[00:00:04] Speaker 00:
Good morning, your honors.

[00:00:06] Speaker 00:
Stanley Panikowski for the Appellant GMRI, Inc.

[00:00:10] Speaker 00:
I plan to reserve three minutes for my rebuttal.

[00:00:13] Speaker 00:
All right.

[00:00:14] Speaker 00:
Your honors, the parties in this case clearly and unmistakably delegated the threshold question of arbitrability to the arbitrator.

[00:00:24] Speaker 00:
And plaintiff did not specifically challenge the enforceability of the delegation clause in the district court as required.

[00:00:32] Speaker 03:
In fact, as I read,

[00:00:36] Speaker 03:
What the district court said he said the plaintiffs brief argued the entire agreement including the delegation clause was unconscionable.

[00:00:46] Speaker 03:
So they only talked about unconscionability and so the district court moved unconscionability isn't that what happened.

[00:00:53] Speaker 00:
Your Honor, the district court did decide unconscionability of the DRP as a whole.

[00:01:00] Speaker 00:
However, the district court did not identify any place in plaintiff's opposition to GMRI's motion to compel arbitration where the plaintiff specifically challenged the delegation.

[00:01:13] Speaker 03:
Did the plaintiff ever specifically challenge that clause?

[00:01:18] Speaker 00:
Your Honor, not in the district court, only on appeal has plaintiffs tried to fashion a challenge to the enforceability of the delegation clause.

[00:01:29] Speaker 00:
The only argument.

[00:01:31] Speaker 04:
Isn't the question, there are two separate questions, it seems to me.

[00:01:35] Speaker 04:
One has to do with the unconscionability or not of the agreement as a whole.

[00:01:41] Speaker 00:
Yes, Your Honor.

[00:01:41] Speaker 04:
Whether or not it has the delegation clause in it.

[00:01:45] Speaker 04:
And the other has to do with the scope or enforceability specifically of the delegation clause.

[00:01:52] Speaker 04:
And my concern is that I don't see anywhere in the contract where the threshold question of the unconscionability of the contract as a whole is for anyone except the court.

[00:02:09] Speaker 00:
Your Honor, in the DRP, there are several provisions that make clear that all questions of arbitrability, except for the few express carve-outs at page 213 of the excerpts of record, are for the arbitrator.

[00:02:25] Speaker 04:
And Your Honor, first at... Arbitrability is not the same as unconscionability of the contract as a contract.

[00:02:35] Speaker 00:
Your Honor, unconscionability is a species of arbitrability issue, and that is made clear in the cases that we cite at page eight of our reply brief.

[00:02:48] Speaker 04:
Those cases, as far as I could tell, have different wording in the contract than is present here.

[00:02:56] Speaker 04:
Your Honor, that is correct.

[00:02:57] Speaker 04:
That can be important, can it not?

[00:02:59] Speaker 00:
Your honor, it can be important in certain cases, but what's relevant from those decisions here is not the specific language of those contracts, but the fact that, for example, this court in Caremark at page 1029 was talking about gateway questions of arbitrability, such as whether the agreement covers a particular controversy

[00:03:22] Speaker 00:
or whether the arbitration provision is enforceable at all.

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And therefore, this court identified enforceability as a type.

[00:03:30] Speaker 04:
But it also viewed those as separate questions, which was what I was saying.

[00:03:34] Speaker 04:
It had questions, including the scope of the arbitration and the enforceability of the contract, as separate questions.

[00:03:44] Speaker 00:
Your Honor, those are separate questions when it is appropriate to address them.

[00:03:49] Speaker 00:
Scope is one issue, and then enforceability is another issue.

[00:03:54] Speaker 00:
Here, the plaintiff at pages 22 and 25 of the response brief, as we explained in our reply brief, appears to concede that enforceability is a type of arbitrability issue.

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And therefore, if this court were to

[00:04:11] Speaker 00:
conclude that the DRP delegates arbitrability to the arbitrator clearly and unmistakably, that would include enforceability challenges and unconscionability challenges.

[00:04:23] Speaker 01:
There's two separate questions, and I'm not sure that I understand your answer in response to what Judge Graber was saying.

[00:04:31] Speaker 01:
Yes, Your Honor.

[00:04:32] Speaker 01:
Do you see that there are two distinct gateway questions?

[00:04:37] Speaker 01:
And if your answer is yes, I see that, but there's concession on the other side, then that's separate.

[00:04:43] Speaker 01:
What's your position?

[00:04:44] Speaker 00:
Right.

[00:04:45] Speaker 00:
So, Your Honor, our position is that

[00:04:47] Speaker 00:
when the DRP at pages 217 and 218 of the excerpts of record says that the arbitrator will have sole authority to decide whether a dispute is arbitrable, that that encompasses all questions relating to arbitrability, such as scope, enforceability, unconscionability, other validity issues.

