Meredith Callahan v. Peopleconnect, Inc.

                                                                              FILED
                           NOT FOR PUBLICATION
                                                                              MAR 18 2022
                    UNITED STATES COURT OF APPEALS                         MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS


                            FOR THE NINTH CIRCUIT


MEREDITH CALLAHAN; LAWRENCE                      No.   21-16040
GEOFFREY ABRAHAM, on behalf of
themselves and all others similarly              D.C. No. 3:20-cv-09203-EMC
situated,

              Plaintiffs-Appellees,              MEMORANDUM*

 v.

PEOPLECONNECT, INC., a Delaware
Corporation,

              Defendant-Appellant.


                    Appeal from the United States District Court
                      for the Northern District of California
                    Edward M. Chen, District Judge, Presiding

                      Argued and Submitted March 11, 2022
                            San Francisco, California

Before: WALLACE, THOMAS, and McKEOWN, Circuit Judges.




      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      Defendant PeopleConnect, Inc. (“PeopleConnect”) appeals from the district

court’s order denying their motion to compel arbitration of Plaintiffs’ privacy-

related claims. We affirm. We have jurisdiction pursuant to 

9 U.S.C. § 16

. We

review an order denying a motion to compel arbitration de novo. Rittmann v.

Amazon.com, Inc., 

971 F.3d 904, 909

 (9th Cir. 2020).

      At issue in this appeal is whether Plaintiffs are bound by their attorney’s

arbitration agreement with PeopleConnect, which is a matter of state agency law.

Plaintiffs’ counsel did not have implied actual authority or apparent authority to

bind his clients to arbitration. The California Supreme Court has held that

attorneys may not impair their client’s substantial rights—including by binding the

client to arbitration—without the client’s consent. Blanton v. Womancare, Inc.,

696 P.2d 645

 (Cal. 1985). This rule is not preempted by the Federal Arbitration

Act because it is a generally applicable rule; it does not single out arbitration

agreements for disfavored treatment. Kindred Nursing Ctrs. Ltd. P’ship v. Clark,

137 S. Ct. 1421

 (2017).

      Plaintiffs did not ratify their counsel’s agreement to arbitrate by accepting

the benefits of the agreement or by failing to repudiate the agreement.

“[R]atification through the acceptance of benefits requires knowledge of the

relevant circumstances.” LAOSD Asbestos Cases, 

240 Cal. Rptr. 3d 1, 21

 (Cal. Ct.


                            

2 App. 2018

) (citation omitted). There is considerable doubt on this record that the

Plaintiffs received any “benefits” that would trigger ratification, such as a

settlement or receipt of payment. See, e.g., Alvarado Cmty. Hosp. v. Superior

Court, 

173 Cal. App. 3d 476, 482

 (Cal. Ct. App. 1985). In any event, at the time

the complaint was filed, there was no evidence Plaintiffs knew the arbitration

agreement existed, that their counsel had executed it, or that they had a right to

rescind it. By the time Plaintiffs were alerted to this information, any information

derived from their counsel’s use of the website had already been publicly filed and

had become part of the litigation. At that stage, it was no longer possible for

Plaintiffs to avoid “accepting” any of these purported “benefits.” See, e.g., Boling

v. Pub. Emp. Rels. Bd., 

216 Cal. Rptr. 3d 757, 793

 (Cal. Ct. App. 2017), rev’d on

other grounds, 

422 P.3d 552

 (Cal. 2018) (“[R]atification [by acceptance of

benefits] has no application when the principal is unable to decline the benefits of

an agent’s unauthorized actions.” (citing Pac. Bone, Coal & Fertilizer Co. v.

Bleakmore, 

254 P. 618, 620

 (Cal. Ct. App. 1927))).

      Additionally, after Plaintiffs became aware of the arbitration agreement, they

repudiated it. Plaintiffs took “immediate action to express dissatisfaction with

[their attorney’s] arbitration [agreement] on [their] behalf.” NORCAL Mut. Ins. Co.




                                           3
v. Newton, 

100 Cal. Rptr. 2d 683, 695

 (Cal. Ct. App. 2000). Thus, the district court

properly concluded that Plaintiffs did not ratify the agreement.

      AFFIRMED.




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