[00:00:01] Speaker 01: Good morning, Your Honors, and may it please the court. [00:00:03] Speaker 01: My name is Lennon Haas, and along with my partner, Andy Scroggins, we represent the defendant appellant, Tech Systems. [00:00:10] Speaker 01: May I reserve three minutes for rebuttal? [00:00:12] Speaker 03: Of course. [00:00:13] Speaker 03: Counsel, please be reminded that the time shown on the clock is your total time remaining. [00:00:17] Speaker 01: Absolutely, Your Honor. [00:00:18] Speaker 01: Thank you. [00:00:20] Speaker 01: The district court's refusal to compel arbitration was improper for two reasons. [00:00:25] Speaker 01: First, Rule 23D does not provide authority for courts to invalidate [00:00:30] Speaker 01: voluntarily entered into non-adhesive arbitration agreements. [00:00:35] Speaker 01: Instead, the Federal Arbitration Act, a statute conspicuously absent from the district court's order here, tells us when that's OK. [00:00:43] Speaker 01: And second, TEC did not waive the right to compel arbitration, regardless of what Rule 23D provides. [00:00:52] Speaker 03: So starting where we always do with the- What's our standard of review on the issue of whether or not you waived the right to arbitrate? [00:01:00] Speaker 01: Denovo, your honor. [00:01:01] Speaker 01: That would be Hill v. Xerox and Newworth. [00:01:05] Speaker 00: And what about the standard of review on the denial of the motion? [00:01:11] Speaker 01: Denovo as well, your honor. [00:01:13] Speaker 01: Hill v. Xerox is pretty clear on that. [00:01:16] Speaker 00: Okay. [00:01:17] Speaker 00: If we had a chance to write on a new slate, would it not make more sense for the factual determinations to be reviewed for clear error? [00:01:28] Speaker 00: I think it would. [00:01:28] Speaker 01: I think it would, Your Honor, absolutely. [00:01:31] Speaker 00: And while I have you, at some point are you going to address our Dominguez decision and whether it sort of predicts what we should do in this case? [00:01:41] Speaker 01: I certainly can, Your Honor, in just a moment, if that's okay. [00:01:44] Speaker 01: You know, I want to start with the text of Rule 23D. [00:01:49] Speaker 01: There's a clear theme throughout all of its subsections. [00:01:52] Speaker 01: It addresses things like notice. [00:01:54] Speaker 01: It addresses how to manage the class process. [00:01:58] Speaker 01: It addresses procedure. [00:02:00] Speaker 01: In fact, the last part of it says, and deal with similar procedural matters. [00:02:05] Speaker 04: I'm sorry. [00:02:05] Speaker 04: Can I just, on one point you just said, under Patrick, the factual findings for a motion to compel arbitration, they are reviewed for clear error. [00:02:14] Speaker 01: That's right, Your Honor. [00:02:15] Speaker 01: I'm sorry if I misspoke. [00:02:16] Speaker 01: Yes. [00:02:19] Speaker 01: What Rule 23D doesn't really speak to are matters of substance, are matters like, do you have the right to contract with another party? [00:02:28] Speaker 01: Can a district court invalidate or refuse to enforce a contract? [00:02:34] Speaker 01: It certainly, by necessity, includes things like overseeing communications with putative class members. [00:02:41] Speaker 01: But that relates to a notice process. [00:02:43] Speaker 01: That relates to other procedural matters. [00:02:46] Speaker 03: It doesn't really- Also, could this order be considered a case management order? [00:02:51] Speaker 01: I don't think so, Your Honor. [00:02:53] Speaker 01: I mean, the court was addressing the motion before it, which was a motion to compel arbitration. [00:02:58] Speaker 01: I don't think that that's necessarily a case management concern. [00:03:06] Speaker 03: What case do you have that would support the proposition that managing a class action process does not come within the rubric of case management? [00:03:19] Speaker 01: I think managing a class action does. [00:03:22] Speaker 01: I think, though, that this order doesn't just do that. [00:03:25] Speaker 03: That's not part of managing the class action? [00:03:29] Speaker 01: I think that deciding whether or not to compel arbitration is not necessarily a class management concern. [00:03:35] Speaker 03: A case management, that's not a case management concern? [00:03:40] Speaker 01: I mean, if whether or not to compel arbitration is a case management concern, then [00:03:48] Speaker 01: I don't know what the outer limits of that term mean. [00:03:52] Speaker 01: I think that that could suck in any number of things if something like whether or not to compel arbitration qualifies as case management. [00:04:02] Speaker 01: Basically anything. [00:04:04] Speaker 03: What's your definition of case management? [00:04:08] Speaker 01: Well, I would probably, in this case, look to Rule 23D for a little guidance there and say, OK, what's this notice process? [00:04:15] Speaker 03: It has to be broader than Rule 