### F OR P UBLICATION



## UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

M I C H E L L E 

### R I C H A R

D S 

### , on behalf of herself and others similarly situated and on behalf of the g eneral public,

Plaintiff-Appellee
,

v

.

E R N S T 

### & Y O U

N G 

### , L L P, Defendant-Appellant

. N o. 11-17530

D.C. No. 5:05-cv-04867- RMW

OPI NI ON

A ppeal from the United States District Court for the Northern District of California J eremy D. F og e l, District J udg e , Presiding

Arg ued and Submitted J une 14, 2013—San F rancisco, California

F iled Aug ust 21, 2013

B efore: Mary

M. Schroeder, Kenneth F . Ripple, * 

### and Consuelo M. Callahan, Circuit J udg es.

Per Curiam Opinion

* T h e Ho n o rab l e K e n n e th F. Rip p le, Sen io r Circu it J u dg e f o r t h e U .S. Co u rt o f A p peals f o r th e Sev en th

Circu it, sittin g b y

d esig n atio n

.

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SUMMARY * *



### Arbitration

The p anel reversed the district c o u r t ’ s denial of Ernst & Young
, L L P’s motion to compel arbitration of state wag e a nd hour claims asserted by

the former employ

ee plaintiff.

The district c ourt dete r m i n e d that E rnst & Young h ad waived its rig ht to arbitration by failing to assert that r ig ht a s

a defense in a n a c t i o n broug ht by two former employ ees, whose action had been consolidated with that of the plaintiff. The panel reversed the district court’s judg ment because the plaintiff had not established a n y prejudice as a result of Ernst & Yong ’s alleg ed delay

in asserting its arbitral rig hts.

COUNSEL

Rex S. Heinke, Greg ory William Knopp, and Katharine J ane Galston, Akin Gump Strauss H auer & F eld L L P, L o s Ang eles, California, for Defendant-Appellant.

Max F olkenflik, F olkenflik & McGerity
, N ew York, New York; H. Tim Hoffman, Arthur W illiam L az ear, and Ross L

. L ibenson, for Plaintiffs-Appellees.

** T h is su m m ary co n stitu

t es n o p ar t o f t h e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.

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OP INION

PER CURI AM:

Defendant Ernst & Y oung , L L P appeals the district court’s denial of its m o tion to compel arbitration of state wag e and hour claims asserted by its former e mploy ee , Michelle Richards. 1 

### The defendant filed the motion after the Supreme Court’s decision i n A T& T Mobility LLC v

. Concepcion
, 131 S. Ct. 1740 (2011). Th e district court determined that Ernst & Young had w a i v e d i ts rig ht to

ar b i t r a t ion by failing to assert that rig ht as a defense in an action broug ht by two other former employ ees, David H o a nd Sarah F ernandez
, whose ac tion had been consolidated with that of Ms. Richards. Because Ms. Richards has not established any prejudice as a r esult of Ernst & Young ’s alleg ed delay in as s erting its arbitral rig hts, we reverse the judg ment of the district court. 2



### “W aiver of a contractu al rig ht to arbitration is not favored
, ” and, therefore, “any p arty arg uing waiver o f arbitration bears a heavy burden o f p r o of.” Fisher v. A.G. Becker Paribas Inc.
, 7 9 1 F .2d 691, 694 (9th Cir. 1 986) (quotation marks omitted). Specifically
, “[ a] party seeking to prove waiver o f a rig ht to a rbitration must demonstrate: (1) knowledg e of a

n ex isting rig ht to compel arbitration; (2) acts inconsistent with that ex isting rig h t; and (3) prejudice to the party opposing a rbitration resulting from such inconsistent acts.” Id. “ W here, as h ere, the concern is whether the undisputed facts of d efendant’s pretri al participation in the

1 T h e d istrict co u rt’ s j u risd ictio n w as b ased

o n 2 8 U.S.C. § 1 3 3 2

.

2 Ou r j u risd ictio n

is b ased o n

9 U.S.C. § 1 6 (a)(1 )(B ).

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litig ation satisfy the standard f or w a i v e r, the question o f waiver of arbitration is one of law which we review de novo

. ” Id. at 693.

Ms. Richards arg ues that she was prejudiced b ecause there was litig ation on the merits, and, as a result, some of her claims were dismissed. We cannot acc ept this arg ument. One of Ms. Richards’ claims—Ernst & Young ’s f ailure to provide meal and rest breaks—was dismissed without prejudice, which is not a decision o n the merits. See Oscar v

. Alaska Dep’t of Educ. & Early Dev. , 541 F .3d 978, 981 (9th Cir. 2008). The o t h er c l aim o n which the district court ruled—Ms. Richards’s claim for injunctive relief— w a s resolved by the district cou r t o n the basis of standing : Ms. Richards, as a form e r e m p loy ee, could not benefit from prospective relief and therefore d i d n o t have standing to assert that claim. W e previously have observed t h a t “ [ t] he jurisdictional question of standing prec e d e s, and does not require, analy sis of the merits.” Equity Lifestyle Props., Inc.

v. Cnty. o f San Luis Obispo
, 548 F .3d 1 1 84, 1189 n.10 (9th Cir. 2008).