[00:05:09] Speaker 01:
I think that's an argument.

[00:05:09] Speaker 01:
Are you familiar with the California case of Beko versus Fast Auto Loans?

[00:05:14] Speaker 01:
Because I think that has a very similar provision

[00:05:17] Speaker 01:
to this case, and the California Court of Appeals considered the gateway issues as two distinct issues.

[00:05:24] Speaker 01:
And in fact, they said that the latter issue is distinct enough that if the parties actually contemplated it at the time of contracting, they can expressly say, well, questions of enforceability of the arbitration provision, they can write that into the contract.

[00:05:39] Speaker 01:
And because they didn't do so, you could look at this as two distinct gateway questions.

[00:05:44] Speaker 00:
correct your honor, and it is certainly possible, your honor, that parties can divide up various threshold questions of arbitrability and decide, for example, that scope issues go to an arbitrator and that enforceability issues go to the court.

[00:06:00] Speaker 00:
However, that is not what the parties did here.

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At pages 217 and 218 of the excerpts of record, there is an indivisible

[00:06:09] Speaker 00:
delegation clause that says that the arbitrator will have sole authority to decide whether the dispute is arbitrable and whether it has been timely filed and pursued.

[00:06:20] Speaker 03:
Isn't it also the case that in this particular agreement, even if one were to make this distinction, that the parties expressly included the AAA rules in this agreement, which not only would suggest that the parties clearly and unmistakably delegated this to the arbitrator,

[00:06:46] Speaker 03:
It says right in those rules that the enforceability is something the arbitrator would take up, right?

[00:06:54] Speaker 00:
Yes, your honor, that is correct.

[00:06:55] Speaker 00:
And under this court's decisions in Caremark and Brennan, the incorporation of the AAA rules is yet another reason why the parties here clearly and unmistakably delegated threshold issues of arbitrability to the arbitrator.

[00:07:12] Speaker 04:
Yes, Your Honor.

[00:07:13] Speaker 04:
It appears to me that our cases on that have left open the question of an unsophisticated contracting party.

[00:07:22] Speaker 04:
Those cases explicitly dealt with sophisticated parties who would understand that the incorporation of the AAA rules encompasses the incorporation of the enforceability of the contract.

[00:07:37] Speaker 04:
And here it seems to me we have a classic unsophisticated individual who's a cook at a sort of chain restaurant.

[00:07:49] Speaker 04:
And we've left that question open.

[00:07:52] Speaker 04:
So is it your position that even an unsophisticated individual such as the plaintiff here

[00:07:58] Speaker 03:
is bound to delve into the triple a rules and understand that that's an unmistakable delegation before before you answer that i don't ever think that that the opposition has even raised that issue have they we didn't even talk about unsophisticated or not now judge graber may want to hold as a question of

[00:08:19] Speaker 03:
law that a cook is not very sophisticated, but I'm not there.

[00:08:26] Speaker 03:
I'm not going to do that on my own.

[00:08:28] Speaker 03:
I've got to have somebody argue it.

[00:08:30] Speaker 03:
So did they ever argue that?

[00:08:33] Speaker 04:
I appreciate that.

[00:08:35] Speaker 04:
I'd like you to answer Judge Smith's question, but I'd also, after that, like you to answer Ryan.

[00:08:40] Speaker 00:
Yes, Your Honor, and Your Honors, if I may answer both at once, please.

[00:08:44] Speaker 00:
The plaintiff did not argue here a lack of sophistication.

[00:08:48] Speaker 00:
The district court did not make any finding with respect to sophistication or lack thereof.

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And there is nothing in the record that indicates sophistication or lack thereof.

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And that is why, Your Honor, GMRI has not taken any position in this case as to whether this court's precedents in Caremark and Brennan

[00:09:11] Speaker 00:
would be extended to unsophisticated parties.

[00:09:14] Speaker 00:
Rather, GMRI has argued as essentially the third reason why the delegation of arbitrability questions to the arbitrator is clear and unmistakable is the agreements and cooperation of the AAA rules at page 218 of the excerpts of record.

[00:09:33] Speaker 00:
And in that same provision, Your Honors,

[00:09:36] Speaker 00:
GMRI did say in the arbitration agreement that you can find those rules at this website or by doing a Google search.

[00:09:45] Speaker 00:
However, Your Honor, that is not the only basis for the clear and unmistakable nature of the delegation here.

[00:09:51] Speaker 00:
That is in the provisions at pages 217 and 218 of the excerpts of record.

[00:09:56] Speaker 00:
And moreover, Your Honors, plaintiff has appeared to concede

[00:10:01] Speaker 00:
at pages 22 and 25 of his response brief that, yes, if you find that there was a clear and unmistakable delegation here, that does include the issue of enforceability.