23D. [00:04:17] Speaker 03: Case management has to be broader than that. [00:04:19] Speaker 01: Sure. [00:04:20] Speaker 03: So generically, what does case management mean to you? [00:04:24] Speaker 01: I would think kind of the course of proceedings. [00:04:26] Speaker 01: How long is discovery going to last? [00:04:27] Speaker 01: What are the contours of discovery? [00:04:29] Speaker 01: Are we going to bifurcate liability and damages at trial? [00:04:33] Speaker 01: How many witnesses are each side going to be permitted to take? [00:04:38] Speaker 01: Contents of a scheduling order at the outset of civil litigation Those those come to mind as case management issues roll 23d It has an opt-out procedure, but you all created an opt-in procedure right because you said [00:04:57] Speaker 04: You know, anyone who stays employed by the end of 23 is automatically going to be subject to our new arbitration agreement. [00:05:05] Speaker 04: And if you want to stay a member of this class, you have to opt in by January 9th. [00:05:11] Speaker 01: You have to opt out of the arbitration agreement? [00:05:13] Speaker 01: Is that what you're referring to? [00:05:16] Speaker 04: Rule 23 requires opt out, but your arbitration process made it an opt in because you have to opt into the class by submitting that form by January 9th of 24 saying you don't want to be subject to this arbitration agreement. [00:05:32] Speaker 04: So why wouldn't Gulf Oil granting district courts broad authority to control class actions plus Rule 23 give the district court the authority to do what it did here? [00:05:46] Speaker 01: Two parts to answer that, Your Honor. [00:05:48] Speaker 01: Number one, Gulf Oil also said, you know, you have broad discretion, but you need to impose or order the least restrictive relief possible under the circumstances. [00:06:02] Speaker 01: Here, invalidating, well, refusing to enforce these agreements for this case, you know, we'll concede the district court didn't say, no, these agreements are no good for any case. [00:06:14] Speaker 01: But refusing to enforce them for this case was not the least restrictive means. [00:06:18] Speaker 03: What would be a less restrictive means? [00:06:21] Speaker 01: Well, could have ordered corrective notice. [00:06:24] Speaker 04: But corrective notice without an opportunity to opt out. [00:06:29] Speaker 04: doesn't take care of any misleading communication or potential coercion, right? [00:06:34] Speaker 04: How does it remedy any misleading or coercive communication? [00:06:38] Speaker 04: We're just putting you on notice that you were misled and coerced. [00:06:42] Speaker 04: How is that an adequate remedy? [00:06:44] Speaker 01: Well, I don't think by itself necessarily it would be. [00:06:47] Speaker 01: A, I don't want to concede that it's necessary here, for one thing. [00:06:51] Speaker 01: I don't think that we think our communications in those two emails that went out to the arbitration parties here were misleading or coercive. [00:06:59] Speaker 01: But stepping back from that for a second, you know, corrective notice by itself wouldn't necessarily be the only remedy. [00:07:05] Speaker 01: I mean, you could order corrective notice. [00:07:07] Speaker 01: You could order an additional opt-out period to give them another opportunity to say, no, I don't want to be subject to this arbitration agreement. [00:07:17] Speaker 01: You could even order a longer period of notice for them to consider that. [00:07:22] Speaker 04: In your briefs, you only rely on corrective notice, correct? [00:07:25] Speaker 04: I'm sorry, could you say that again? [00:07:36] Speaker 01: If that's what we say in our briefs, that's what we say in our briefs. [00:07:43] Speaker 01: to your point, Gulf Oil affords a district court broad discretion, and it could go beyond corrective notice. [00:07:50] Speaker 01: It could order an additional period of time for people to consider whether to opt out of the arbitration agreement. [00:07:56] Speaker 04: And why did your client make it, or perhaps you in advising your client, make it an opt-in instead of an opt-out? [00:08:07] Speaker 04: Well, I don't think that... Which would have been more consistent with Rule 23. [00:08:11] Speaker 01: I think it's just kind of a product of promulgating an arbitration agreement and giving them the ability to opt out. [00:08:25] Speaker 01: It's just kind of a consequence of that. [00:08:28] Speaker 01: It's not an intentional act on the part of tech or us as lawyers to create and opt, to kind of go the reverse route. [00:08:38] Speaker 04: of rule twenty three of course people over the holidays when you send it out december nineteen saying if you don't well i guess the the agreement itself was confusing [00:08:51] Speaker 04: because it says all new and current employees will be subject to the arbitration agreement as a condition of working for the company. [00:08:59] Speaker 04: If