KENNETH HOLLEY-GALLEGLY V. TA OPERATING, LLC, No. 22-55950 (9th Cir. 2023)
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Defendant-Appellant TA Operating LLC (TA) appeals the district court’s denial of its motion to compel arbitration of employment-related claims brought by Plaintiff.
The Ninth Circuit vacated the district court’s order denying Defendant’s motion to compel arbitration. The panel held that the district court erred in finding that the arbitration agreement’s delegation clause was unenforceable because it was substantively unconscionable. The district court properly considered whether an “unrelated” jury waiver provision made the delegation clause unconscionable. Here, though, the jury waiver provision applied only if the Agreement were determined to be unenforceable. As such, it could not support the conclusion that an agreement to arbitrate enforceability (i.e., the delegation clause) was unenforceable.
Court Description: Arbitration The panel vacated the district court’s order denying defendant TA Operating LLC’s motion to compel arbitration of employment-related claims brought by Kenneth Holley-Gallegly and remanded for the district court to order the arbitrator to decide the issue of arbitrability.
TA moved to compel arbitration pursuant to an arbitration agreement (the Agreement) that Holley-Gallegly signed when TA hired him as a truck mechanic. The Agreement included a delegation clause delegating to the arbitrator questions regarding the interpretation and enforceability of the Agreement. The district court ruled that the parties had delegated issues of arbitrability to the arbitrator and the delegation was clear and unmistakable, but that the delegation clause was unconscionable and therefore unenforceable. The district court then itself addressed arbitrability and concluded that the Agreement as a whole was unconscionable and unenforceable.
The panel held that the district court erred in finding that the arbitration agreement’s delegation clause was unenforceable because it was substantively unconscionable. The district court properly considered whether an “unrelated” jury waiver provision made the delegation clause unconscionable. Here, though, the jury waiver provision applied only if the Agreement were determined to be unenforceable. As such, it could not support the conclusion that an agreement to arbitrate enforceability (i.e., the delegation clause) was unenforceable.
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