NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 15 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: PACIFIC FERTILITY CENTER No. 19-15885
LITIGATION,
______________________________ D.C. No. 3:18-cv-01586-JSC
A. B.; et al.,
MEMORANDUM*
Plaintiffs-Appellees,
SHERLENE WONG; LAWRENCE
WONG,
Objectors-Appellees,
v.
CHART INDUSTRIES, INC.,
Defendant-Appellant,
and
PACIFIC FERTILITY CENTER; et al.,
Defendants.
In re: PACIFIC FERTILITY CENTER No. 19-15886
LITIGATION,
______________________________ D.C. No. 3:18-cv-01586-JSC
A. B.; et al.,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Plaintiffs-Appellees,
SHERLENE WONG; LAWRENCE
WONG,
Objectors-Appellees,
v.
PACIFIC MSO, LLC,
Defendant-Appellant,
and
CHART INDUSTRIES, INC.; et al.,
Defendants.
In re: PACIFIC FERTILITY CENTER No. 19-15888
LITIGATION,
______________________________ D.C. No. 3:18-cv-01586-JSC
A. B.; et al.,
Plaintiffs-Appellees,
SHERLENE WONG; LAWRENCE
WONG,
Objectors-Appellees,
v.
PRELUDE FERTILITY, INC.,
Defendant-Appellant,
2
and
CHART INDUSTRIES, INC.; et al.,
Defendants.
Appeal from the United States District Court
for the Northern District of California
Jacqueline Scott Corley, Magistrate Judge, Presiding
Submitted April 16, 2020**
San Francisco, California
Before: HAWKINS and PAEZ, Circuit Judges, and RESTANI,*** Judge.
In this consolidated appeal, Appellants Chart Industries, Inc. (“Chart”),
Pacific MSO, LLC (“MSO”), and Prelude Fertility, Inc. (“Prelude”) seek review of
the district court’s order denying their motions to compel arbitration. We have
jurisdiction over this interlocutory appeal under 9 U.S.C. § 16(a)(1)(C), and our
review is de novo. Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1124, 1127 (9th
Cir. 2013). We affirm as to Chart and reverse as to MSO and Prelude.
Appellants are non-signatories to the Informed Consent Agreements (“ICA”)
Plaintiffs signed with Pacific Fertility Center (“PFC”), which contained an
arbitration provision and a separate arbitration agreement for any dispute related to
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Jane A. Restani, Judge for the United States Court of
International Trade, sitting by designation.
3
medical services Plaintiffs received. As relevant here, Appellants contend they are
entitled to arbitration through equitable estoppel and, as to Prelude and MSO, as
third-party beneficiaries and assignees. We start and end with equitable estoppel.
The Federal Arbitration Act (“FAA”) governs the enforceability of arbitration
agreements in contracts involving interstate commerce. Kramer, 705 F.3d at 1126
(citing 9 U.S.C. § 1 et seq.). The right to compel arbitration is generally limited to
parties to the contract, but non-signatories “may invoke arbitration under the FAA
if the relevant state contract law allows the litigant to enforce the agreement.” Id. at
1126, 1128 (citations omitted). Under California law, applicable here, non-
signatories may seek arbitration through equitable estoppel in two scenarios:
(1) [W]hen a signatory must rely on the terms of the written
agreement in asserting its claims against the nonsignatory or the
claims are “intimately founded in and intertwined with” the
underlying contract, and (2) when the signatory alleges substantially
interdependent and concerted misconduct by the nonsignatory and
another signatory and “the allegations of interdependent misconduct
[are] founded in or intimately connected with the obligations of the
underlying agreement.”
Id. at 1128–29 (quoting Goldman v. KPMG LLP, 92 Cal. Rptr. 3d 534, 541, 543
(Cal. Ct. App. 2009)).
Applying equitable estoppel against a signatory requires looking to “the
relationships of persons, wrongs and issues,” with a particular focus on whether the
claims the non-signatory seeks to arbitrate are “intimately founded in and
intertwined with the underlying contract obligations.” Goldman, 92 Cal. Rptr. 3d at
4
543 (citing Metalclad Corp. v. Ventana Envtl. Organizational P’ship, 1 Cal. Rptr.
