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Civil Litigation,
9th U.S. Circuit Court of Appeals

Dec. 30, 2019

The top 5 9th Circuit civil cases of 2019

With the new year quickly approaching, now is a good time to reflect on the 9th U.S. Circuit Court of Appeals’ significant cases decided this year. While there were many to choose from, we have selected what we consider to be the top-5 (technically, top-6) blockbuster civil cases of 2019. They range widely in subjects from constitutional law to the Americans with Disabilities Act.

Azadian james web

James Azadian

Partner, Dykema Gossett LLP

Email: jazadian@dykema.com

Pepperdine Univ School of Law

The top 5 9th Circuit civil cases of 2019

With the new year quickly approaching, now is a good time to reflect on the 9th U.S. Circuit Court of Appeals' significant cases decided this year. While there were many to choose from, we have selected what we consider to be the top-5 (technically, top-6) blockbuster civil cases of 2019. They range widely in subjects from constitutional law to the Americans with Disabilities Act.

1. Americans with Disabilities Act

Robles v. Domino's Pizza, LLC, 2019 416 DJDAR 416: In January, the 9th Circuit decided this Americans with Disabilities Act case that all companies doing business over the internet must understand. A visually-impaired man filed the lawsuit against Domino's, alleging he couldn't use the company's website or delivery app even with screen-reader software and, consequently, was unable to order a pizza online. Screen-reading software users often say modern websites and apps don't have enough built-in cues to let the software meaningfully translate what's happening on-screen to audio output. The 9th Circuit held (and is the first circuit court to hold) that entities selling online must make their websites and apps accessible to people with disabilities. Businesses have expressed concern that the 9th Circuit's novel decision, coupled with uncertainty about exactly what it means to make a website accessible, have caused a flood of lawsuits over website/app access that, in turn, are causing businesses to consider reducing their online presence, which would ultimately hurt all consumers. The Supreme Court decided not to hear the case, leaving the law unsettled both as to brick-and-mortar retailers who also have websites/apps (like Domino's) and e-commerce-only businesses.

The case marks a major win for disability rights advocates, who have been arguing that the ADA applies to websites, digital platforms, and other non-physical spaces. It is a disappointment for retailers and service providers operating their websites and apps with the long-held understanding that the ADA applied only to physical locations, not to non-physical spaces, even if those non-physical spaces have some connection to a physical location.

2. Arbitration

Monster Energy Company v. City Beverages, 2019 DJDAR 9934: In October, the 9th Circuit issued a decision impacting arbitrations, which promises to reverberate throughout the alternative dispute resolution industry. Olympic Eagle Distributing and Monster Energy Co. entered into an agreement under which Monster had exclusive distribution rights for its products in a certain territory for 20 years. Monster exercised its contractual right to terminate the agreement and, in response, Olympic invoked Washington's Franchise Investment Protection Act, which prohibits termination of a franchise contract absent good cause. Monster thereafter initiated an arbitration proceeding before JAMS based on a mandatory arbitration clause in the parties' agreement. The parties chose an arbitrator, who submitted disclosure statements before the arbitration. The arbitrator ultimately issued a final award in favor of Monster.

Monster filed a petition to confirm the award, and Olympic cross-petitioned to vacate the award based on later-discovered information that demonstrated the arbitrator was not impartial. The trial court confirmed the award, but, in a divided decision, a 9th Circuit panel vacated it, with the panel majority holding that the arbitrator's failure to disclose his ownership interest in JAMS, coupled with the fact that JAMS had administered 97 arbitrations for Monster over the past five years, required vacatur on the ground of evident partiality. The two key takeaways from the majority's decision are: (1) confirmation that the Federal Abritration Act's clause permitting vacatur of an arbitrator's award based on "evident partiality" has real teeth; and (2) the argument that a challenging party has waived its "evident partiality" objection by failing to object to the arbitrator during the selection process is no hindrance.

Judge Michelle Friedland dissented, and her dissent can be summed up as "you get what you pay for." Judge Friedland observed that when parties willingly forego Article III protections in favor of private arbitration, they give up their constitutional right to completely impartial administration of the law. Arbitrators are paid by the parties and have an inherent economic stake in securing repeat business. As a result, risk of bias is baked into the arbitration industry's structure and "requiring disclosures about the elephant that everyone knows is in the room will [not] address" the disparities inherent in the private arbitration system, according to Judge Friedland.

As arbitration continues to infiltrate everyday life, with increasing numbers of cases being tried out of court, parties may not realize that private arbitrators differ from Article III judges, who have life tenure and are subject to stringent financial disclosure laws. The 9th Circuit's new disclosure standard for arbitrators will have far-reaching effects on parties who need to make informed decisions when selecting neutrals. At a minimum, it should cause parties to take a closer look at their arbitrators in any given case. (The time to petition the Supreme Court to review the panel majority's decision has not yet passed, but it is not anticipated that any party will be seeking further review in this case.)

3. First Amendment's Religion Clauses (and the Ministerial Exception)

Biel v. St. James School, 2019 DJDAR 5725, and Morrissey-Berru v. Our Lady of Guadalupe School, 17-56624: In this pair of employment-discrimination cases brought by employees against their religious employers, where the employees carried out religious functions, two different 9th Circuit panels declined to apply the "ministerial exception" enjoyed by religious institutions under the Religion Clauses of the First Amendment and Supreme Court precedent. In Hosanna-Tabor Evangelical Lutheran Church & School v. E.E.O.C., 565 U.S. 171 (2012), the Supreme Court unanimously held that a religious school can claim a "ministerial exception" to a discrimination charge under the ADA for a teacher who taught secular subjects.

