[00:00:00] Speaker 01: Good morning, everyone. [00:00:03] Speaker 01: Please be seated. [00:00:05] Speaker 01: Judge Thomas Press and I welcome you to the Ninth Circuit. [00:00:09] Speaker 01: We'll go through the calendar in the order that the cases are listed. [00:00:14] Speaker 01: The first three have been submitted on the briefs and record. [00:00:17] Speaker 01: Guerrero versus Bondi, Ley versus Huynh, Covello versus City of Belmont, actually four. [00:00:24] Speaker 01: Eden versus Bisognano have all been submitted. [00:00:29] Speaker 01: So the first case up for argument is Young versus Solana Labs, Inc. [00:00:43] Speaker 00: May it please the court, Samir Degasen for defendants. [00:00:45] Speaker 00: I'd like to reserve two minutes of my time for rebuttal. [00:00:48] Speaker 01: All right, I'll try to help you out, but keep your eye on the clock, too, please. [00:00:51] Speaker 00: Thank you, Your Honor. [00:00:53] Speaker 00: The arbitration agreement at issue in this case is governed by the delegation provision in the JAMS rules. [00:01:00] Speaker 00: This court held in Patrick that, quote, incorporation of the JAMS arbitration rules by reference constitutes clear and unmistakable evidence that the parties agree to arbitrate arbitrability. [00:01:11] Speaker 00: And the JAMS rules even have a provision that specifically contemplates non-signatory enforcement by delegating to the arbitrator the determination of, quote, who are the proper parties [00:01:22] Speaker 00: to the arbitration. [00:01:23] Speaker 00: That is the exact question that's at issue in this case, and it's for the arbitrator to decide. [00:01:29] Speaker 00: The district court held otherwise based on language outside the delegation clause that purportedly limited the arbitration clause to the signatory parties. [00:01:38] Speaker 00: But the question of who the proper parties are is the very question that is being delegated to the arbitrator. [00:01:44] Speaker 00: As Judge Thapar put it in Blanton, it's like saying, quote, the arbitrator shall have the power to determine the scope of the agreement [00:01:52] Speaker 00: only as to claims that fall within the scope of the agreement. [00:01:55] Speaker 01: There's no case in the Ninth Circuit addressing non-signatories, though, correct? [00:01:59] Speaker 00: There is the PGE case, Your Honor, and the PGE case was a non-signatory. [00:02:03] Speaker 00: That was an attempt by the sureties in that case who were not signatories to the arbitration agreement to invoke it against PGE. [00:02:10] Speaker 00: And this court said that that is a question of the ICC rules, which are very similar to the Jams rules, actually don't have the who the proper parties are language. [00:02:19] Speaker 00: That's quite unique to the Jams rules. [00:02:21] Speaker 00: But even under the ICC rules, this court said that's a question of scope and enforceability that's properly delegated to the arbitrator. [00:02:27] Speaker 02: What about Kramer? [00:02:29] Speaker 00: So Kramer, that was not a Jams rules case. [00:02:32] Speaker 00: And so I think the thing about Kramer was you have a delegation clause there that was textually tied to the scope of the arbitration clause. [00:02:40] Speaker 00: So the arbitration clause there was this. [00:02:44] Speaker 00: Either you or we may choose to have any dispute between you and us decided by arbitration. [00:02:49] Speaker 00: So that's very limited to the parties in at least two distinct ways. [00:02:52] Speaker 00: First, only either you or we may choose to have the dispute. [00:02:56] Speaker 00: So the trigger is one of the two parties is the only party that can actually even trigger an arbitration. [00:03:02] Speaker 00: And secondly, it limits the dispute to any dispute between you and us decided by arbitration. [00:03:06] Speaker 00: So it's a very narrow arbitration clause. [00:03:08] Speaker 00: Then the critical point is the delegation clause there said this. [00:03:12] Speaker 00: This arbitration clause applies to any claim or dispute about the interpretation and scope of this arbitration clause. [00:03:19] Speaker 00: The delegation clause incorporates the narrow arbitration clause. [00:03:22] Speaker 00: The narrow arbitration clause is only between the parties. [00:03:24] Speaker 00: So, you know, all CREMA was really doing is answering the question of is this clear and unmistakable, is this delegation clause clear and unmistakable evidence? [00:03:32] Speaker 01: Right, but it has the you and us, we language is very similar to this