you choose to continue working here after December 31st, 2023, you'll be deemed to have accepted the arbitration agreement. [00:09:07] Speaker 04: And we are asking for your signature to reflect that. [00:09:10] Speaker 04: So on the one hand, you're saying, hey, look, unless you either get fired or quit, if you're still here as an employee by December 31, you're bound. [00:09:19] Speaker 04: But oh, on top of that, give us a signature. [00:09:21] Speaker 04: How is that not confusing? [00:09:23] Speaker 01: So that, well, that's not the only communication that went out to the putative class members. [00:09:30] Speaker 04: Okay. [00:09:30] Speaker 04: Well, let's look at the other one then it says the company is adopting a policy of requiring mutual arbitration that will go into effect on January 1, 2024. [00:09:41] Speaker 04: You may opt out of the arbitration agreement for the limited purpose of keeping your ability to participate in that lawsuit by signing and returning the attached agreement by January 9th, 2023. [00:09:53] Speaker 04: So that's confusing, right? [00:09:55] Speaker 04: Because you're saying you're bound by this arbitration agreement as of January 1, but you opt out of this agreement nine days later, even though you've already been bound by it for eight days. [00:10:06] Speaker 04: And this is also misleading because you're not opting out of the arbitration agreement just for the limited purpose of keeping your ability to participate in the lawsuit. [00:10:13] Speaker 04: It means you won't be bound otherwise, right? [00:10:15] Speaker 04: There could be other implications of not being bound by that arbitration agreement. [00:10:20] Speaker 01: Potentially. [00:10:23] Speaker 01: But again, if those communications are found to be misleading or unclear, Rule 23 provides for remedies like corrective notice. [00:10:35] Speaker 01: We've already been through those. [00:10:36] Speaker 01: What it doesn't say, though, is, hey, you can refuse to enforce that. [00:10:41] Speaker 01: Our main point here is Rule 23 embodies a federal policy favoring court control over class actions in the class process. [00:10:51] Speaker 01: The Federal Arbitration Act embodies a federal policy in favor of enforcing arbitration agreements. [00:10:58] Speaker 01: If you lodge the authority for a district court to invalidate or refuse to enforce an arbitration agreement within Rule 23, [00:11:07] Speaker 01: You're cross-pollinating those two policies and creating potential confusion. [00:11:12] Speaker 01: The better course would be to say, look, the FAA's savings clause provides the outlines for when a court can refuse to enforce an arbitration agreement. [00:11:22] Speaker 01: So look into things like unconscionability. [00:11:24] Speaker 04: But Gulf Oil says that the district court's broad authority to exercise control over class action includes entering orders governing the conduct of parties and counsel. [00:11:33] Speaker 04: So if the district court had access to these documents and these mutual arbitration FAQs that your client sent out that said class actions are wasteful, inefficient means for resolving disputes, [00:11:49] Speaker 04: and tend to enrich only attorneys rather than individuals who may have legitimate claims. [00:11:54] Speaker 04: A class claim requires the company to ignore individual employee issues and concerns. [00:11:59] Speaker 04: Additionally, attorneys not employees are often the biggest winners in class actions, often charging exorbitant fees to both the class and the employer involved. [00:12:08] Speaker 04: reducing the money actually received by class members. [00:12:11] Speaker 04: Let's say the judge had the opportunity to look at the communications we just discussed and these FAQs beforehand. [00:12:17] Speaker 04: Would you agree that before the communications went out, the district court would have had under Gulf Oil and Rule 23D the authority to enjoin these communications from going out? [00:12:27] Speaker 04: Would you agree with that? [00:12:29] Speaker 01: Yes, Your Honor, absolutely. [00:12:30] Speaker 04: So then why does it matter that you guys got these out without the district court's knowledge? [00:12:34] Speaker 04: Why should that authority to enjoin not include the authority after the fact to invalidate? [00:12:41] Speaker 01: Well, I think it's two separate things. [00:12:44] Speaker 01: You're talking about control over communications, control over what putative class members hear from one party or the other, and invalidation of an agreement. [00:12:53] Speaker 01: Those, to me, are two very different things. [00:12:56] Speaker 01: And they have two separate, you know, [00:12:58] Speaker 01: two separate sources of authority. [00:12:59] Speaker 01: And if you look at the FAA, it provides for the circumstances when a court can refuse to enforce an arbitration agreement. [00:13:08] Speaker 01: And those circumstances aren't