Claudia Garcia v. Iss Facility Services, Inc., 20-15633

Background

Claudia Garcia brought a putative wage-and-hour class action against ISS Facility Services, ISS Facility Services California, and Broadridge Financial Solutions. Defendants moved to compel arbitration under an earlier Arbitration Agreement.
After the Arbitration Agreement, the parties signed a later Mediation Agreement that required disputes to be mediated and included an integration clause describing it as "the full and complete agreement relating to the resolution of disputes covered by this Agreement."
The Mediation Agreement defined covered disputes in terms identical to the Arbitration Agreement (claims arising out of or related to employment or separation) and in many places reproduced Arbitration Agreement language verbatim, substituting "mediation" for "arbitration."
The Mediation Agreement carved out actions "to a court of competent jurisdiction for temporary or preliminary injunctive relief," using the term "court" (not arbitrator), and contained a few apparent drafting remnants referencing arbitration.
The district court denied the motion to compel arbitration, finding the Mediation Agreement fully integrated and superseding the Arbitration Agreement, and concluding defendants waived any right to insist that an arbitrator decide gateway arbitrability questions.
On appeal, defendants argued (1) integration was incorrect, (2) the district court should have analyzed novation, and (3) a delegation clause in the Arbitration Agreement required an arbitrator to decide arbitrability. The Ninth Circuit affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Mediation Agreement is fully integrated and supersedes the prior Arbitration Agreement	Mediation Agreement is the exclusive, integrated agreement covering the same disputes, so arbitration was superseded	"Covered by this agreement" modifies "resolution," and surviving arbitration language shows Arbitration Agreement remains enforceable	Court held the Mediation Agreement is fully integrated and supersedes the Arbitration Agreement
Whether the district court erred by not analyzing the Mediation Agreement as a novation	Garcia did not concede novation; integration analysis resolves the issue	On appeal, defendants argued the court should have applied novation standards	Court declined to reach novel novation argument raised first on appeal and found integration analysis dispositive
Whether the delegation clause required an arbitrator to decide arbitrability	Garcia argued defendants waived the right to enforce delegation by seeking judicial resolution and not invoking delegation below	Defendants argued Rent-A-Center requires a specific district-court challenge to the delegation clause and that arbitrator should decide arbitrability	Court held defendants waived the right to insist on delegation because they sought judicial adjudication and never sought enforcement of the delegation clause; district court properly decided arbitrability

Key Cases Cited

Kramer v. Toyota Motor Corp., 705 F.3d 1122 (9th Cir. 2013) (de novo review standard for arbitrability determinations)
Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733 (9th Cir. 2014) (applying state contract law to decide existence/scope of arbitration agreements)
Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042 (9th Cir. 2009) (same; general principles for interpreting arbitration clauses)
Masterson v. Sine, 68 Cal.2d 222 (Cal. 1968) (integration doctrine; when a writing is the exclusive embodiment of the parties' agreement)
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clauses and requirement to challenge them specifically)
Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754 (9th Cir. 1988) (party's inconsistent acts can waive arbitration)
In re E.R. Fegert, Inc., 887 F.2d 955 (9th Cir. 1989) (declining to consider arguments raised for first time on appeal)
Martin v. Yasuda, 829 F.3d 1118 (9th Cir. 2016) (waiver of arbitration requires knowledge, inconsistent acts, and prejudice)