[00:10:14] Speaker 00:
And that concession is well supported by the cases that GMRI has cited at pages eight and nine of the reply brief, where this court has, in dealing with different contracts, has described generally enforceability as a type of arbitrability issue.

[00:10:32] Speaker 00:
The argument, Your Honors, that GMRI has responded to is the only argument with respect to the delegation clause that the plaintiff made below.

[00:10:45] Speaker 00:
Plaintiff did not make below any challenge that was specific to the delegation clause on unconscionability grounds.

[00:10:54] Speaker 00:
We see that at their opposition to the motion to compel arbitration at pages 31 to 50 of the excerpts of record.

[00:11:02] Speaker 00:
What plaintiffs instead argued was that the delegation clause was not clear and unmistakable.

[00:11:09] Speaker 00:
That is not a challenge to the delegation clause in terms of its enforceability.

[00:11:15] Speaker 00:
Rather, that's an argument about its scope.

[00:11:18] Speaker 00:
The district court did.

[00:11:19] Speaker 00:
Yes, Your Honor.

[00:11:20] Speaker 04:
Before you run out of time, I have one additional question on a slightly different topic.

[00:11:26] Speaker 04:
And for the purpose of this question, I'd like you to assume that we can look at the issue of unconscionability.

[00:11:34] Speaker 04:
And it appears to me that the timing provisions

[00:11:41] Speaker 04:
may render this unconscionable because they are so short in comparison to the normal time limits for bringing a claim.

[00:11:53] Speaker 04:
In your view, is that an unconscionable provision, and if so, would it render the entire arbitrability provision unconscionable?

[00:12:04] Speaker 00:
Your Honor, that provision is not unconscionable, and that is because of the plain language of the provision at page 214 of the excerpts of record.

[00:12:15] Speaker 00:
Your Honor, if I may quote, the relevant sentence in that provision says, where time limits for filing a claim, i.e.

[00:12:23] Speaker 00:
statutes of limitations, cannot be modified by agreement of the employee and the company, the legally mandated time limits applicable to the claim will apply.

[00:12:33] Speaker 00:
And that means, therefore, Your Honor, that in whatever jurisdiction the matter happens to be, you look at the applicable law of that jurisdiction.

[00:12:43] Speaker 00:
Here, we're in California, and California has case law that prohibits the unreasonable shortening of statutes of limitations.

[00:12:53] Speaker 00:
And therefore, in California, you may have a conflict here.

[00:12:57] Speaker 00:
What distinguishes this case, Your Honor, from the cases cited by the district court and plaintiff of De Leon, Baxter, and Pinnewa is that savings provision in the agreement.

[00:13:10] Speaker 00:
In De Leon, there was simply a one-year statute of limitations with no clause like the one at page 214 of the excerpts of record here that says,

[00:13:19] Speaker 00:
if we're unable to accomplish the shortening that this agreement provides for by default under the applicable laws of the jurisdiction, then the legally mandated time limits override the contract and apply.

[00:13:34] Speaker 00:
There was no such provision.

[00:13:35] Speaker 03:
I'm going to interrupt you just a little bit because I've read this in your brief, so I'm not sure I need you to tell me that.

[00:13:41] Speaker 03:
I thought the better part of Judge Graber's question was, assuming that this were an unconscionable provision,

[00:13:50] Speaker 03:
Would that be an overriding factor as to this being an unconscionable agreement?

[00:13:57] Speaker 00:
No, Your Honor.

[00:13:58] Speaker 00:
The standard for unconscionability in California is not simply that the contract be a simple, old-fashioned bad bargain, but rather that the terms need to be oppressive.

[00:14:11] Speaker 00:
unduly harsh, overly burdensome.

[00:14:14] Speaker 00:
And your honor, if this provision were found to be the sole ground of substantive unconscionability, it would not rise to that level.

[00:14:24] Speaker 00:
We would have a situation where- Can I interrupt you, because your time is running short?

[00:14:28] Speaker 01:
And have you addressed the unconscionability of the cost provision, because you said this might be the sole ground.

[00:14:33] Speaker 01:
And I'm concerned on the cost provision as well, because there's California law

[00:14:39] Speaker 01:
In this case, the DRP states that the arbitrator is authorized award fees and costs in accordance with applicable law, but doesn't require the arbitrator to do so.

[00:14:51] Speaker 01:
And I read authorized too as being permissive as in may do it, but you don't have to.

[00:14:58] Speaker 01:
So how do you address that?

[00:14:59] Speaker 00:
Your Honor, this provision is not unconscionable, and it does clearly state that the arbitrator is authorized to award fees and costs, quote, in accordance with and subject to the limitations of applicable law.