present here. [00:13:10] Speaker 01: You know, there were afforded an opportunity to opt out. [00:13:13] Speaker 01: And as for, you know, this being promulgated on December 19th, arguably that's an opportunity when people are less occupied by things like work. [00:13:22] Speaker 01: And again, there's really nothing in the record though to indicate whether [00:13:25] Speaker 01: people were or were not on vacation or were or were not paying attention to their email. [00:13:32] Speaker 01: It's a very sparse record to make the determinations that the district court made. [00:13:36] Speaker 04: And you say, oh, and go and get a lawyer if you want to consult with someone about it. [00:13:39] Speaker 04: Who is going to find a lawyer between December 19 and December 31 to advise them about an agreement? [00:13:46] Speaker 01: The only thing I would say to that, Your Honor, is that the hyperlink was there to the complaint in Avery that had counsel's contact information right up front. [00:13:55] Speaker 03: But before you leave, I wanted you to talk briefly about the waiver by litigation. [00:14:01] Speaker 01: Sure. [00:14:02] Speaker 01: So to start, I would say there's two very different considerations here. [00:14:08] Speaker 01: There's the right to enter into an arbitration agreement and the right to compel arbitration. [00:14:14] Speaker 01: So you've already got an arbitration agreement in place. [00:14:18] Speaker 01: I'm not aware of a case that has said you have, by litigation conduct, waived your right to enter into. [00:14:25] Speaker 01: in agreement. [00:14:25] Speaker 01: Certainly there's a legion of cases saying. [00:14:27] Speaker 03: Well, there are definitely cases that say you waive your right to compel. [00:14:31] Speaker 01: Correct. [00:14:32] Speaker 03: If you proceed to litigation to a certain point and then try to backtrack. [00:14:37] Speaker 01: Absolutely. [00:14:37] Speaker 03: And realize. [00:14:38] Speaker 03: So why doesn't that premise preclude your argument here? [00:14:44] Speaker 01: Because, Your Honor, the agreements, they were promulgated on December 19th. [00:14:49] Speaker 01: They were effective January 1st. [00:14:50] Speaker 01: So I think the time period that you've got to look at [00:14:53] Speaker 01: is from January 1, when these agreements were effective, to July 15, when TEC moved to compel. [00:14:59] Speaker 01: And if you look at its litigation conduct during that time period, it was not litigating merits issues. [00:15:04] Speaker 01: It was not engaged in the type of conduct that the case's finding waiver said constituted an intentional relinquishment of the right. [00:15:13] Speaker 03: All right. [00:15:13] Speaker 03: I understand your argument. [00:15:14] Speaker 01: Thank you. [00:15:14] Speaker 01: All right. [00:15:14] Speaker 03: We'll give you a couple minutes for rebuttal. [00:15:31] Speaker 02: Good morning, Your Honors. [00:15:34] Speaker 02: Shelby Layton for Plaintiffs Appellees. [00:15:37] Speaker 02: I think it's important to take a step back and understand how we got here. [00:15:42] Speaker 02: TEC waited until after discovery and after class certification briefing to impose individual arbitration agreements as a mandatory condition of employment. [00:15:53] Speaker 02: In doing so, it disparaged class actions in court, [00:15:56] Speaker 02: including, quote, that they tend to enrich only the attorneys, that class members will be on the hook for, quote, exorbitant fees, and that they would require tech to... Why wouldn't a corrective notice with an opportunity to opt out be sufficient here, rather than invalidating the agreements altogether? [00:16:13] Speaker 02: So the standard here is abuse of discretion, and the district court was well within its discretion to... That's for Rule 23D, but the standard of review for motions to compel arbitration is de novo, right, except for the factual findings for clear error. [00:16:27] Speaker 02: That's right, but this was an order issued under Rule 23D, and I think it makes sense to defer to the choice of remedy here that the district court chose. [00:16:40] Speaker 02: It could have chosen an extended period and opting out, although that wouldn't have fixed the fundamental problem that a Rule 23 class action is supposed to be an opt out class action, and you would still be asking people to affirmatively opt into the class action. [00:16:55] Speaker 02: But I also think even if an opt-out period would have amounted to essentially the same thing as invalidating the agreement. [00:17:01] Speaker 04: But I just said corrective notice with opt-out. [00:17:04] Speaker 04: Isn't that then consistent with Rule 23 opt-out? [00:17:07] Speaker 02: No, because it would be opting out of the arbitration agreement and into the litigation. [00:17:12] Speaker 02: And so if you had a corrective notice that said, OK, now you have an additional 30 days to opt out of arbitration, it