NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MANUEL REYES, 

Plaintiff-Appellee, 

 v. 

HEARST COMMUNICATIONS, INC., 

Defendant-Appellant.

No. 21-16542 

D.C. No. 4:21-cv-03362-PJH 

MEMORANDUM*

Appeal from the United States District Court

for the Northern District of California

Phyllis J. Hamilton, District Judge, Presiding

Submitted June 17, 2022**

San Francisco, California

Before: S.R. THOMAS, BEA, and H. THOMAS, Circuit Judges.

Hearst Communications, Inc. appeals the district court’s order denying its

motion to compel arbitration of claims asserted by Manuel Reyes. We have 

jurisdiction under 9 U.S.C. § 16(a). We affirm.

* 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).

FILED

JUN 22 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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1. The district court did not err in finding that Reyes is a transportation 

worker engaged interstate commerce, and that the Federal Arbitration Act therefore 

does not apply to his claims. See 9 U.S.C. § 1; Rittmann v. Amazon.com, Inc., 971 

F.3d 904, 909 (9th Cir. 2020). Reyes stated in his declaration that the 

advertisements he delivered were “shipped in boxes from other states.” The district 

court could reasonably infer that Reyes would know from observation or 

experience where the boxes originated. The fact that the newspapers and 

magazines arrived by large trucks and on wooden shipping pallets was additional 

circumstantial evidence that they, too, arrived from out of state. And the district 

court reasonably concluded that Hearst’s arguments to the contrary were 

undermined by its failure to produce any evidence that its publications originated 

within California.

2. The district court correctly concluded that Hearst’s arbitration 

agreement with Reyes, including the provision delegating the adjudication of 

threshold issues to the arbitrator (the “delegation clause”), could not be enforced 

under the California Arbitration Act because it is unconscionable under California 

law.

a. Reyes sufficiently raised a specific unconscionability challenge to the

delegation clause. See Tiri v. Lucky Chances, Inc., 226 Cal. App. 4th 231, 240–41

(2014). Reyes argued at the hearing on the motion to compel arbitration that the 
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delegation clause was not enforceable. He submitted an additional filing after the 

hearing in which he expressly asserted that the delegation clause was procedurally 

and substantively unconscionable. The district court understood Reyes to be 

making a specific challenge to the delegation clause, and it assessed the 

unconscionability of the clause separately from the arbitration agreement as a 

whole, as California law requires. See id.; cf. Yamada v. Nobel Biocare Holding 

AG, 825 F.3d 536, 543 (9th Cir. 2016).

b. Under California law, when an employer requires an employee to 

arbitrate unwaivable statutory claims, the arbitration agreement must adhere to 

certain requirements, including that the agreement cannot “require [the] 

employee[] to pay either unreasonable costs or any arbitrators’ fees or expenses as 

a condition of access to the arbitration forum.” Armendariz v. Found. Health 

Psychcare Servs., Inc., 24 Cal. 4th 83, 102 (2000); see Lim v. TForce Logistics, 

LLC, 8 F.4th 992, 1002–04 (9th Cir. 2021). The district court correctly held that 

Hearst’s arbitration agreement with Reyes violated this rule because it contained a 

provision requiring Reyes to pay an equal share of all arbitration fees.

Contrary to Hearst’s arguments, Reyes was not required to introduce 

evidence of the amount of fees he would be required to pay to arbitrate threshold 

unconscionability issues. The agreement, on its face, requires that he pay an equal 

share of all fees incurred. That is a violation of California law, regardless of
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whether Reyes could afford arbitration. See Armendariz, 24 Cal. 4th at 102; Lim, 8 

F.4th at 1004 (“[I]mposing arbitration expenses on an employee that he would not 

otherwise bear in federal court is unconscionable regardless of his ability to pay.”).

The rule from Armendariz applies to the unwaivable statutory claims Reyes 

asserts in this action, including claims under California Labor Code § 1194. See 

Gentry v. Superior Court, 42 Cal. 4th 443, 456–57 (2007), abrogated on other 

grounds by AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011); Lim, 8 F.4th 

at 996, 1002–04 (applying Armendariz to claims similar to those asserted by 

Reyes). Hearst’s contention that equally apportioning arbitration fees comports 

with the default rule of California Code of Civil Procedure § 1284.2 is squarely 

foreclosed by Armendariz. 24 Cal. 4th at 112–13.

Finally, Hearst’s argument that Reyes could challenge his obligation to pay

arbitration fees before the arbitrator finds no support in the language of the 

agreement. The agreement authorizes the arbitrator to resolve disputes related to 

the apportionment of fees, but it does not empower the arbitrator to depart from the 

contracted rule of equal apportionment. Even if the agreement did grant the 

arbitrator discretion to excuse Reyes from paying fees, it would still impose an 

impermissible risk that the arbitrator would not exercise that discretion, leaving 

Reyes with fees he would not otherwise bear in federal court. See Armendariz, 24 

Cal. 4th at 110; Lim, 8 F.4th at 1004.
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c. The district court correctly found that there was sufficient evidence of 

procedural unconscionability that, when combined with the substantively 

unconscionable fee-splitting provision, rendered the arbitration agreement and 

delegation clause unconscionable. Hearst did not dispute that all delivery persons 

entered into substantially similar form agreements, which is some evidence of 

procedural unconscionability. See Poublon v. C.H. Robinson, Co., 846 F.3d 1251, 

1261 (9th Cir. 2017). The district court did not, as Hearst asserts, improperly refuse

to resolve factual disputes related to Reyes’s knowledge of English and ability to 

understand the arbitration agreement. Rather, the court considered the parties’ 

competing narratives and “f[ound] [Reyes’s] version . . . persuasive.”

d. The district court did not abuse its discretion by declining to sever the 

fee-splitting provision from the rest of the arbitration agreement. See Lim, 8 F.4th 

at 999 (standard of review). The court was well within its discretion to conclude

that severance was not appropriate given Hearst’s inclusion of a fee-splitting 

provision that has been impermissible under Armendariz for more than two 

decades. See Armendariz, 24 Cal. 4th at 124 n.13; Lim, 8 F.4th at 1005–06.

AFFIRMED.