3d 328, 334 (Cal. Ct. App. 2003)). This involves examining the facts alleged in the
complaint and whether they rely or depend on the terms, duties, or obligations in the
contract containing the arbitration provision in asserting the claims. See id. at 550–
51. Also considered is whether the allegations “are in any way founded in or bound
up with the terms or obligations” in the contract. Id. at 550. If the claims “are fully
viable without reference to the terms of [the contract],” equitable estoppel does not
apply. See id. at 551.
Starting with Chart, the operative complaint brings claims for negligent failure
to recall; unfair competition under California’s Unfair Competition Law (“UCL”)
based on failure to adequately design, manufacture, warn, and recall; and strict
products liability for failure to warn, manufacturing defect, and design defect under
the consumer expectations and risk-utility tests. These claims are based on factual
allegations that: (1) Chart manufactured the storage tank at PFC; (2) it recalled
several tanks after the tank at PFC failed; (3) its recall notice stated it was
investigating the possible cause of vacuum failure in the tank based on a binding
agent used during the manufacturing process; and (4) it made claims on its website
regarding the superior quality of its equipment. None of Plaintiffs’ claims against
Chart, therefore, rely on the terms of the ICA, nor are they intimately founded in or
intertwined with the terms of the ICA. Plaintiffs also do not allege collusion between
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Chart and the other defendants, or a pattern of concealment involving Chart.
Accordingly, neither Goldman scenario applies, so Chart cannot invoke equitable
estoppel to compel arbitration as to these claims.
As to Prelude and MSO, however, we determine the first Goldman scenario
applies and equitable estoppel compels arbitration of Plaintiffs’ claims against these
defendants. As before, we base this on a close examination of Plaintiffs’ claims
against Prelude and MSO and the factual allegations underpinning those claims. The
operative complaint brings six claims against Prelude and MSO: (1) negligence
and/or gross negligence; (2) bailment; (3) premises liability; (4) UCL violations; (5)
violations of the Consumers Legal Remedies Act; and (6) fraudulent concealment.
Underlying each claim are allegations about PFC’s conduct, not just Prelude and
MSO’s. And Plaintiffs’ allegations concerning their expectations about the service
PFC provided—then imputed onto Prelude and MSO—are exactly the terms and
duties of the ICA. Even though Plaintiffs do not mention the ICA, the claims they
raise against Prelude and MSO are founded in and inextricably intertwined with the
terms and obligations of the ICA. Under the first Goldman scenario then, Prelude
and MSO can invoke equitable estoppel to compel Plaintiffs to arbitrate these claims.
AFFIRMED IN PART, REVERSED IN PART. Each party to bear its own
costs on appeal.
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FILED
A.B. v. Chart Industries, Inc., et al., 19-15885, 19-15886, 19-15888
MAY 15 2020
PAEZ, concurring in part and dissenting in part: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Although the majority, relying on Kramer v. Toyota Motor Corp., 705 F.3d
1122, 1127 (9th Cir. 2013), reviews de novo, there appears to be some
inconsistency in our caselaw regarding whether that standard applies to an
application of equitable estoppel in the arbitration context. In Nguyen v. Barnes &
Noble Inc., 763 F.3d 1171, 1179 (9th Cir. 2014), we reviewed for abuse of
discretion the district court’s rejection of the defendant’s equitable estoppel
argument to compel arbitration. I see no need to reconcile this inconsistency
because under either standard, I would affirm the district court’s ruling as to all
Appellants.1 Accordingly, I concur in the majority’s disposition as to Chart, but
dissent as to Prelude and MSO.
As the name suggests, equitable estoppel is fundamentally about fairness.
Goldman v. KPMG LLP, 92 Cal. Rptr. 3d 534, 543 (Cal. Ct. App. 2009). In the
arbitration context, courts apply the doctrine to prevent the unfairness that arises
when a signatory to an agreement seeks to “have it both ways” by holding a non-
signatory liable for the terms of the agreement while simultaneously avoiding that
agreement’s arbitration requirement. See Kramer, 705 F.3d at 1129 (citing Jones
1
See Waymo LLC v. Uber Techs., Inc., 870 F.3d 1342, 1345 (Fed. Cir. 2017)
(noting the inconsistency in Ninth Circuit caselaw on the standard of review of
equitable estoppel ruling in the arbitration context and affirming under either
standard).