[00:15:13] Speaker 00:
And that's at page 218 of the excerpts.

[00:15:16] Speaker 00:
of record.

[00:15:17] Speaker 00:
And by giving the arbitrator that authority, what the DRP is saying is that arbitration is a creature of contract.

[00:15:25] Speaker 00:
And we are giving the arbitrator the authority to act in accordance with applicable law when it comes to the award of fees and costs.

[00:15:34] Speaker 00:
It would not make sense, Your Honor,

[00:15:36] Speaker 00:
for the DRP to say that the arbitrator is required to award fees and costs because whether it's required depends on the requirements of applicable law.

[00:15:47] Speaker 00:
For example, both parties have cited some labor code provisions where if the plaintiff prevails, plaintiff is entitled to reasonable attorney's fees and costs.

[00:15:57] Speaker 00:
Under the DRP, both that provision, Your Honor, as well as the provision at page 219

[00:16:03] Speaker 00:
of the excerpts of record that says the arbitrator will have the same authority as a court of law to grant request of use?

[00:16:12] Speaker 00:
Yes, Your Honor.

[00:16:13] Speaker 00:
That entire clause is mandatory when it says the arbitrator is authorized to award fees and costs in accordance with and subject to the limitations

[00:16:22] Speaker 00:
of applicable law.

[00:16:24] Speaker 00:
So all that the arbitrator has been authorized to do is to act in accordance with whatever the underlying applicable law says with respect to fees and costs.

[00:16:34] Speaker 00:
There's no discretion to deviate from that.

[00:16:35] Speaker 00:
I have your argument.

[00:16:35] Speaker 01:
I've taken you over time, but let me see if my colleagues have any additional questions.

[00:16:40] Speaker 01:
No.

[00:16:41] Speaker 01:
All right.

[00:16:41] Speaker 01:
Thank you, Your Honor.

[00:16:42] Speaker 01:
I know you wanted to save a couple of minutes, so I'll give it back to you.

[00:16:44] Speaker 00:
Thank you, Your Honor.

[00:16:54] Speaker 02:
Good morning, Your Honors.

[00:16:56] Speaker 02:
Please to the court.

[00:16:58] Speaker 02:
I think the threshold issue here is, does the delegation term expressly and with clear and unmistakable ability, I guess, make it clear that only the arbitrator has the ability to decide questions of unconscionability or enforceability?

[00:17:20] Speaker 03:
Well, it seems to me that when I read your brief, as counsel suggested, that you concede that the question of whether the dispute is arbitrable includes the questions regarding the enforceability of the arbitration agreement and all other claims.

[00:17:41] Speaker 03:
except those that are specifically carved out.

[00:17:44] Speaker 03:
That's what you say right in the middle of your brief.

[00:17:47] Speaker 02:
Well, no, Your Honor, at the beginning of what we first say that the clear enough.

[00:17:53] Speaker 03:
I'm trying to read what your brief says.

[00:17:56] Speaker 03:
You tell me where you suggest that enforceability is carved out in any way.

[00:18:02] Speaker 03:
It seems to me that you suggest arbitrable is enforceability.

[00:18:08] Speaker 03:
unless it's specifically carved out, and it wasn't carved out in this agreement.

[00:18:14] Speaker 03:
And therefore, I'm having a tough time understanding how I get there with your brief.

[00:18:22] Speaker 02:
I understand.

[00:18:23] Speaker 02:
There's nothing to carve out.

[00:18:25] Speaker 02:
I'm sorry, but the carve out is the severance clause?

[00:18:28] Speaker 02:
Is that what we're focusing on now?

[00:18:32] Speaker 02:
The arbitration agreement in itself does not state in expressed terms that only the arbitrator may decide either on accountability or enforcement or anything of that sort.

[00:18:47] Speaker 02:
That's the argument to begin with.

[00:18:48] Speaker 02:
It says arbitrable.

[00:18:49] Speaker 02:
I'm sorry?

[00:18:50] Speaker 03:
It says arbitrable.

[00:18:51] Speaker 03:
It decides all issues which are arbitrable.

[00:18:55] Speaker 03:
And whether the dispute is arbitrable.

[00:18:58] Speaker 03:
Now, do you make any argument in your brief?

[00:19:02] Speaker 03:
that there's a distinction between the questions of arbitrability and the question of enforceability.

[00:19:09] Speaker 03:
If you do, where do you make it?

[00:19:11] Speaker 03:
I appreciate Judge Graver, you'd like to answer that, but I'd like to have him answer it because I don't think he does.

[00:19:22] Speaker 04:
Okay, I'm looking at page 21 myself.

[00:19:28] Speaker 04:
The first sentence under Sub A,

[00:19:32] Speaker 04:
is precisely the question that I've been asking, I think.

[00:19:36] Speaker 04:
I don't.