would still require class members to take an affirmative step. [00:17:24] Speaker 02: to opt into being part of the class action rather than under rule 23 when they would have to take an affirmative step to opt out of the class action. [00:17:35] Speaker 02: But I think that this relief here was also narrowly tailored in that it focused only on the class members in the case. [00:17:45] Speaker 02: and only on invalidating the agreement as to this case. [00:17:49] Speaker 02: So in a sense, it's similar to giving people the chance to opt out in that it allows class members to proceed with the case, but everyone else to still be subject to the arbitration agreement. [00:18:02] Speaker 04: But what if there are some recruiters who do want to arbitrate now? [00:18:05] Speaker 04: They don't have the opportunity, right? [00:18:07] Speaker 04: Is the answer to them just tough luck because how this came down, or what's the answer? [00:18:12] Speaker 02: No, I think those recruiters could still opt out of the class action and pursue their claims against tech separately. [00:18:21] Speaker 02: And in fact, only two people did choose to opt out of the class action here. [00:18:28] Speaker 02: And so those people could choose to bring their claims against tech in whatever form they would like. [00:18:36] Speaker 02: But the idea is that no one who wants to be in the class, which is everybody except those two people, would not be then compelled into arbitration and unable to pursue their claims on a class-wide basis. [00:18:50] Speaker 00: Council, my understanding of what the opposing party is saying is that, [00:18:55] Speaker 00: While there might be a number of instances where Rule 23D would be appropriate, it's not appropriate to use it this way when you have a statute like the FAA. [00:19:06] Speaker 00: Would you address that? [00:19:08] Speaker 00: Yes. [00:19:08] Speaker 00: And would you also address the Dominguez opinion of this Court? [00:19:13] Speaker 02: Yes, absolutely. [00:19:14] Speaker 02: So the FAA mandates enforcing arbitration agreements save upon such grounds as exist at law or in equity for the revocation of any contract. [00:19:24] Speaker 02: And rule 23D is such an equitable ground for revoking a contract. [00:19:32] Speaker 02: And it applies to all types of contracts. [00:19:34] Speaker 02: It's not specific to arbitration. [00:19:36] Speaker 02: For example, in the Wang case, this court invalidated opt-out forms. [00:19:41] Speaker 02: In the Dominguez case, there were release agreements. [00:19:45] Speaker 02: In the Fox case from the Sixth Circuit, there were attorney-client representation agreements. [00:19:50] Speaker 02: So nothing about Rule 23D singles out arbitration agreements for unfavorable treatment, which is what the savings clause in the FAA prohibits. [00:20:00] Speaker 02: And on the other hand, if you accept defendant's argument, that Rule 23D can be used to invalidate all types of contracts [00:20:09] Speaker 02: except for arbitration agreements, that would be creating an arbitration-specific rule, which this Supreme Court's decision in Morgan v. Sundance prohibits. [00:20:21] Speaker 02: There the court said you can't create an arbitration-preferring rule just under the guise of this FAA has a presumption in favor of arbitration that defendants keep citing. [00:20:32] Speaker 02: it, you have to treat arbitration agreements like all other contracts. [00:20:38] Speaker 02: And if you could invalidate all other types of contracts under Rule 23D, then you have to be able to invalidate arbitration agreements under Rule 23D. [00:20:50] Speaker 02: In terms of this court's decision in Dominguez, I think that Dominguez conclusively rejects defendants' argument that Rule 23D doesn't allow courts to issue rulings that regulate the conduct of counsel in the parties. [00:21:09] Speaker 02: This ruling was clearly within the scope of the type of relief that the court could order here, and district courts [00:21:18] Speaker 02: do routinely, in the circuit, do routinely invalidate arbitration agreements under the Rule 23D authority. [00:21:27] Speaker 02: And in Dominguez, this court recognized that the authority was broad, recognized that district courts have been doing that, but then declined to reach the arbitration agreement issue, but did reach the court's corrective actions and held that those actions were appropriate under Rule 23D. [00:21:49] Speaker 02: Additionally, just to go back to their arguments on the FAA about how somehow the savings clause requires an equitable defense or a state law defense, that is not the case. [00:22:06] Speaker 02: As I mentioned, the FAA refers to the phrase, or inequity. [00:22:14] Speaker 02: And so to say that there has to be some sort of legal argument for why the contract is unenforceable is just not supported by the text of the statute. [00:22:23] Speaker 02: And Rule 23D is a clear exercise of