case. [00:03:36] Speaker 00: Sure, but it's answering the question, was there, is there clear and unmistakable evidence of an intent to delegate? [00:03:42] Speaker 00: That's the question that this court already answered with respect to the Jams rules with Patrick. [00:03:47] Speaker 00: And of course, the Jams rules has this additional thing of who the proper parties are. [00:03:50] Speaker 00: And none of that was an issue in Kramer. [00:03:52] Speaker 00: Kramer wasn't a Jams rules craze. [00:03:54] Speaker 00: And I actually think Kramer is a very straightforward and completely correct case on its facts. [00:03:57] Speaker 00: If you look at that delegation clause, this arbitration clause applies to any claim or dispute about the interpretation of this arbitration clause. [00:04:04] Speaker 00: That's clearly saying that whatever the scope of the arbitration clause is, it's the same as the scope of the deliberation clause. [00:04:09] Speaker 00: The arbitration clause applies to arbitrability disputes. [00:04:13] Speaker 00: Sure. [00:04:13] Speaker 00: And then you look to the arbitration clause, [00:04:15] Speaker 00: that is very clearly limited to disputes between the parties. [00:04:18] Speaker 00: Here, even the arbitration clause is not limited to disputes between the parties. [00:04:22] Speaker 00: It's much broader. [00:04:23] Speaker 00: It says this is at section 10.1 at 2ER 210. [00:04:27] Speaker 00: You agree that any dispute or claim relating in any way to your access or use of the site services or software, any aspect of your relationship with Exodus, be resolved by binding arbitration. [00:04:36] Speaker 00: So it's a much broader arbitration clause. [00:04:37] Speaker 00: But I don't think that even really matters. [00:04:39] Speaker 00: I think the important thing is the delegation clause here is the Jams rules. [00:04:44] Speaker 00: that this court has already held that JAMA's rules are clear and unmistakable evidence of an intense delegate arbitrability. [00:04:50] Speaker 00: And I don't really understand on plaintiff's theory even what that who the proper parties are language could possibly mean. [00:04:56] Speaker 00: Because I do think this is the classic circular reasoning that Judge Thapar was talking about. [00:05:00] Speaker 00: As I understand their argument, it is you have to look to the rest of the contract and figure out if the proper parties to the arbitration are just the signatories or if they are, in fact, include non-signatories. [00:05:13] Speaker 00: And if you determine that it includes non-signatories, then the delegation clause applies. [00:05:18] Speaker 00: But then what is the meaning of the who the proper parties are language in the delegation clause? [00:05:22] Speaker 00: The whole point of the Jams rules and a lot of these arbitrary rules is they're a reaction to the Supreme Court's decision in first options that said you need to find clear and unmistakable evidence. [00:05:32] Speaker 00: These rules are drafted in such a way to create clear and unmistakable evidence. [00:05:36] Speaker 00: And this court and every circuit that's considered it has said, when a contract incorporates rules like this, you incorporate the delegation provision as well. [00:05:45] Speaker 00: And that constitutes the clear and the requisite clear and unmistakable evidence. [00:05:49] Speaker 00: Kramer didn't have any of that because it didn't have the incorporation of these rules. [00:05:52] Speaker 00: So Kramer was just looking at it completely different. [00:05:54] Speaker 01: So what are the limits of your argument? [00:05:55] Speaker 01: Any time that the JAMS rules are incorporated, any non-signatory can then come in and say, and invoke the delegation clause? [00:06:05] Speaker 01: Regardless of whether there's any agency relationship, whether it's a successor interest, anybody can come in and say, okay, now this case goes to arbitration. [00:06:13] Speaker 00: No, no, they would have to have an equitable stop-all argument. [00:06:15] Speaker 00: I mean, we have an equitable stop-all argument here. [00:06:18] Speaker 00: And the question is who decides that? [00:06:20] Speaker 00: And so the arbitrator is the one that has to decide that. [00:06:23] Speaker 00: Of course, the arbitrator can decide, you know, you don't have a very good equitable stop-all argument and send us back to court. [00:06:28] Speaker 00: That's a completely valid thing that could happen. [00:06:30] Speaker 00: But right, it has to be someone who has. [00:06:32] Speaker 01: But the threshold issue, you