[00:19:37] Speaker 03:
Well, I appreciate you want to make that argument, but I'd like to have him make it since he's got the client.

[00:19:43] Speaker 02:
Yes, Your Honor.

[00:19:46] Speaker 02:
The argument that the, we made the argument that the delegation term that only, that says, that uses the term, arbitrable disputes, does not encompass

[00:20:02] Speaker 02:
the decision on whether the agreement is enforceable or whether there's inconscionability.

[00:20:10] Speaker 03:
Okay, so if I give you that, I'll just give it to you.

[00:20:14] Speaker 03:
Then if your agreement incorporates the AAA rules,

[00:20:19] Speaker 03:
which suggests that there's clear and unmistakable evidence that the parties delegated the questions of arbitrability to the arbitrator, then why is the exact wording of the delegation clause even relevant?

[00:20:37] Speaker 02:
Because the AAA rules don't, as a matter of law, incorporate into an arbitration agreement.

[00:20:44] Speaker 03:
Well, just a minute.

[00:20:45] Speaker 03:
Maybe I ought to read those rules.

[00:20:47] Speaker 03:
The AAA rules say, and I'll read them through you, the arbitrator shall have the power to rule on his or her own jurisdiction, including objections with respect to the validity of the arbitration agreement.

[00:21:05] Speaker 03:
That's correct.

[00:21:05] Speaker 03:
That's right in there.

[00:21:06] Speaker 02:
That's correct, Your Honor.

[00:21:07] Speaker 03:
Which says that it encompasses exactly what you're talking about.

[00:21:11] Speaker 02:
But it doesn't say that the arbitrator, the rule doesn't say the arbitrator has the sole authority to do that.

[00:21:18] Speaker 03:
It does.

[00:21:18] Speaker 02:
No, it doesn't.

[00:21:19] Speaker 03:
I just read it to you, shall have the power to rule.

[00:21:22] Speaker 02:
Shall have the power to rule.

[00:21:24] Speaker 02:
But it doesn't say that it's the only one that can rule on that.

[00:21:27] Speaker 02:
It talks about once you get into the arbitration, the arbitration, whether,

[00:21:35] Speaker 02:
an arbitrator or a judge has the right to determine unconscionability or enforceability is a matter of contract.

[00:21:43] Speaker 02:
There's nothing in the contract that you can point to, or anyone can point to, that says that only the arbitrator may consider questions that are contained in the AAA.

[00:21:55] Speaker 02:
On top of that, the AAA rules weren't provided.

[00:21:59] Speaker 03:
If you knew that the AAA was going to be the thing that was going to be argued here, why is it that you didn't ever talk about a sophisticated party?

[00:22:12] Speaker 02:
Well, because that never comes up.

[00:22:13] Speaker 03:
And when you're talking about contrastivity... That's the only precedent we have in our precedent, which would get you out of being subject to the AAA.

[00:22:24] Speaker 03:
Is that your client is not sophisticated, and yet there's nothing in this whole record that suggests that it's not sophisticated, except somebody who wants to say because of their

[00:22:41] Speaker 03:
position or what they do that somehow they're not which is not even here i mean i'm trying to figure out if you knew the triple-a and this i mean it isn't it isn't unclear what brennan says about the triple-a and it isn't unclear that our only way to get out of this in any place maybe get out of it is sophistication that one would argue that my client isn't sophisticated

[00:23:10] Speaker 02:
We didn't use the words sophisticated.

[00:23:13] Speaker 02:
I admit that.

[00:23:14] Speaker 02:
But the point is that the AAA rules, in the case they said that they lend credence to the fact that only the arbitrator has the authority to do it,

[00:23:29] Speaker 02:
had an express provision that the arbitrator was the only one that could decide enforceability on it.

[00:23:38] Speaker 02:
You really used the word unquenchability.

[00:23:40] Speaker 01:
One of the questions that we struggle with in terms of whether the analysis should differ as to unsophisticated parties, because the record suggests that that may be a viable argument for you, is that California is quite favorable

[00:23:53] Speaker 01:
to your case as to whether the mere incorporation of the AAA rules alone should be viewed as an unmistakable delegation.

[00:24:05] Speaker 01:
And so the fact that you may have an unsophisticated client really matters when it comes to this argument of incorporation of the AAA.

[00:24:15] Speaker 01:
And we generally have a rule that if arguments aren't specifically raised and preserved, they're deemed forfeited.

[00:24:23] Speaker 01:
So what's your best argument on why forfeiture should not be applied in this particular case?

[00:24:30] Speaker 02:
The rule itself?

[00:24:31] Speaker 02:
Well, as far as the AAA rule, my argument is that it does give the arbitrator the authority to do that if the contract allows it to happen.

