Court Opinion

ID: 3181642
Source: CourtListenerOpinion
Date Created: 2016-03-01 21:07:49.702452+00
Date Added: 2024-06-11T10:16:07.674745
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                            FOR THE NINTH CIRCUIT
                                                                           MAR 01 2016
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
DAVID WULFE,                                     No. 13-57177

              Plaintiff - Appellant,             D.C. No. 2:12-cv-05971-MWF-E

 v.
                                                 MEMORANDUM*
VALERO REFINING COMPANY -
CALIFORNIA, et al.,

              Defendants - Appellees.

                   Appeal from the United States District Court
                       for the Central District of California
                  Michael W. Fitzgerald, District Judge, Presiding

                      Argued and Submitted February 2, 2016
                               Pasadena, California

Before: WARDLAW and HURWITZ, Circuit Judges and RICE,** Chief District
Judge.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Thomas O. Rice, Chief United States District Judge
for the Eastern District of Washington, sitting by designation.

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      David Wulfe, a refinery operator, filed suit against his former employer,

Valero Refining Co., alleging several employment related claims. Wulfe appeals a

district court order compelling arbitration, confirming an arbitration award, and

denying reconsideration. We have jurisdiction pursuant to 28 U.S.C. § 1291. We

affirm the orders compelling arbitration and denying reconsideration. We also

affirm, in part, the order confirming the arbitration award but remand for the

district court to consider in the first instance the effect of recent case law.

      1. Wulfe agreed to arbitrate. Under California law, consent to arbitrate can

either be express or implied. Davis v. Nordstrom, Inc., 755 F.3d 1089, 1093 (9th

Cir. 2014). Here, Wulfe impliedly agreed to arbitrate because the arbitration

agreement was a condition of his employment; Wulfe was aware that if he

continued to work, he would be bound by this condition; and Wulfe continued his

employment with Valero after the arbitration agreement went into effect. See Craig

v. Brown & Root, Inc., 100 Cal. Rptr. 2d 818, 820-21 (Ct. App. 2000).

      2. The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, applies to

Wulfe’s wage claims. Although wage claims under California Labor Code section

229 are generally not subject to arbitration, the FAA supersedes any contrary state

law. See Perry v. Thomas, 482 U.S. 483, 491 (1987). The FAA “provide[s] for the

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enforcement of arbitration agreements within the full reach of the Commerce

Clause.” Id. at 490. Here, not only does the DRP expressly state that the FAA

applies, Wulfe and Valero’s employment relationship undoubtedly involves

interstate commerce: Wulfe, a citizen of California, was employed by Valero, a

citizen of Texas, as an oil refinery operator at one of Valero’s California facilities.

      3. The arbitration agreement is not unconscionable. Although there are

elements of procedural and substantive unconscionability within the arbitration

agreement— “the former focusing on ‘oppression’ or ‘surprise’ due to unequal

bargaining power, the latter on ‘overly harsh’ or ‘one-sided’ results,” Armendariz

v. Found. Health Psychcare Servs., Inc., 6 P.3d 669, 690 (Cal. 2000) (citation

omitted)—neither element, when viewed together, tips the scale toward a finding

of unconscionability. See Sanchez v. Valencia Holding Co., LLC, 353 P.3d 741,

748 (Cal. 2015).

      4. The district court did not err in compelling arbitration of Wulfe’s Private

Attorneys General Act (“PAGA”), Cal. Labor Code § 2698, et seq. claim. The

California Supreme Court and we have recently held that pre-dispute agreements to

waive the right to bring a representative PAGA claim are unenforceable and that

this rule is not preempted by the FAA. Sakkab v. Luxottica Retail N. Am., Inc., 803

                                           3
F.3d 425 (9th Cir. 2015); Iskanian v. CLS Transp. L.A., LLC, 327 P.3d 129 (Cal.

2014). But the district court’s order compelling arbitration did not run afoul of

Sakkab and Iskanian because the order did not prevent Wulfe from bringing a

representative PAGA claim in arbitration; instead, the district court left the scope

of the agreement to the arbitrator to decide in the first instance.

      5. The district court did not abuse its discretion when it found that Wulfe

was judicially estopped from arguing that the arbitrator’s award should be

reviewed de novo. The doctrine of judicial estoppel “generally prevents a party

from prevailing in one phase of a case on an argument and then relying on a

contradictory argument to prevail in another phase.” New Hampshire v. Maine, 532
U.S. 742, 749 (2001) (citation omitted). Here, Wulfe’s position—that the district

court should apply de novo review to the arbitrator’s denial of classwide

arbitration—is “clearly inconsistent” with his earlier position that the arbitrator

should decide whether classwide arbitration is available; the district court relied, at

least in part, on Wulfe’s earlier position when ruling in his favor; and Wulfe would

derive an unfair advantage if not estopped. Milton H. Greene Archives, Inc. v.

Marilyn Monroe LLC, 692 F.3d 983, 992-94 (9th Cir. 2012).

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      6. The arbitration award was not procured by fraud or undue means. While

an arbitrator’s award may be vacated if it was “procured by corruption, fraud, or

undue means,” 9 U.S.C. § 10(a)(1), the conduct at issue here was discovered and

brought to the attention of the arbitrator before she issued her decision and had no

effect on the arbitrator’s decision. See A.G. Edwards & Sons, Inc. v. McCollough,

967 F.2d 1401, 1403-04 (9th Cir. 1992).

      7. Finally, Wulfe argues that the arbitrator exceeded her powers by allegedly

ordering Wulfe to proceed with his PAGA claim on an individual basis because

such a right cannot be waived. Wulfe’s argument rests on the holdings recently

announced in Iskanian and Sakkab, which were both issued after the arbitrator

issued her award and the district court confirmed the same. We leave to the district

court to consider in the first instance Wulfe’s argument that, in light of those

subsequent decisions, the arbitrator’s award should be vacated because she

“exceeded [her] powers, or so imperfectly executed them that a mutual, final, and

definite award upon the subject matter submitted was not made.” 9 U.S.C. §

10(a)(4).

      AFFIRMED IN PART AND REMANDED IN PART.

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