Plaintiff Kristen Biel, a fifth-grade teacher employed by a private Catholic school, sued under the ADA when the school fired her after she announced that she had breast cancer and requested time off from work to undergo chemotherapy. The trial court threw out Biel's claims at summary judgment -- determining that her lawsuit was barred by the First Amendment's "ministerial exception." A 9th Circuit panel reversed in a divided decision, with the panel majority holding that the total circumstances of Biel's employment did not qualify her as a minister for the purposes of the ministerial exception. 3rd Circuit Judge D. Michael Fisher sat on the panel by designation and dissented, reasoning that the panel majority's decision conflicts with the Supreme Court's decision in Hosanna-Tabor, pointing to the fact that Biel performed important religious functions at the school and was "entrusted with teaching and conveying the tenets of the faith to the next generation."

In Our Lady of Guadalupe, the plaintiff was also a fifth-grade teacher at a private Catholic school. Her duties required her to teach the tenets of Catholicism, lead her students in daily prayer, and plan the liturgy for the school's monthly Mass. To ensure that she was qualified to serve as a religion teacher, the Archdiocese of Los Angeles required her to take a course to become a certified Catechist.

After the school declined to renew the teacher's contract due to her performance, she sued the school for age discrimination. At the time of her termination, she was 65 years old. On summary judgment, the trial court rejected her claim, reasoning that civil courts could not second-guess a Catholic school's judgment over who should serve as one of its religion teachers. That decision was consistent with what the trial court observed to be a long line of cases, including Hosanna-Tabor, holding that religious schools must retain full autonomy over such employment decisions. In an unpublished "memorandum disposition," the 9th Circuit reversed the trial court's summary judgment. Although the 9th Circuit panel acknowledged that the teacher had "significant religious responsibilities," it nonetheless held that the ministerial exception did not bar her claim, in part because her title of "Teacher" was secular, and she did not hold herself out to the public as a religious "minister."

In June, the Biel panel majority denied a petition for an en banc rehearing in that case, and nine judges dissented from the denial of rehearing the matter en banc. In that dissenting opinion, Judge Ryan Nelson argued that the panel majority did not hold Biel to be a "minister" because her employment circumstances "were not a carbon copy of the plaintiff's circumstances" in Hosanna-Tabor, a conclusion that clearly "departed from the plain direction of the Supreme Court." The dissent extended its rebuke to the second case, Our Lady of Guadalupe, which, according to the dissent, presented an "even stronger" case to apply the ministerial exception.

Just last week, the Supreme Court decided to review both decisions, granting the schools' certiorari petitions, which argued that these 9th Circuit decisions squarely conflict with the Supreme Court's decision in Hosanna-Tabor and with decisions of the other circuits.

4. Labor and Employment (with a California Twist)

Vazquez v. Jan-Pro Franchising Int'l Inc., 2019 DJDAR 3707: This is an important labor and employment case that bridges the divide between California state courts and federal courts and calls for a decision from the California Supreme Court on the retroactivity of one of its prior landmark decisions.

In May, a 9th Circuit panel held that the California Supreme Court's adoption of the ABC test for independent contractor status (in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 4th 903 (2018)) is retroactive. Dynamex changed long-standing precedent by adopting what has been coined "the ABC test" to determine whether a worker was properly classified as an independent contractor or employee. Dynamex has a significant impact on employers because its ABC test places the burden on putative employers to establish a worker is an independent contractor, not an employee, by meeting the following three elements:

A: the worker is free from control and direction over performance of the work, both under the contract and in fact;

B: the work provided is outside the usual course of the putative employer's business; and

C: the worker is customarily engaged in an independently established trade, occupation or business.

After a petition for rehearing en banc, in September the 9th Circuit panel withdrew its opinion and entered an order requesting that the California Supreme Court answer the question of retroactivity. The California Supreme Court recently granted that request, and a decision from the California Supreme Court is anticipated sometime in 2020.

5. Nationwide Class Actions (Settlement Procedure)

In re Hyundai and Kia Fuel Economy Litigation, 2019 DJDAR 4888: The 9th Circuit's 11-member en banc panel reviewed a three-judge panel's split decision that threw out a $200 million nationwide class action settlement. The two-member panel majority had criticized the trial court for not analyzing the consumer-protection laws of several states in certifying a nationwide settlement class of plaintiffs. The decision would have forced trial courts to scrutinize a settlement class to the same degree as a litigation class by requiring attorneys and the federal trial courts to conduct an all-50-states analysis of consumers' claims. That about-face in class action settlement procedure caused trial courts throughout the 9th Circuit to sideline pending class settlements as they waited for the en banc court's decision.

In an 8-3 majority decision issued in June, the en banc panel determined there is no requirement, absent sufficient showing from an objector, that the trial court must analyze variances of state laws at the settlement stage. Reversing the earlier panel ruling and reinstating the trial court's $200-million nationwide settlement, the en banc super-majority explained that "[t]he criteria for class certification are applied differently in litigation classes and settlement classes," and "[i]n deciding whether to certify a litigation class, a district court must be concerned with manageability at trial. However, such manageability is not a concern in certifying a settlement class where, by definition, there will be no trial." The 9th Circuit convenes its 11-judge en banc panel to rehear only a very small handful of civil cases each year. Review by the Supreme Court was not sought in this case.

Lastly, it should be noted that all 29 authorized 9th Circuit judgeships are now filled. The final two vacancies were filled earlier this month with the Senate's confirmation of Patrick Bumatay to a California-based seat and Lawrence VanDyke to a Nevada-based seat. 

#355622

Ilan Isaacs

Associate Legal Editor
ilan_isaacs@dailyjournal.com

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