California; for Plaintiff-Appellee.

Bruce Goldstein, Iris Figueroa, and Gabriela Hybel, Farmworker Justice, Washington, D.C., for Amicus Curiae Farmworker Justice.

Before: Eugene E. Siler,^* Johnnie B. Rawlinson, and Patrick J. Bumatay, Circuit Judges.

Order;

Opinion by Judge Bumatay ;

Dissent by Judge Rawlinson

ORDER

The opinion filed on November 3, 2021, and published at 17 F.4th 875, is amended by the opinion filed concurrently with this order.

With this amended opinion, Appellee's petition for panel rehearing and rehearing en banc is DENIED. Judge Bumatay and Judge Siler have voted to deny the petition for panel rehearing. Judge Bumatay has voted to deny the petition for rehearing en banc and Judge Siler so recommends. Judge Rawlinson has voted to grant the petition for panel rehearing and rehearing en banc. The full court has been advised of the petition for rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35. No further petitions for panel rehearing or rehearing en banc may be filed.

AMENDED OPINION

BUMATAY, Circuit Judge:

25 F.4th 619

For three consecutive lettuce-harvesting seasons, Dario Martinez-Gonzalez worked as a farm laborer for Elkhorn Packing Company and D'Arrigo Brothers (collectively, "Elkhorn"). After quitting his job in the middle of the third season, Martinez-Gonzalez sued his former employers, alleging violations of federal and state labor and wage laws. Elkhorn later moved to compel arbitration under agreements signed by Martinez-Gonzalez after he traveled to the United States and started harvesting lettuce. The district court refused to enforce the arbitration agreements, holding that Martinez-Gonzalez signed them under economic duress and undue influence. We reverse and remand.

I.

Elkhorn Packing Company is a farm labor contractor for D'Arrigo Brothers, a California-based grower of vegetables. In 2015, Martinez-Gonzalez resided in Mexicali, Mexico, supporting his wife and their parents, when he learned about an opportunity to work for Elkhorn in the United States. A job at Elkhorn paid up to five times as much as Martinez-Gonzalez earned in Mexico. In 2016, Elkhorn accepted Martinez-Gonzalez's application and helped him obtain an H-2A temporary agricultural worker visa. Elkhorn then transported Martinez-Gonzalez to Monterey County, California, to start the job.

Elkhorn held orientations for incoming employees. For Martinez-Gonzalez, the orientation did not occur until a few days after he began harvesting lettuce in the fields. The orientation took place at the end of the workday, at around 4 p.m., in a hotel parking lot. At the orientation, some 150 workers were asked to sign employment paperwork. To facilitate the signing of the paperwork, Elkhorn representatives directed employees to form lines, where they stood—in at least one case for 40 minutes—and waited to sign the packages. Once at the front of the line, an Elkhorn representative told each employee where to sign while flipping through the pages. Representatives urged employees to hurry so that others could have a chance to sign.

The employment package included an arbitration agreement. The agreement required employees to resolve all disputes with Elkhorn by arbitration. The agreement was written in Spanish, Martinez-Gonzalez's native language. Martinez-Gonzalez signed the arbitration agreement without reading it. Elkhorn representatives didn't explain the contents of the arbitration agreement to Martinez-Gonzalez,¹ didn't give him a copy of the agreement, and didn't tell him he could consult an attorney before signing it. On the other hand, Martinez-Gonzalez didn't ask for a copy of the agreement, attorney consultation, or time to read the agreement. All sides agree that Elkhorn never expressly told Martinez-Gonzalez that he had to sign the agreement to keep working for the company.

Martinez-Gonzalez completed the 2016 season and traveled back to Mexico on Elkhorn-funded transportation. For the 2017 season, Martinez-Gonzalez again harvested lettuce for Elkhorn in Monterey County, California.² He also signed an arbitration agreement for the 2017 season. But Martinez-Gonzalez didn't finish the

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2017 season. He quit Elkhorn mid-season and returned to Mexico on his own.

In 2018, Martinez-Gonzalez sued Elkhorn in California state court on behalf of himself and other similarly situated workers, alleging a failure to pay federal minimum wages under the Fair Labor Standards Act, and state-law claims related to meals, wages, rest periods, and privacy. Elkhorn removed the case to federal district court and moved to compel arbitration under the two arbitration agreements. The district court held a two-day bench trial to determine the enforceability of the agreements and concluded that they resulted from undue influence and economic duress. The district court accordingly held the agreements invalid and unenforceable and denied the employers' motion to compel. Elkhorn appeals to this court.

II.

The Federal Arbitration Act provides that arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. In determining the enforceability of an arbitration agreement, "generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2." Nagrampa v. MailCoups, Inc. , 469 F.3d 1257, 1268 (9th Cir. 2006) (simplified). State contract law governs this inquiry. Revitch v. DIRECTV, LLC , 977 F.3d 713, 716 (9th Cir. 2020). We review the enforceability of an arbitration agreement de novo, but the factual findings underlying the district court's decision for clear error. Nagrampa , 469 F.3d at 1267–68.

A.

In California, a contract signed under economic duress may be rescinded. See Cal. Civ. Code § 1689(b)(1). Economic duress occurs when one party commits a (1) "wrongful act" and (2) that act "is sufficiently coercive to cause a reasonably prudent person faced with no reasonable alternative" to agree to an unfavorable contract. Perez v. Uline, Inc. , 157 Cal. App. 4th 953, 959, 68 Cal.Rptr.3d 872 (2007) (simplified). Economic duress also requires (3) causation: "[a] contract cannot be rescinded when it appears that consent would have been given ... notwithstanding the duress[.]" In re Cheryl E. , 161 Cal. App. 3d 587, 600, 207 Cal.Rptr. 728 (1984) ; see also Judicial Council of California Civil Jury Instructions § 333, Affirmative Defense—Economic Duress (2020) (establishing three elements for economic duress).

The doctrine of economic duress does not prohibit "[s]imple hard bargaining." Sheehan v. Atlanta Int'l Ins. Co. , 812 F.2d 465, 469 (9th Cir. 1987). Instead, it is "designed to preclude the wrongful exploitation of business exigencies to obtain disproportionate exchanges of value." Id. (simplified). While the doctrine guards against "economic exploitation," it doesn't interfere with the "notion of freedom of contract" or "the desirability of finality of private dispute resolution." Id. The doctrine is one of "last resort," to be used only absent "conventional alternatives and remedies." Rich & Whillock, Inc. v. Ashton Dev., Inc. , 157 Cal. App. 3d 1154, 1159, 204 Cal.Rptr. 86 (1984) ; see Grace M. Giesel, A Realistic Proposal for the Contract Duress Doctrine , 107 W. Va. L. Rev. 443, 463–64 (2005) (noting that, in the 88 published cases nationwide on economic duress between 1996 and 2003, only nine were decided in favor of the claim). The party seeking rescission bears the burden of proving economic duress. See Saheli v. White Mem. Med. Ctr. , 21 Cal. App. 5th 308, 324, 230 Cal.Rptr.3d 258 (2018).

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Because Elkhorn did not commit a wrongful act and reasonable alternatives were available to Martinez-Gonzalez, we hold that the doctrine of economic duress does not render the arbitration agreements unenforceable.

1.

Martinez-Gonzalez has not...