basically get to the arbitrator to decide all those questions. [00:06:35] Speaker 01: That's your theory. [00:06:37] Speaker 00: You just get to the arbitrator to decide the threshold question. [00:06:40] Speaker 00: But the arbitrator is able to kick us back into court, and then we have to litigate the dispute in court. [00:06:47] Speaker 00: But arbitrability is decided by the arbitrator under the delegation clause. [00:06:52] Speaker 00: And the other side sort of suggests that, oh, there's going to be all these wild, crazy invocations of the delegation clause. [00:06:59] Speaker 00: That is exactly the same argument that the Supreme Court addressed in Henry Schein. [00:07:03] Speaker 00: If you listen to the oral argument there, the suggestion was, Justice Breyer asked the question, well, if you're right, doesn't that mean that if you have an agreement with Walmart or some consumer, they can just pale you into court and say, we want you to decide the question of the annexation of Crimea? [00:07:19] Speaker 00: And the Supreme Court's opinion says arbitrators can efficiently dispose of frivolous cases by quickly ruling that a claim is not, in fact, arbitrable. [00:07:27] Speaker 00: And arbitrators impose [00:07:29] Speaker 00: heavy sanctions, and as the Supreme Court pointed out, any of the circuits that have had the rule that there was no wholly groundless exception, there was never a problem. [00:07:40] Speaker 00: And the same thing is true here. [00:07:41] Speaker 00: There are four circuits that have the exact rule that we're suggesting. [00:07:45] Speaker 00: There has never been all these crazy wild invocations of the arbitration clause, because obviously a party that does that and has a frivolous claim is going to get sanctioned heavily, and there's no incentive to do that. [00:07:54] Speaker 00: No one wants to go on a detour to arbitration where they're guaranteed to lose and get sanctioned. [00:07:58] Speaker 00: So they're only going to do it in situations where they have a realistic and viable claim under whether it's equitable estoppel or agency or whatever it may be. [00:08:06] Speaker 00: And that is the sensible rule that's been administered in four circuits. [00:08:10] Speaker 00: And I do think there's no way around the fact this court would be creating a circuit conflict with those four circuits if it adopts the rule that plaintiffs suggest, which is that this is an issue of formation that, in fact, the arbitrator doesn't get to decide. [00:08:23] Speaker 00: And I think that would be the exact circular reasoning [00:08:25] Speaker 00: that Judge DePauw referred to. [00:08:27] Speaker 00: And just on that quick question on formation, as I mentioned it, because that is one of their lead arguments, you know, this is not the, the straightforward reason why this is not a formation issue is because there is a contract here. [00:08:37] Speaker 00: You know, you have a situation where, you know, if you bracket the formation dispute in this case, you know, a plaintiff has signed the agreement and the question is, what is the scope of that agreement? [00:08:46] Speaker 00: Who can enforce it? [00:08:47] Speaker 00: How far does it extend? [00:08:49] Speaker 00: And as the Supreme Court itself put it with respect to equitable estoppel, [00:08:52] Speaker 00: It described that as a background principle of state contract law regarding the scope of agreements, including the question of who may be bound by them. [00:09:02] Speaker 00: You wanted to save a little bit of time. [00:09:04] Speaker 00: Thank you, Your Honor. [00:09:13] Speaker 03: Good morning, Your Honors, and to please the Court. [00:09:15] Speaker 03: It's Matthew S. Wyler on behalf of Young. [00:09:18] Speaker 03: There are two independent bases to affirm the [00:09:22] Speaker 03: district court with respect to the delegation ruling. [00:09:25] Speaker 03: And the first basis is within the context in the straightforward text of the terms of service. [00:09:32] Speaker 03: The terms of service here explicitly and consistently define the parties as young and exodus, and that's from the outset of [00:09:45] Speaker 03: the agreement all the way through. [00:09:47] Speaker 03: The parties are defined consistently. [00:09:50] Speaker 03: The authority of the arbitrator is limited in section 10.3, and I'll get to that in a minute. [00:09:56] Speaker 03: But the second reason to affirm the district court ruling is if there's ambiguity at all, if there is a conflict between what the Jams rules would say on the one hand and what the [00:10:10] Speaker 03: Contract explicitly says on the other hand at minimum there can be no clear and unmistakable delegation under Kramer And so the court can affirm on that basis alone, but sticking within well counsel saying Kramer is not a Incorporation of jams rule case so that's limited to those facts. [00:10:29] Speaker 01: How do you respond to that? [00:10:30] Speaker ?: I? [00:10:30] Speaker 03: I would say that Kramer sets the background rule here, sets the clear and unmistakable standard. [00:10:37] Speaker 03: That applies whether there's Jams rules or not. [00:10:41] Speaker 03: You know, the Jams rules here are defeated by the plain terms of the agreement and that's what I want to get into right now. [00:10:49] Speaker 03: Because the district court in noting that the agreement repeatedly describes the arbitration agreement as requiring arbitration of disputes [00:10:59] Speaker 03: between you and Exodus invokes the same rules that are in Kramer, but the agreement here goes even further, and I want to show you how. [00:11:11] Speaker 03: So in the very same section of the delegation clause, which is section 10.3 [00:11:19] Speaker 03: of the terms of service. [00:11:21] Speaker 03: There's a provision there that says, quote, the arbitration proceeding will not be consolidated with any other matters or joined with any other cases or parties. [00:11:31] Speaker 03: That's 10.3. [00:11:34] Speaker 03: This limits the ability of the arbitrator to join third parties such as Solana. [00:11:39] Speaker 03: As the Exodus terms of service defines the parties to the agreement as between Young and Exodus, the arbitrator therefore lacks any authority to perform the very estoppel analysis that Solana seeks to perform here. [00:11:51] Speaker 03: And how do we know that the parties are narrowed? [00:11:53] Speaker 03: Well, beyond the consistent use of you and Exodus, there's a couple of terms that I want to [00:11:58] Speaker 03: point out to the court. [00:12:00] Speaker 03: And one of those is section 11.5, the exclusive venue section there. [00:12:05] Speaker 03: The parties are explicitly referred to as Exodus and Young. [00:12:09] Speaker 03: What Exodus and Young can do. [00:12:11] Speaker 03: That is another indication and iteration of this UNS language. [00:12:16] Speaker 03: It's found also in the waiver of the class action provision. [00:12:21] Speaker 03: It refers to waiver only as to Exodus because there is no other party contemplated in the agreement. [00:12:28] Speaker 02: Even on your view of the law, do you agree there's some kind of disagreement among the circuits at this point? [00:12:37] Speaker 03: I don't think so. [00:12:38] Speaker 03: I think the disagreement, Judge Rest, comes with respect to the different agreements that the circuits are analyzing. [00:12:51] Speaker 03: And I think that all of the circuits have the same standard, clear and unmistakable. [00:12:56] Speaker 03: That is the standard to show that the issue has been delegated, has to be clear and unmistakable. [00:13:04] Speaker 03: that language appears in the Sixth Circuit cases as well. [00:13:09] Speaker 03: But what's lacking in those cases, in the Sixth Circuit cases, is the explicit limitation on the power of the arbitrator found in section 10.3 of this agreement, which is the very delegation clause. [00:13:20] Speaker 03: Because there's another provision in 10.3. [00:13:22] Speaker 03: It says right after it gets done saying that [00:13:26] Speaker 03: issues of scope and arbitrability as between Young and Exodus have to be decided by the arbitrator, the provision says, and I quote, this arbitration will decide the rights and liabilities, if any, of you and Exodus, period and stop. [00:13:39] Speaker 03: This is another important qualification that comes just after the delegation of arbitrability. [00:13:46] Speaker 03: The terms of the Jams rules that Solana cites in its brief and discussed today are contradicted by these plain terms of the Exodus agreement. [00:13:53] Speaker 03: And here I want to get to a point [00:13:55] Speaker 03: council made about the district court going outside of the delegation clause to find indicia that the agreement was limited. [00:14:04] Speaker 03: The district court did no such thing. [00:14:06] Speaker 03: The limitations on the authority of the arbitrator are found in section 10.3. [00:14:11] Speaker 03: That's inside the delegation clause. [00:14:13] Speaker 03: That is in the section of the terms of service defined as authority of the arbitrator. [00:14:20] Speaker 03: Those are explicit limits. [00:14:22] Speaker 03: And that, I think, explains factually the difference between [00:14:25] Speaker 03: what the Sixth Circuit may have done and what other circuits may have done. [00:14:30] Speaker 03: But there's another point that I want to make about the JAMS rules. [00:14:36] Speaker 03: So the JAMS rules cannot supplant the plain terms of the arbitration agreement. [00:14:41] Speaker 03: This is true as a matter of contract interpretation. [00:14:44] Speaker 03: The specified terms should trump the unspecified terms. [00:14:48] Speaker 03: And JAMS own conflict rules, rule four of JAMS, [00:14:52] Speaker 03: It is no different and it confirms that the application of the rules must yield to the terms of the contract. [00:14:58] Speaker 03: Rule four says, if any of these rules or modification of these rules agreed to by the parties is determined to be in conflict with a provision of applicable law, the provision of law will govern over the rule in conflict and no other rule will be affected. [00:15:14] Speaker 03: Now in matters of contract interpretation, there is no greater legal authority than the contract itself. [00:15:19] Speaker 02: Is this is this now intention with Patrick this point you're making. [00:15:24] Speaker 03: What is the intention with with Patrick I don't think that it is because again again in Patrick there was no contraindication within the authority provided to the arbitrator as there is here and Patrick you had. [00:15:41] Speaker 03: You had an invocation of Jams rules, but you did not have the explicit limits on scope, the explicit limits on the ability of the arbitrator to bring another party into the arbitration that you have here. [00:15:54] Speaker 03: So I don't think it's in conflict at all. [00:16:01] Speaker 01: The cases relied on by Solana have very different- In your view, Patrick is just limited to the parties. [00:16:06] Speaker 01: It doesn't address non-signatories. [00:16:08] Speaker 03: Right, that's right. [00:16:09] Speaker 03: So you don't have this non-signatory issue in Patrick. [00:16:15] Speaker 03: So again, the second independent basis to come back to here is that under the clear and unmistakable standard, [00:16:23] Speaker 03: the existence of ambiguity defeats delegation. [00:16:26] Speaker 03: So even if the court were to consider what is in the JAMS rules, that would be, that would create an ambiguity. [00:16:34] Speaker 03: That would create a conflict between the potentially applicable JAMS rules, which in my opinion are not applicable by the very terms of JAMS rules itself. [00:16:44] Speaker 03: It would create a contradiction between the JAMS rules and the plain terms of the contract. [00:16:48] Speaker 03: That's an ambiguity. [00:16:50] Speaker 03: That has to be resolved in favor of, that has to be resolved in favor of delegation to, away from delegation and in favor of determining the issues by the court. [00:17:11] Speaker 03: So there is not a case that Solana has cited in his papers that uses the same explicit, has the same explicit limits of authority [00:17:20] Speaker 03: found in Section 10.3 of the Exodus Terms of Service. [00:17:24] Speaker 03: The Sixth Circuit and the Second Circuit cases all lack that explicit limit. [00:17:32] Speaker 03: And most of them lack the consistent you and us formulation. [00:17:37] Speaker 03: And I want to go back and emphasize that as in Kramer and as the District Court pointed out here, [00:17:43] Speaker 03: That UNS language is very important because it's consistently limiting the scope of the parties to the agreement. [00:17:49] Speaker 03: And it appears consistently throughout the agreement. [00:17:53] Speaker 03: And with the rest of my time here, I think I'd like to point out to the court that the issue of a stopple, I think, has been clarified by the California Supreme Court in the Ford case. [00:18:07] Speaker 03: And it's very clear now under Ford [00:18:09] Speaker 03: that you have to have in order to enforce third party agreement that the plaintiff has to be seeking to enforce the terms or has to be seeking to enforce rights under that agreement. [00:18:24] Speaker 03: And this is at section of Ford at 17 Cal 5th, 1130 to 1131. [00:18:33] Speaker 03: Plaintiffs' causes of action alleging warranty violations and fraud do not seek to enforce any contractual provision. [00:18:40] Speaker 03: As a result, they should not be stopped from pursuing their claims in this court. [00:18:45] Speaker 03: And parentheses, that I think disposes of any of the