[00:24:41] Speaker 02:
It's not just something that you incorporate, and then as a matter of law, it takes the place of a delegation clause that's clear and unmistakable in regard to that issue.

[00:24:52] Speaker 02:
It's not even in the agreement to begin with.

[00:24:56] Speaker 02:
It wasn't provided.

[00:24:57] Speaker 02:
Even if he was sophisticated, it wasn't provided.

[00:25:01] Speaker 02:
He had to sign this agreement.

[00:25:02] Speaker 02:
And then he could go look it up.

[00:25:03] Speaker 02:
And it says it's there.

[00:25:04] Speaker 02:
And the district court found that that agreement was not provided in regard to the contract itself.

[00:25:11] Speaker 02:
So you can incorporate rules.

[00:25:13] Speaker 02:
And the rules of AAA, 99% of them only talk about the procedure of the arbitration.

[00:25:23] Speaker 02:
That one rule that says that the arbitrator has the authority to do this

[00:25:28] Speaker 02:
I don't think it supplants an arbitration agreement that doesn't provide that authority in the first place.

[00:25:34] Speaker 02:
It just says, we can do it if the contract says you can.

[00:25:38] Speaker 02:
But the contract, as we were looking at, says it doesn't say anything of that sort.

[00:25:44] Speaker 02:
And I was looking at the cases.

[00:25:47] Speaker 01:
I'm not sure I understand your answer.

[00:25:50] Speaker 01:
to my question and perhaps I didn't ask it well, I think what we're talking about is the general rule that incorporation of the AAA rules, that can constitute a clear and unmistakable evidence that the parties intended to arbitrate the arbitrability question, right?

[00:26:08] Speaker 01:
That analysis or the application of that rule can differ.

[00:26:12] Speaker 01:
if a party is unsophisticated.

[00:26:14] Speaker 01:
So in other words, if you've got an unsophisticated client, then that rule may not be applicable.

[00:26:19] Speaker 01:
There are multiple California Court of Appeals cases that have rejected the notion that merely incorporating the AAA rules alone indicates clear and unmistakable intent.

[00:26:30] Speaker 01:
And so you didn't make that argument.

[00:26:32] Speaker 01:
You didn't rely on the unsophisticated

[00:26:35] Speaker 01:
nature of your client.

[00:26:36] Speaker 01:
I don't know if that's true or not.

[00:26:38] Speaker 01:
Maybe it is.

[00:26:39] Speaker 01:
And so normally when you don't make an argument, that argument is deemed waived or forfeited.

[00:26:44] Speaker 01:
So my question to you is, well, should we not apply the usual waiver and forfeiture question to this case?

[00:26:52] Speaker 01:
And if we don't apply it, why is that the case?

[00:26:57] Speaker 02:
Well, I wouldn't apply it.

[00:26:59] Speaker 02:
I don't think we actually forfeited anything, because what I'm saying is that when we argued that the clear and unmistakable standard wasn't met, that simply going to the AAA rules to show that an arbitrator may, I don't see how an incorporation of something that allows an arbitrator to do something, such as to rule on a particular issue,

[00:27:25] Speaker 02:
trumps the arbitration agreement that was signed in general as to whether or not there was clear and unmistakable language that only the arbitrator, only the arbitrator has the right to determine enforceability.

[00:27:42] Speaker 02:
That's the only answer I can give you, Your Honor, because I'm sorry.

[00:27:46] Speaker 04:
It sounds to me, I just want to be sure I understand your argument.

[00:27:51] Speaker 04:
Your argument, as I understand it, is that you are not relying on whether or not your client is sophisticated or unsophisticated.

[00:28:00] Speaker 04:
You're making a different argument entirely, which has to do with

[00:28:04] Speaker 04:
clear and unambiguous, and the rule of the reference to the AAA rules.

[00:28:09] Speaker 04:
Is that what I'm hearing you say?

[00:28:12] Speaker 02:
Well, generally, yes, Your Honor.

[00:28:14] Speaker 02:
But I can't say that, generally speaking, the courts have recognized, and I didn't specifically argue it, because it was, to me, a sort of a given, in my mind, that a cook is an unsophisticated employee.

[00:28:27] Speaker 02:
I'm saying it now.

[00:28:29] Speaker 02:
He's not a sophisticated party, such as you found in Stolt Nielsen or something like that.

[00:28:35] Speaker 01:
I understand your answer to be that you're just rejecting the premise that there is such a general rule.

[00:28:41] Speaker 02:
Well, when I read the rule, I read it as an accompanying rule.

[00:28:45] Speaker 02:
I read it as a rule that says, if there is language that's clear and unmistakable, and then you have a severance clause that says, OK, we're delegating this to the court to determine if the Paga waiver is enforceable, et cetera, then the incorporation of the AAA rules lends credence to the fact that that is a carve-out.