the court's equitable discretion to invalidate contracts that are obtained through interfering with the class action process. [00:22:35] Speaker 02: And this is, again, a quintessential example of a generally applicable equitable defense. [00:22:44] Speaker 02: In Gulf oil, this Supreme Court said that courts have the duty and the broad authority to exercise control over class action and to enter appropriate orders governing the conduct of council and parties. [00:23:08] Speaker 02: And that's exactly what the court did here. [00:23:10] Speaker 02: That's exactly what this court has said is appropriate in Dominguez and Wang. [00:23:16] Speaker 02: The district court did not clearly err when it held that Tech usurped the court's role in overseeing the notice and opt-out process. [00:23:25] Speaker 02: Tech sent class members an arbitration agreement that would automatically bind them if they did not quit their jobs and did not give them an option to opt out. [00:23:33] Speaker 04: So there's no evidence in the record that any internal employees, including the recruiters, [00:23:39] Speaker 04: were actually confused by the different communications. [00:23:42] Speaker 04: So how should we weigh that? [00:23:44] Speaker 02: Right. [00:23:45] Speaker 02: So district courts in this circuit have been clear that [00:23:49] Speaker 02: There's no requirement that plaintiffs show actual harm, just that under Gulf oil, there must be, quote, potential interference. [00:23:58] Speaker 02: And for example, in Dominguez, this court did not require evidence about whether class members were in fact misled or coerced, and instead looked to the content of the communications, the timing of the communications, [00:24:12] Speaker 02: the circumstances around the communications going out and concluded that on their face they were misleading and coercive. [00:24:21] Speaker 02: And like in Dominguez, the district court here carefully analyzed those factors and found that the communications falsely conveyed that class members would have to pay exorbitant fees, [00:24:35] Speaker 02: that and falsely conveyed that the company would be required to ignore their concerns. [00:24:39] Speaker 04: Let me ask you another question about your waiver argument. [00:24:44] Speaker 04: If class members didn't opt out of the arbitration agreement until January 9th of 2024, we have to look at the test in the Ninth Circuit, which is the test for the waiver of the right to compel arbitration [00:24:58] Speaker 04: includes the knowledge of an existing right to compel arbitration and intentional acts inconsistent with that existing right. [00:25:07] Speaker 04: So how did tech systems have an existing right to compel arbitration before January 9th of 2024? [00:25:13] Speaker 02: So in the Hill case, this court said that you have to look at the totality of the party's actions. [00:25:20] Speaker 02: And Hill also said that you do not have to have a present right to move to compel arbitration. [00:25:27] Speaker 02: in order to raise the arbitration issue to the court. [00:25:31] Speaker 04: But these two elements have the word existing before right. [00:25:36] Speaker 04: Are we supposed to read that out? [00:25:38] Speaker 02: I don't think you have to read it out, but I think that there's two rights at issue here. [00:25:45] Speaker 02: There's the right to impose these arbitration agreements on workers, and then there's the right to move to compel arbitration. [00:25:54] Speaker 02: And I think the court in Hill was clear. [00:25:58] Speaker 02: that even if your right to move to compel arbitration has not attached yet, you can still engage in conduct that is inconsistent with that right that you now have looking back retroactively. [00:26:15] Speaker 02: In this case, there was a series of conduct, including waiting until after discovery and after class certification briefing to roll out these arbitration agreements. [00:26:28] Speaker 02: But then there's also post-agreement conduct that Tech engaged in. [00:26:33] Speaker 04: What case says that you merged the analysis of the right to compel and the right to impose arbitration? [00:26:39] Speaker 02: So again, I think the totality of the party's actions language from Hill suggests that that's exactly what you do. [00:26:46] Speaker 02: But another case to look at is the DeGidio case from the Fourth Circuit, where the court examined both pre-agreement and post-agreement conduct. [00:26:56] Speaker 02: So there, the defendant had waited more than a year into litigation. [00:27:01] Speaker 02: at the very end of the discovery period to begin entering into arbitration agreements with class members. [00:27:08] Speaker 02: And then after it entered into the agreements, it waited another two months before it filed its opposition to the plaintiff's motion for class certification and raised arbitration for the first time. [00:27:18] Speaker 02: And the court said that