1
v. Jacobson, 125 Cal. Rptr. 3d 522, 538 (Cal. Ct. App. 2011)). And because
equitable estoppel forces a signatory to arbitrate with a nonsignatory party, the
signatory may be estopped from asserting rights in the agreement only where her
“own conduct renders assertion of those rights contrary to equity.” Id. at 1133
(quoting Goldman, 92 Cal. Rptr. 3d at 542 (quoting Metalclad Corp. v. Ventana
Envtl. Organizational P’ship, 1 Cal. Rptr. 3d 328, 334 (Cal. Ct. App. 2003))). The
“sine qua non” for equitable estoppel to apply is that the plaintiff’s claims “must be
dependent upon, or founded in and inextricably intertwined with,” the agreement
she signed. Goldman, 92 Cal. Rptr. 3d at 540; id. at 550 (estoppel is triggered by
“[t]he plaintiff’s actual dependence on the underlying contract in making out the
claim against the nonsignatory defendant” (citation omitted) (alteration in
original)). The doctrine applies only in “narrow situations.” Waymo, 870 F.3d at
1345 (applying California substantive law).
In my view, the district court correctly concluded that Plaintiffs should not
be estopped from avoiding arbitration with Prelude and MSO. Initially, as the
majority points out, in bringing their claims against Prelude and MSO, Plaintiffs do
not expressly mention their agreement with PFC. Although not dispositive, that
fact alone supports the district court’s conclusion here, see Jones, 125 Cal. Rptr. 3d
at 527 & n.3, and also distinguishes this case from the only case cited by the
majority in which the court held that equitable estoppel applies, see Metalclad, 1
2
Cal. Rptr. 3d at 337. Indeed, it is difficult to see how Plaintiffs’ claims can be
“intimately founded in and intertwined with” the obligations of an agreement that
Plaintiffs’ complaint completely fails to mention.
In any event, a careful review of the complaint reveals that Plaintiffs’ claims
against Prelude and MSO do not actually depend on Plaintiffs’ agreements with
PFC. Plaintiffs bring several claims based on Prelude and MSO’s failure to
exercise appropriate care in the handling of Plaintiffs’ eggs and embryos,
culminating in the tank failure. Plaintiffs allege that Prelude and MSO owed them
such a duty not because of Plaintiffs’ agreements with PFC, but rather because of
Prelude and MSO’s separate agreements with PFC. Plaintiffs’ negligence claim,
for example, is based on Prelude and MSO’s “special relationship with Plaintiffs
arising from the sensitive services Defendants undertook to perform.” Framed in
this way, Plaintiffs here are similar to the plaintiffs in Kramer—third-party
beneficiaries of the contracts signed among the defendants. 705 F.3d at 1131. And
although Prelude and MSO’s exercise of reasonable care may encompass many of
the same duties that PFC expressly agreed to undertake, Plaintiffs’ claims are in no
way “dependent upon, or founded in and inextricably intertwined with” those
agreements.
The district court’s recent order partially granting and partially denying
Prelude and MSO’s motions to dismiss the complaint only confirms that Plaintiffs’
3
claims do not rely on their written agreements with PFC. See In re Pac. Fertility
Ctr. Litig., No. 18-CV-01586-JSC, 2019 WL 3753456 (N.D. Cal. Aug. 8, 2019).
Indeed, many of Plaintiffs’ claims failed precisely for that reason. For example,
the district court dismissed Plaintiffs’ claims premised on Prelude and MSO’s
failure to disclose their role in the tissue storage because, without any contract
between them, Plaintiffs had not adequately alleged Prelude or MSO owed them
such a duty. Id. at *6–*8. Similarly, the district court dismissed Plaintiffs’
bailment claim, a contractual theory, where Plaintiffs specifically disavowed any
reliance on an express or implied contract with Prelude. Id. at *4–*5. Conversely,
but nonetheless proving the point, the district court upheld Plaintiffs’ claim for
premises liability because “mere possession with its attendant right to control
conditions on the premises is a sufficient basis for the imposition of an affirmative
duty to act.” Id. at *5–*6. In other words, Prelude and MSO owed a duty of care
to Plaintiffs regardless of Plaintiffs’ agreements with PFC.
The majority—and not the Plaintiffs—impute the terms of the written
agreement onto parties who were not signatories to that agreement. The better
course for us to follow would be to leave the parties “bound by the agreements
they made and not by any they did not make.” Murphy v. DirecTV, Inc., 724 F.3d
1218 (9th Cir. 2013). Plaintiffs should not, in equity, be required to arbitrate
4
against any of the appellants. Accordingly, I respectfully concur in part and
dissent in part.
5