[00:29:10] Speaker 02:
It enforces the first part where, like in Mohammed, where it said disputes arising out of relating to or interpreting in the application of the provision includes the, quote, enforceability, revocability, or validity of the arbitration provision.

[00:29:30] Speaker 02:
Every case that I've seen that had it incorporated in the AAA rules into it had a clear and distinct and unmistakable

[00:29:39] Speaker 02:
delegation clause that said that the arbitrator is the only one that can do that.

[00:29:44] Speaker 02:
And then they turn around and say, OK, now look at the AAA rules.

[00:29:47] Speaker 02:
It says the AAA rules say that he's authorized to do it.

[00:29:51] Speaker 02:
Well, he's not authorized to do it by the rules.

[00:29:53] Speaker 02:
He's authorized to do it by the contract.

[00:29:56] Speaker 03:
Maybe I could change the area that we're in.

[00:30:00] Speaker 03:
If you really believe that the delegation clause was the thing that needed to be challenged,

[00:30:08] Speaker 03:
And it was the clause that should get the big challenge in this particular case.

[00:30:17] Speaker 03:
Why is it that you challenge the agreement based on unenforceability, based on unconscionable and unenforceable terms?

[00:30:28] Speaker 03:
like recovery of costs, attorney's fees, timing provisions, and the waiver of the right to the Paga.

[00:30:36] Speaker 03:
It seems to me by saying that, you oriented the district court to the idea that it could make a decision here simply based on thou's

[00:30:50] Speaker 03:
particular terms being unconscionable and unenforceable and make a decision.

[00:30:57] Speaker 03:
And therefore the district court didn't really focus on the delegation clause as it should have.

[00:31:03] Speaker 03:
So I'm saying why didn't you focus on the delegation clause?

[00:31:08] Speaker 03:
Why did you focus on these unenforceable and unenconscionable terms in making your argument?

[00:31:17] Speaker 02:
Number one, the first thing we stated in our argument was that the delegation clause was not clear and unmistakable.

[00:31:27] Speaker 02:
And this is on page 40 of the excerpts.

[00:31:31] Speaker 02:
And the trial court is the proper decision maker.

[00:31:34] Speaker 02:
That was the first thing.

[00:31:36] Speaker 02:
To me, it was clear.

[00:31:37] Speaker 03:
So he missed it?

[00:31:39] Speaker 02:
I don't know.

[00:31:40] Speaker 02:
I wasn't there.

[00:31:40] Speaker 02:
I'm not being fled.

[00:31:42] Speaker 03:
So the district court missed it?

[00:31:43] Speaker 03:
I mean, I'm reading the district court's decision, and the district court's decision suggests that your argument and your brief

[00:31:52] Speaker 03:
suggests that the delegation clause is unconscionable because of the unenforceable and unconscionable terms.

[00:32:02] Speaker 03:
And therefore, he made all kinds of a big opinion on those terms.

[00:32:08] Speaker 03:
and didn't ever talk about the delegation clause and that's what's giving your opponent the right to come here because your opponent is reading the law which is dead set against that which is out of veranda center you've got us

[00:32:26] Speaker 03:
You've got to beat on the delegation clause, or it's going to apply, and this is going to be arbitrated.

[00:32:33] Speaker 03:
So I'm saying to you, it seems to me you misled the district court here.

[00:32:39] Speaker 03:
Or you're saying he missed what you argued.

[00:32:41] Speaker 02:
Is that what you're saying?

[00:32:44] Speaker 02:
Here's what the district court, my reading of the order.

[00:32:49] Speaker 02:
Plaintiff questions both conditions to enforcing the delegation clause.

[00:32:53] Speaker 02:
He claims the parties have no valid arbitration agreement due to unconscionability and, alternatively, that the delegation clause is ambiguous and therefore not clear and unmistakable of intent to delegate gateway issues to the arbitrator.

[00:33:11] Speaker 02:
We argued two issues.

[00:33:14] Speaker 02:
One, that the arbitration agreement does not contain clear and unmistakable evidence or statements

[00:33:22] Speaker 02:
delegation term that only the arbitrator has the ability to determine enforceability or validity or any of the things that we're talking about right now as far as that.

[00:33:34] Speaker 02:
We also, and I apologize, I missed it completely when they were saying that we never argued that the delegation clause was unenforceable because of unconscionability.

[00:33:45] Speaker 02:
I was focusing on what the court had said in regard to

[00:33:49] Speaker 02:
the cost provision.

[00:33:51] Speaker 01:
But then I looked... All right, we've taken you over time, Council.

[00:33:55] Speaker 01:
If you can wrap up, please.

[00:33:56] Speaker 02:
All right.