Ms. Richards also mainta i n s that she was p rejudiced because E rnst & Young conducted discovery that c aused her
to incur ex p e n s e s d u ring the y ears of litig ation prior to the motion to compel. Ms. Richards does not contend, however,
t hat E rnst & Young used discovery “to g ain inform a t i o n about the other side’s c ase that could not have b een g ained in arbitration. ” S

a i n t Agnes Med. Ctr. v. PacifiCare o f Cal.
, 31 Cal. 4th 1 187, 1204, 8 Cal. Rptr. 3d 517, 530, 82 P.3d 727, 738 (C a l

. 2 0 03) (noting that courts have found prejudice in such circumstances). More o v er, in F isher
, we rejected the notion that “self-inflict e d” e x penses could be evidence o f prejudice. 791 F .2d a t 698. L ike the plaintiffs in Fisher
, Ms.

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R i c h a r ds was a “part[ y ] to an ag reement making arbitratio n of disputes mandatory ,” and therefore “[ a] n y ex tra ex pen se incurred as a result of [ Ms. Richards’s] deliberate choice o f

an improper forum, in c ontravention of their contract, cannot be charg e d to” Ernst & Young

. Id.

Alternatively
, Ms. Richards u rg es that we may rely on the decision o f the N ational L abor Relations Bo a r d (“NL RB ”) decision in D.R. Horton
, 357 N. L

. R

. B

. No. 1 84, 2 012 W L 36274 (J an. 3, 2012), to affirm the district court’s judg ment. W e d ecline to do so. Ms. Richards failed to r a i s e t he
arg ument that her arbitration ag reement with Ernst & Y oung

was unenforceable und e r t h e National L abor Relations A ct (“NL RA”) until after the parties had briefed, and the district
court had d enied, Ernst & Yo u n g’s motion to compel. “W e apply a ‘g eneral rule’ a g ainst entertaining arg uments on appeal that were not presented or developed before the district court.” Peterson v

. H ighland Music, Inc.
, 140 F .3d 1313, 1321 (9th Cir. 1998). W e also n ote that the only court of appeals, a

nd the overwhelming majori t y of the district courts, to have considered the issue have determined that they should not def

e r to the NL RB ’s decision in D.R. Horton because it conflicts with t h e ex plicit pronouncements of the Supreme Court concerning the p olicies underg irding the F ederal Arbitration Act (“F AA”), 9 U.S.C. §§ 1–16. 3 

### F inally
,

3 S ee, e. g

. , Owen v. Bristo l Ca re, In c. , 7 0 2 F.3 d 1 0 5 0
, 1 0 5 5 (8 th Cir. 2 0 1 3 ) (“ [G]iv en th e ab sen ce of an y ‘ co n trary co n g ressio n al c o m m an d’ f ro m th e FL SA th at a r i g h t to en g ag e in class actio n s ov errid es th e

m an d ate o f t

h e FA A in f

av o r o f arb itratio n , w e rej ect Ow en ’ s i n v itatio n to f o llo w th e NL RB ’ s ratio n ale in D.R. Ho rto n

. . . .” (q u o tin g Co mp u Cred i t Co rp . v. Green wo o d , 1 3 2 S. C t. 6 6 5 , 6 6 9 (2 0 12 )); Delo ck

v. S ecu rita s Sec. S

ervs. US A, In c. , 8 8 3 F. Su

p p

. 2 d 7 8 4
, 7 8 9 (E.D. A rk

. 2 0 1 2 ) (“ T h e Co u

rt d eclin es to en d orse, h o w ev er, th e B o ard ’ s ap p licatio n

o f th e Fed eral A rb itratio n A ct o r its read in g o f t h e p reced en t ap p l y in g th at

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the Supreme Court recently has reiter a t ed that “courts must rig orously e n f

o r ce arbitration ag reements according to their terms” and that this “ holds true for claims that alleg e a vi o l a t i o n of a federal statute, u nless the F AA’s mandate has

A ct. T h e NL RA
, as in terp re t e d i n Ho r to n , co n f licts w ith t

h e FA A
, as in terp reted b y th e S u

prem e Co u rt.”); Mo r

va n t v. P.F. Ch a n g ’s Ch i n a Bistro

, In c. , 8 7 0 F. Su

p p

. 2 d 8 3 1
, 8 4 5 (N.D. Cal. 2 0 1 2 ) (n o tin g th at th e Su p rem e Co u

rt h ad “ h eld th at co u rts are req u ired to en f o rce ag reem en ts to arb itrate acco rd in g to th eir term s, u n less th e FA A ’ s m an date h as b een

o v errid d en b y a co n trary co n gr e s s i o n al co m m an d ,” b u t co n clu d in g th at