the totality of that [00:27:21] Speaker 02: behavior was waiver. [00:27:25] Speaker 02: And so I think this court could take a similar approach and look at both the pre-agreement conduct and the post-agreement conduct as a continuing course of behavior. [00:27:34] Speaker 04: But does the right to impose arbitration exist when the class members still have the opportunity to opt out of the arbitration agreement? [00:27:41] Speaker 02: I think that it does here. [00:27:43] Speaker 02: So what happened here, to be clear, is that they imposed arbitration on class members, and then they gave class members [00:27:51] Speaker 02: separately a limited opportunity to opt out. [00:27:55] Speaker 02: So they're still enacting this policy that applies to all of their employees. [00:28:00] Speaker 02: But even with the fact that class members did have this opportunity to opt out, tech easily could have- But is that just an eight-day window? [00:28:08] Speaker 04: They had the right to impose, as of January 1, 2024, class members have until January 9, 2024 to opt out. [00:28:14] Speaker 04: So is that right, just the eight or nine-day window here? [00:28:17] Speaker 04: I don't think so, because- To impose arbitration? [00:28:19] Speaker 02: I think the issue here is whether they should have alerted the court in some way that they were planning to roll out this arbitration agreement as of still during discovery is when they decided to do this. [00:28:35] Speaker 02: They didn't tell the court. [00:28:36] Speaker 02: They didn't tell opposing counsel. [00:28:38] Speaker 02: They waited until class certification had been fully briefed to then say, oh, by the way, opposing counsel, we sent out these arbitration agreements to all of the class members. [00:28:51] Speaker 02: And then even when plaintiffs raised that with the court, tech still said, we're not sure. [00:29:00] Speaker 02: We might not move to compel arbitration. [00:29:02] Speaker 02: We don't know. [00:29:04] Speaker 02: the class certification hearing goes by, they don't say anything about arbitration at the class certification hearing, and it's only until they've lost class certification, they've seen the Plaint of Summary Judgment Motion, they've seen who's opted out of the class, that they move to compel arbitration. [00:29:25] Speaker 02: cases like DeGidio and Hill stand for the proposition that you can consider that failure to even mention arbitration when they knew they were going to roll out the agreement out early in the process so that the court could, you know, if they had said we're going to roll out arbitration agreements in September, the court could have helped [00:29:47] Speaker 02: manage that process so that it didn't end up with this misleading and coercive notice that ended up going out to the class members and would have been able to consider arbitration as part of the class certification process. [00:29:58] Speaker 03: So before you conclude, could you address the litigation waiver argument? [00:30:03] Speaker 02: Yes, yeah, so I think that the waiver is the totality of the conduct that I just described. [00:30:12] Speaker 02: So waiting until after the class discovery and class certification briefing to impose this arbitration agreement that they could have imposed at any time. [00:30:23] Speaker 02: Not informing anyone that they were going to do this during the course of the discovery and class certification briefing. [00:30:29] Speaker 02: Then after the agreements went into effect not raising it a class certification waiting until after summary judgment Motion had been filed waiting until The notice period was almost over in order to support your argument that this conduct constituted a litigation waiver [00:30:47] Speaker 02: So I do think that the DeGidio case from the Fourth Circuit is the most factually analogous case. [00:30:51] Speaker 02: You don't have a Ninth Circuit case? [00:30:53] Speaker 02: I think that the law on waiver, the general principles of waiver from the Hill case, absolutely support that this was waiver here. [00:31:02] Speaker 02: But I think in terms of facts that involve both pre-agreement and post-agreement conduct, the most analogous case factually would be the DeGidio case in the Fourth Circuit. [00:31:13] Speaker 03: All right. [00:31:13] Speaker 03: Thank you, counsel. [00:31:14] Speaker 03: Thank you. [00:31:14] Speaker 03: Rebuttal? [00:31:22] Speaker 01: Thank you, your honor. [00:31:23] Speaker 01: Just a couple of quick points. [00:31:25] Speaker 01: Number one, if this was a Rule 23D order, we wouldn't be here and this court wouldn't have jurisdiction. [00:31:30] Speaker 01: It was a denial of a motion to compel. [00:31:32] Speaker 01: That's why this court has jurisdiction over this. [00:31:36] Speaker 01: Number two, [00:31:37] Speaker 01: I think one of the only facts in this record that speaks to whether or not these communications were misleading or coercive