[00:33:57] Speaker 02:
Well, I'll just... Our whole position was that we did address all of the issues that were there, that we did address the unconscionability issue in regard to the arbitrator being able to dismiss cases that were not brought timely in regard to the DRP's internal constraints in regard to timing, and that, in general,

[00:34:19] Speaker 02:
in regard to whether the agreement should be enforced when the judge decides that he has the authority to rule on the agreement.

[00:34:26] Speaker 02:
That's why we focus on the unconscionability issues that we did.

[00:34:30] Speaker 01:
Thank you, counsel.

[00:34:31] Speaker 02:
Thank you, your honor.

[00:34:41] Speaker 00:
Your honors, I would like to make two points, please.

[00:34:45] Speaker 00:
First,

[00:34:46] Speaker 00:
Plaintiff never made any argument in the district court that challenged the enforceability of the delegation clause on grounds specific to the delegation clause.

[00:34:58] Speaker 00:
Therefore, plaintiff did not do what this court has expressly held in BLSCV.

[00:35:04] Speaker 00:
Coinbase must be done to sufficiently challenge a delegation provision.

[00:35:09] Speaker 00:
At 87F4- Can I absorb?

[00:35:12] Speaker 00:
Yes, Your Honor.

[00:35:14] Speaker 04:
Is it not a permissible argument to say that a delegation clause is not clear and unmistakable and therefore is not sufficient to remove an issue from the district court to the arbitrator?

[00:35:29] Speaker 04:
Is that an available argument?

[00:35:32] Speaker 04:
Yes, Your Honor, that's an available... And isn't that exactly the argument that was made to the district court in the alternative?

[00:35:39] Speaker 00:
No, Your Honor, that argument was not made in the alternative with respect to the delegation clause.

[00:35:45] Speaker 00:
That, Your Honor, was the only argument that plaintiff made below.

[00:35:49] Speaker 04:
OK.

[00:35:50] Speaker 04:
So that is a valid argument.

[00:35:51] Speaker 04:
So if the clause is, if the delegation is not clear and unmistakable, that is a sufficient answer, correct?

[00:36:02] Speaker 04:
I know you disagree with that.

[00:36:04] Speaker 04:
You think it is clear and unmistakable.

[00:36:08] Speaker 04:
Whether it is or it isn't, it seems to me to be the issue in front of us.

[00:36:15] Speaker 00:
Your Honor, yes, that is one of the issues here.

[00:36:17] Speaker 00:
If I may distinguish, Your Honor, between the question addressed in BLSCB Coinbase and Renness Center about the need to challenge a delegation clause on unenforceability grounds.

[00:36:30] Speaker 00:
In order to do that, the court said you need to specifically reference the delegation provision and make arguments challenging its enforceability.

[00:36:38] Speaker 00:
You may use the same arguments to challenge both the delegation clause and the arbitration agreement as a whole, but only this court held

[00:36:46] Speaker 00:
so long as the party articulates why the argument invalidates each specific provision.

[00:36:52] Speaker 00:
Your Honor, that covers the issue of unconscionability, and plaintiff never made such an argument below, and it's too late to do so on appeal.

[00:37:01] Speaker 00:
The other argument, Your Honor, about whether the delegation clause is clear and unmistakable, we do not construe that as a challenge to the delegation clause.

[00:37:11] Speaker 00:
It's rather an argument

[00:37:12] Speaker 00:
about is it clear and unmistakable enough to delegate the threshold question of arbitrability to the arbitrator.

[00:37:20] Speaker 00:
And that's my second point I'd like to raise and rebuttal, Your Honor, if I may, which is plaintiff did make that argument below, but we need to look at what the basis was for making that argument.

[00:37:32] Speaker 00:
Plaintiff did not say that the delegation clause lacks clear and unmistakable evidence of intent because enforceability is not part of arbitrability.

[00:37:42] Speaker 00:
Rather, at page 41, the reason that plaintiff gave for it is saying, in fact, the DRP states that courts would decide issues of unconscionability in regard to the class action

[00:37:55] Speaker 00:
That's the same argument made at pages 23 and 24 of plaintiff's response brief on appeal.

[00:38:03] Speaker 00:
We address that argument

[00:38:05] Speaker 00:
in detail at pages 12 to 17 of our reply brief, showing why this court's precedential decision in Mohammed, which plaintiff ignored, compels the opposite conclusion, and why plaintiff's cases are distinguishable.

[00:38:19] Speaker 00:
However, despite the topic sentence that Your Honor quoted at page 21 of the response brief, there was never such an argument.

[00:38:27] Speaker 00:
Thank you, Your Honors.

[00:38:28] Speaker 01:
Thank you.

[00:38:28] Speaker 01:
Thank you very much to both sides for your helpful arguments this morning.

[00:38:32] Speaker 01:
The matter is submitted.