“ C o n g ress d id n o t ex p ressly p ro v id e th at it w as o v errid in g an y p ro v isio n in t h e FA A w

h en it en acted th e NL RA o r t h e N o rris- L aGu ard i a A ct” ( i n tern al q u o tatio n m ark s o m i tted )); Ja sso v. Mo n ey M a rt Exp ress, In c

. , 8 7 9 F

. Su p p

. 2 d 1 0 3 8, 1 0 4 9 (N.D. Cal. 20 1 2 ) (“ B ecau se Co n g ress d id n o t

ex p ressly pro v id e t h a t i t w as o v errid in g an y p ro v isio n i n th e FA A
, th e Co u rt can n ot read su ch a p ro v isio n in to th e NL RA an d is co n strain ed

b y [ AT& T Mo b ility LLC v.] Co ncep cio n [, 1 31 S. C t. 1 7 4 0 (2 0 1 1 ),] to en f orce th e in stan t ag reem en t acco rd i n g to its term s. ” ) ; L aVo ice v. UBS Fin

. S ervs., In c. , No

. 1 1 Civ

. 2 3 0 8 (B SJ ) (J L C ), 2 0 1 2 W L 1 2 45 9 0, at * 6 (S.D.N.Y. J an

. 1 3
, 2 0 12 ) (h o ld in g t h at “ th is Co u rt m

u st read AT & T Mo b ility as stan din g ag ain st an y arg u m en t t ha t an ab so lu te rig h t to

co lle c tiv e actio n is co n sisten t w ith t h e FA A ’ s ‘ o v erarch in g p u rp ose’ of

‘ en su r[in g ] th e en f

o rcem en t o f arb itratio n ag reem e n t s a cco rd in g to th eir
term s s o as to f

acilitate stream lin ed pro ceed in g s’ ” an d t h at, “ [t]o th e

ex ten t th at L aVo ice relie s o n

. . . th e recen t decisio n o f t h e [NL RB ] in D.R. Ho rto n, In c.

. . . , as au t h o rity to su

pp o rt a co n f

l ictin g read in g of A T & T M ob ility
, th is Co u rt d eclin es to f o llo w th [at] d ecisio n []” (q u o tin g A T & T Mo b ility
, 13 1 S. Ct. at 1 7 4 8 )). Bu t see Bro wn v. Citico rp Cred i t S ervs. , No

. 1 :1 2- cv

- 0 0 0 6 2

- B L W
, 2 0 1 3 W L 6 4 5 9 4 2
, at * 3 (D. Id ah o Feb

. 2 1
, 2 0 1 3 ) (d ef

errin g to NL R

B ’ s d ecisio n in D.R. Ho rto n u n der C h evro n , U.S .A., In c. v. N

a tu ra l Res. Def. Co u n cil, In c. , 46 7 U.S. 8 3 7 (1 9 8 4 ), as

“ ratio n al an d co n sisten t” w ith t h e N L RA
, b u t f ailin g to co n s id er

co u n terv ailin g p o licies o r d ef eren ce w ith resp ect to th e FA A ); Herrin g t o n

v. W atersto n e Mo rtg

. Co rp

. , No

. 1 1

- cv

- 7 7 9

- b bc, 20 1 2 W L 1 2 4 23 1 8, at * 6 (W .D. W is. Mar. 1 6, 2 0 1 2 ) (f in d in g “ th e B o ard ’ s in terp retatio n o f th e NL RA in D.R. Ho rto n [] is reaso n ab l y d ef en sib le” an d
, th eref

o re,

“ ap p ly in g it

. . . to in v alid ate th e co llectiv e actio n w aiv er in th e arb itratio n ag reem en t” (in tern al q u o tatio n m ark s o m itted )).

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been overridden by a contrary c ong ressional command.” A m

. Express v

. Italian Colors Rest.
, 133 S. Ct. 2304, 2309 (2013) (internal quotation ma r ks omitted). “Cong ress,” however, “did not ex pressly provid e t h a t it was overriding any provision in the F AA w hen it enacted the NL RA or the Norris-L aGuardia Act.” Morvant v. P.F. Cha n g ’ s China Bistro, Inc.
, 870 F

. Supp. 2d 831, 845 (N.D. Cal. 2012).

REVERSED. 4

4 B ecau se th e d istrict co u rt sh o u ld h av e co m p elled arb itratio n , an d b ecau se th e arb itratio n ag reem en t b etw een E r n s t & Yo u n g an d Ms. Rich ard s p reclu d es clas s arb itratio n , w e also v acate th e d istrict co u rt’ s

o rd er certif

y i n g a class o f litig an ts w ith Ms. Rich ard s as its rep resen tativ e.