or anything like that is how many people that this arbitration agreement was promulgated to, how many of them chose to opt out? [00:31:53] Speaker 01: 23%, which is incredibly high in these situations. [00:31:56] Speaker 01: Courts have said 10%, 15% is evidence that the communications weren't coercive or misleading. [00:32:04] Speaker 01: Number three, [00:32:06] Speaker 01: This DeGidio case from the Fourth Circuit, it's fairly nothing like this one. [00:32:12] Speaker 01: Number one, the arbitration agreement there contained no opt-out provision for the people that received it. [00:32:17] Speaker 01: It was purely adhesive. [00:32:20] Speaker 01: Number two, the defendant's litigation conduct there was quite unlike Tex. [00:32:24] Speaker 01: The defendant had moved for summary judgment after promulgating the arbitration agreement, but before moving to compel. [00:32:33] Speaker 01: The conduct was just nothing like text here. [00:32:35] Speaker 04: Can I ask you about the timing? [00:32:36] Speaker 04: In a number of places you say well we couldn't file our motion to compel arbitration until the class period closed because we didn't know who was in the class and yet you still filed your motion to compel arbitration five days before the class period. [00:32:50] Speaker 01: That's right, your honor. [00:32:51] Speaker 04: So it just seems very, there's a tension there. [00:32:54] Speaker 04: So which way do you want to go? [00:32:56] Speaker 04: You want to go with the, we couldn't file until we knew or, but somehow we did anyway. [00:33:00] Speaker 01: Well, so two things on that. [00:33:02] Speaker 01: Number one, the timing of that filing being five days before notice closed came because the district court asked for it to come then. [00:33:10] Speaker 01: There is. [00:33:11] Speaker 04: Oh, the district court asked the number of times and you all didn't do it. [00:33:13] Speaker 01: Well, that time. [00:33:14] Speaker 04: I don't find that persuasive, right? [00:33:17] Speaker 01: I think the feeling on our side was that that time was a little more insistent, a little more of an order as opposed to a suggestion. [00:33:25] Speaker 04: Because the district court said at the March 14, 2024 case management conference that there was no reason why you would wait till the end of the class notice period to file this motion to compel arbitration, but you still didn't file till June 10. [00:33:37] Speaker 04: April, May, June. [00:33:38] Speaker 04: So I find it. [00:33:41] Speaker 01: Well, so two things, Your Honor. [00:33:43] Speaker 01: Number one, I don't think we felt like that was an order. [00:33:45] Speaker 01: Had it been, we absolutely would have filed one. [00:33:48] Speaker 04: So what is the document that you're saying is an order to file that then triggered that June 10th filing? [00:33:54] Speaker 01: No document, Your Honor. [00:33:55] Speaker 01: I think it was just a sense on our side that there was more insistence. [00:33:59] Speaker 01: later in the process. [00:34:00] Speaker 01: But number two, the hearing on that motion to compel that, you know, when you file the motion, you have to set a hearing as well. [00:34:06] Speaker 01: That was well after notice closed. [00:34:08] Speaker 01: So by the time that hearing rolled around, we did know who had opted out, who had opted in. [00:34:12] Speaker 04: Well, you filed on June 10th. [00:34:13] Speaker 04: Are you saying the district court should have had a hearing before June 15th? [00:34:17] Speaker 01: No, no, no. [00:34:18] Speaker 01: Absolutely not. [00:34:18] Speaker 01: I think the filing came on June 10th, but the hearing itself came after notice. [00:34:22] Speaker 04: I want to know what was the specific date that you felt the district court was asking you [00:34:27] Speaker 04: to file your motion promptly if you didn't think the March 14th, 2024 CMC was that request that you file promptly. [00:34:38] Speaker 04: If you didn't think that was anything you needed to respond to. [00:34:41] Speaker 01: Your Honor, I'm going to be frank. [00:34:42] Speaker 01: I don't remember the precise timing of the communication from the district court that prompted us to file on June 10th. [00:34:51] Speaker 01: Before my time runs out, though, I also want to point out. [00:34:53] Speaker 03: You're over your time, so you need to wrap up. [00:34:55] Speaker 01: Oh, I'm so sorry, Your Honor. [00:34:57] Speaker 01: With that said, we would just ask that you reverse the district court and remand with instructions to compel arbitration. [00:35:04] Speaker 01: Thank you. [00:35:04] Speaker 01: All right. [00:35:04] Speaker 03: Thank you, counsel. [00:35:05] Speaker 03: Thank you to both counsel for your helpful arguments. [00:35:08] Speaker 03: The case just argued is submitted for a decision by the court that completes our calendar for the morning. [00:35:13] Speaker 03: We are in recess until 930 AM tomorrow morning.