“9th Circuit Rules that Defendants Must be Prompt to Compel Arbitration”
The Daily Journal, July 21, 2016
By Matthew Blake
A federal appellate panel on Thursday ruled that defendants in an employment dispute could not compel arbitration after litigating the case for 17 months.
Judge Stephen R. Reinhardt of the 9th U.S. Circuit Court of Appeals wrote that the Milan Institute of Cosmetology, a national group of accredited colleges, and its president, Gary Yasuda, waited 17 months to move to arbitrate a lawsuit alleging the school made students do unpaid labor unrelated to their education.
Reinhardt’s opinion, which noted there is no concrete test for when parties engage in conduct inconsistent with their right to arbitrate, carves out another instance in which arbitration is not enforceable. Martin et al. v. Yasuda et al., 2016 DJDAR 7404.
The Milan Institute’s delay in enforcing an agreement that students take grievances to an arbitrator was not fair to plaintiffs who had already fended off a motion to dismiss, Reinhardt wrote.
The fact that arbitration meant the Milan would get a second chance to dismiss the case was “dispositive because the plaintiffs would be prejudiced if the defendants got a mulligan on a legal issue it chose to litigate in court and lost,” according to the opinion.
A 2011 U.S. Supreme Court decision, AT&T Mobility LLC v. Concepcion, U.S. Supreme Court, 09-893, states arbitration contracts are almost always enforceable. But subsequent 9th Circuit decisions previously provided exceptions to the Concepcion rule.
Those cases include Zaborowski v. MHN Government Services Inc., which ruled an arbitration contract was not conscionable, and Sakkab v. Luxxotica Retail North America Inc., which found representative California Private Attorney General Act claims are not subject to arbitration.
Bryan J. Schwartz of Bryan Schwartz Law, who brought the lawsuit on behalf of a putative class of beauty design students, said the ruling provides clarity on a key arbitration issue.
“You don’t test your hand in district court and see if you can win for free,” Schwartz said. “You have to make the choice out of the gate: Do you want to spend money on arbitration or do you want to litigate?”
Glenn Danas, a plaintiffs’ lawyer at Capstone Law APC, concurred, adding that foot dragging on enforcing an arbitration deal is “surprisingly still somewhat common. Some defendants continue to employ a ‘wait and see’ approach, which is obviously a very risky move.”
But Felix A. Shafir, an appellate defense attorney at Horvitz & Levy LLP, cautioned the ruling may not have too much of an impact, as Reinhardt focused on Martin’s specific context.
“He was looking at a complex picture of a number of events in this case,” Shafir said, including that even after losing their motion to dismiss, defendants stipulated to discovery before filing their motion to compel arbitration.
In one of several lawsuits nationally against cosmetology schools, the students sued for being made to clean, sell retail products and do other unpaid work that had little to do with acquiring the skills of a hairdresser or manicurist.
Lawyers for the Milan Institute, including William M. Hensley, a shareholder at Alvarado Smith, appeared poised to litigate, noting at a status conference 14 months into the litigation they would prefer to keep the matter in court.
When the defendants changed their tune three months later, plaintiffs contested they had waived their right to arbitrate, because the Milan Institute had gone too far in the litigation, costing plaintiffs significant resources.
When no other attorney would touch my case, Bryan took it on with zeal. Since then, the EEOC certified a class action and has ruled in our favor in every motion the other side has thrown at us. A five-star rating does not come close…
I was fortunate to have found Bryan Schwartz Law while searching for reputable and reliable law firms in the Oakland area that specialized in labor law, and I couldn’t be more pleased by the results they secured for my family on my father’s behalf! After…
Bryan's firm came highly recommended to deal with an employment discrimination and harassment case. Bryan and his staff were very professional, ethical, extremely organized and diligent. They are strong advocates who worked extremely hard to get me a very fair resolution to my case. I…
Bryan Schwartz is an attorney who gives good, sound advice and empowers you to believe in your convictions. I reached out to him because no other attorney wanted to assist me. Bryan has been my advocate for the last six years. He is compassionate, empathetic…
Bryan Schwartz is without a doubt a fantastic attorney. As tenacious as he is intelligent, I would absolutely recommend his services to anyone seeking justice. Not only is his legal expertise top notch, his interpersonal skills with his clients are superb as well. Working with…
Bryan and his team were highly recommended by a friend and another attorney. I reached out to Bryan when I was sick, hurting and afraid, not knowing what to expect or how to ask for help. Bryan offered to help, he and his team fought…
When I first met Bryan, and the team at Bryan Schwartz Law, I was blown away by how understanding, sympathetic, and outright dismayed they were to the unlawful situation my coworkers and I were (to say the least) uncomfortably having to endure and work through.…
Bryan Schwartz represented me successfully in mediating my age discrimination claim against a large employer....[T]here can be few lawyers with greater legal acumen or a more relentless drive to get an acceptable result for their clients. Bryan is all business and probably works too hard.…
I could never imagine having any other attorney on my side when I needed someone. This office is beyond professional and intelligent from the person answering the phone right to the attorneys. These attorneys will fight tooth and nail for you.
These guys were amazing. Just on the ball, knowledgeable and friendly as hell. I presented my case over the phone and I immediately got some preliminary feedback which was awesome. I was asked for more details which I provided via email the next day. Two…
Schedule an initial consultation to have Bryan Schwartz Law
evaluate your situation.
*Your submission of an intake request form does not guarantee that Bryan Schwartz Law will take your case or provide legal advice. You must be offered and sign a representation agreement with the firm before you will receive any legal advice.
How did we do?
Note: Your review may be shared publicly.