Michelle Richards v. Ernst & Young, LLP
2013 U.S. App. LEXIS 24562
| 9th Cir. | 2013Background
- Michelle Richards, a former Ernst & Young (E&Y) employee, sued over California wage-and-hour claims; her case was consolidated with an earlier suit by two former employees (Ho and Fernandez).
- E&Y moved to compel arbitration after the Supreme Court's decision in AT&T Mobility v. Concepcion.
- The district court denied E&Y's motion, finding E&Y had waived arbitration by failing to assert it earlier in the consolidated litigation and by participating in discovery; the court also certified a class with Richards as representative.
- Richards argued she was prejudiced by E&Y's delay because claims were litigated and some relief was lost or dismissed.
- The Ninth Circuit reviewed waiver de novo and reversed: it found Richards failed to show the requisite prejudice from E&Y’s delay and vacated class certification because the arbitration agreement barred class arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of arbitration by delay/participation | Richards: E&Y waited and litigated, so it waived arbitration | E&Y: timely invoked arbitration after Concepcion; participation did not prejudice Richards | No waiver; reversal — Richards failed to prove prejudice required for waiver |
| Prejudice from discovery costs | Richards: discovery forced litigation expenses and harmed her case | E&Y: expenses stemmed from Richards' choice to litigate rather than arbitrate; no unique information gained that arbitration couldn't produce | No prejudice — self-inflicted expenses insufficient; no showing discovery produced unavailable-to-arbitration evidence |
| D.R. Horton / NLRA unconscionability argument | Richards: arbitration agreement unenforceable under NLRA (per NLRB D.R. Horton) | E&Y: Horton was not raised below; NLRB decision conflicts with FAA and Supreme Court precedent | Court declined to consider Horton-based NLRA argument (not raised below) and noted many courts resist deferring to D.R. Horton |
| Class arbitration / class certification | Richards: class should proceed in court | E&Y: arbitration agreement precludes class arbitration | Vacated class certification because arbitration must be compelled and agreement bars class arbitration |
Key Cases Cited
- Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691 (9th Cir. 1986) (elements and heavy burden for proving waiver of arbitration)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (FAA requires enforcement of arbitration agreements according to their terms)
- Equity Lifestyle Props., Inc. v. County of San Luis Obispo, 548 F.3d 1184 (9th Cir. 2008) (standing is a jurisdictional question that precedes merits)
- Saint Agnes Med. Ctr. v. PacifiCare of Cal., 31 Cal. 4th 1187 (Cal. 2003) (prejudice can include use of discovery to obtain information unavailable in arbitration)
- CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012) (no contrary congressional command found to override FAA's policy favoring arbitration)