Court Opinion

ID: 3066019
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:52:32.522001+00
Date Added: 2024-06-11T11:25:49.541877
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             DEC 22 2014

                                                                        MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

EDVARD ESHAGH,                                   No. 12-16718

              Plaintiff - Appellant,             D.C. No. 1:11-cv-00222-LJO-DLB

  v.
                                                 MEMORANDUM*
THE TERMINIX INTERNATIONAL
COMPANY, L.P., a limited partnership;
TERMINIX INTERNATIONAL, INC., a
corporation,

              Defendants - Appellees.

                   Appeal from the United States District Court
                       for the Eastern District of California
                   Lawrence J. O’Neill, District Judge, Presiding

                       Argued and Submitted October 7, 2014
                             San Francisco, California

Before: THOMAS, Chief Judge, and O’SCANNLAIN and McKEOWN, Circuit
Judges.

       Edvard Eshagh appeals the district court’s order striking class allegations

from his complaint and compelling arbitration of his claims against The Terminix

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
International Company, L.P. and Terminix International, Inc. Specifically, Eshagh

contends that the district court erred (1) in concluding that Terminix did not waive

its right to compel arbitration, (2) in concluding that the parties’ arbitration

agreement was not illusory or unconscionable, and (3) by striking class claims

from Eshagh’s complaint.

                                            I

      Regardless of whether Terminix had knowledge of an existing right to

compel arbitration prior to AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740

(2011), it did not act inconsistently with such a right by filing a motion to dismiss

prior to its motion to compel arbitration. See Lake Communications, Inc. v. ICC

Corp., 738 F.2d 1473, 1476–77 (9th Cir. 1984) (holding that a party which “had

not yet filed an answer,” filed counterclaims, filed a motion to dismiss, and

engaged in limited discovery did not waive its contractual arbitration rights),

overruled on other grounds by Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 632–35 (1985); Britton v. Co-op Banking

Grp., 916 F.2d 1405, 1407–09, 1413 (9th Cir. 1990) (concluding that a party who

actively avoided discovery and filed multiple motions to stay district court

proceedings did not act inconsistently with its arbitration rights).

                                            II

                                            2
      The district court did not err in holding that the arbitration agreement was

not unconscionable. An arbitration clause is unenforceable under California law

only if it is both procedurally and substantively unconscionable. Ting v. AT&T,

319 F.3d 1126, 1148 (9th Cir. 2003). Eshagh has not provided any authority

suggesting that the arbitration clause itself—which merely addresses the parties’

ability to recover “indirect, special or consequential damages or loss of anticipated

rents and/or profits”—is substantively unconscionable.

      Similarly, the district court properly determined that the arbitration

agreement was not illusory. A contract provision is illusory and not enforceable if

one of the parties can avoid the provision by unilaterally amending or terminating

the agreement. See Asmus v. Pac. Bell, 999 P.2d 71, 79 (Cal. 2000). The

termination provision is limited to a change in existing law regarding termite-

control services, and is thereby not so broad as to render the agreement illusory.

Cf. Casas v. Carmax Auto Superstores California LLC, 224 Cal. App. 4th 1233,

1237 (Cal. Ct. App. 2014) (holding that a provision permitting an employer to

modify unilaterally an arbitration agreement upon providing 30-days notice was

not illusory in light of the implied covenant of good faith and fair dealing).

                                          III

                                           3
      Finally, the district court did not err in striking Eshagh’s class claims. Issues

that “contracting parties would likely have expected a court to have decided” are

considered “gateway questions of arbitrability” for courts, and not arbitrators, to

decide. Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011). The Supreme Court

has made it clear that “class-action arbitration changes the nature of arbitration to

such a degree that it cannot be presumed the parties consented to it by simply

agreeing to submit their disputes to an arbitrator.” Stolt-Nielsen S.A. v.

AnimalFeeds Int’l Corp., 559 U.S. 662, 685 (2010); see also Concepcion, 131 S.

Ct. at 1750–52 (emphasizing the “fundamental” changes implicated in the shift

from bilateral to class-action arbitration).

      AFFIRMED.1

      1
         The Motion for Leave To File Brief of Amicus Curiae in Support of
Plaintiff-Appellant by Consumer Attorneys of California is GRANTED.

                                               4