arguments that Solana raises in the brief. [00:18:52] Speaker 03: Their arguments are relying on the loose, logical relationship between [00:19:03] Speaker 03: Plaintiff Young's relationship of Exodus on the one hand, and certain elements of claims on the other hand, but that's not enough under Ford. [00:19:12] Speaker 03: And it's not enough under Gonzalez either, the 2024 Cal App case that is discussed in Solana's reply brief. [00:19:20] Speaker 03: Same standard there. [00:19:21] Speaker 03: I think my time's up. [00:19:22] Speaker 01: Thank you, counsel. [00:19:28] Speaker 00: Thank you, Your Honor. [00:19:28] Speaker 00: Just a couple of quick points. [00:19:30] Speaker 00: So I guess I'm not seeing what the inconsistency is in the provisions that were cited. [00:19:35] Speaker 00: So the plaintiff relied heavily on section 10.3, which says that you can't join or consolidate the proceeding. [00:19:43] Speaker 00: We're not suggesting that this proceeding be joined or consolidated if this arbitration would just be between, in this case, Solana and the plaintiff. [00:19:52] Speaker 00: So we're not talking about joined or consolidations. [00:19:54] Speaker 00: I don't think that suggests anything, really, with respect to this case. [00:19:58] Speaker 00: And then the other provisions are things that say the arbitrator, the word of the arbitrator is final and binding upon you and us, or that you, the arbitrator would decide the rights of you and Exodus. [00:20:08] Speaker 00: That's absolutely true. [00:20:09] Speaker 00: In an arbitration between you and Exodus, the arbitrator will decide those things. [00:20:14] Speaker 00: And there's nothing inconsistent about the arbitration provision referring to the thing that is going to be happening in 99.9% of times. [00:20:21] Speaker 00: I mean, 99.9% of times, you're going to have an arbitration between, you know, Exodus and the [00:20:27] Speaker 00: and the party signed the contract. [00:20:28] Speaker 00: That's fine. [00:20:29] Speaker 00: And so most of the provisions describe that situation. [00:20:32] Speaker 00: But nothing in this language says that the delegation clause or even the arbitration clause is limited to disputes between the parties. [00:20:40] Speaker 00: And just to give you two examples that I think were different, the Eighth Circuit's decision in Burnett, for example, that had the phrase, the arbitration should be administered pursuant to the AAA rules only when the dispute or claim is between the parties. [00:20:55] Speaker 00: Now, yeah, that language, absolutely, that's a limitation on the delegation clause. [00:20:58] Speaker 00: Or Judge Thaparan Blanton used this example. [00:21:01] Speaker 00: The arbitration bracket, except to stand to trust claims against non-signatories, will be conducted in accordance with the AAA rules. [00:21:07] Speaker 00: You absolutely can have some limitation on the scope of the delegation clause. [00:21:12] Speaker 00: But there's no limitation like that here at all. [00:21:15] Speaker 00: The delegation clause stands apart. [00:21:17] Speaker 00: It's not limited in any way. [00:21:18] Speaker 00: The arbitration clause itself is broad. [00:21:20] Speaker 00: And the only thing they point to is general language that says the arbitrator will decide [00:21:24] Speaker 00: disputes between you and us. [00:21:26] Speaker 00: Absolutely, the arbitrator will decide disputes between you and us. [00:21:29] Speaker 00: That doesn't mean that's the only thing that the arbitrator can decide or that it precludes equitable estoppel, and it doesn't mean that it negates the force of the Jams rules. [00:21:37] Speaker 00: And the final thing I'll say is that I don't see anything that we heard is consistent with PGE. [00:21:43] Speaker 00: If you listen to the oral argument at PGE, they said the exact same things about how we didn't agree to arbitrate with this particular entity. [00:21:50] Speaker 00: And if you look at [00:21:51] Speaker 00: E.R. [00:21:52] Speaker 00: 332 of that case and the arbitration clause, it had the phrase, disputes between the parties. [00:21:58] Speaker 00: That was the limitation on the arbitration clause. [00:22:01] Speaker 00: And it had all kinds of you and us language that's exactly the same as here. [00:22:05] Speaker 00: And what this court said is, that's all stuff you can say to the arbitrator. [00:22:09] Speaker 01: All right. [00:22:09] Speaker 01: Thank you, counsel, for your argument. [00:22:11] Speaker 01: Thank you to both sides. [00:22:12] Speaker 01: The matter is submitted.