June Newirth, by and through her Guardian ad Litem, Frederick J. Newirth, on her own behalf and on behalf of others similarly situated; Elizabeth Barber; Andrew Bardin; Thomas Bardin, as successors-in-interest to the Estate of Margaret Pierce; on their own behalves and on behalf of others similarly situated, Plaintiffs-Appellees,
Aegis Senior Communities, LLC, DBA Aegis Living, Defendant-Appellant.
and Submitted May 14, 2019 San Francisco, California
from the United States District Court No. 4:16-cv-03991-JSW
for the Northern District of California Jeffrey S. White,
District Judge, Presiding
G. McIntyre (argued), Lewis Brisbois Bisgaard & Smith
LLP, San Diego, California; Leona Lam Reddy, Katherine C. Den
Bleyker, and Jeffrey S. Ranen, Lewis Brisbois Bisgaard &
Smith LLP, Los Angeles, California; for Defendant-Appellant.
Colby (argued) and Guy B. Wallace, Schneider Wallace Cottrell
Konecky Wotkyns LLP, Emeryville, California; Christopher J.
Healey, Dentons U.S. LLP, San Diego, California; George
Kawamoto and Kathryn A. Stebner, Stebner and Associates, San
Francisco, California; Michael D. Thamer, Law Offices of
Michael D. Thamer, Callahan, California; W. Timothy Needham,
Janssen Malloy LLP, Eureka, California; Robert S. Arns, The
Arns Law Firm, San Francisco, California; Kirsten M. Fish,
Neeham Kepner & Fish LLP, San Jose, California; for
Before: J. Clifford Wallace and Sandra S. Ikuta, Circuit
Judges, and Donald W. Molloy, [*] District Judge.
panel affirmed the district court's order denying Aegis
Senior Communities, LLC's motion to compel arbitration in
a class action alleging that Aegis engaged in a scheme to
panel applied a federal law standard for determining whether
the arbitration agreement was waived. Under federal law, a
party seeking to prove that the right to compel arbitration
has been waived must carry the burden of demonstrating: (1)
knowledge of an existing right to compel arbitration; (2)
intentional acts inconsistent with that existing right; and
(3) prejudice to the person opposing arbitration from such
inconsistent acts. Fisher v. A.G. Becker Paribas
Inc., 791 F.2d 691, 694 (9th Cir. 1986).
panel held that because Aegis knew of its right to compel
arbitration, but made an intentional decision not to compel
arbitration in order to take advantage of the judicial forum,
and because the plaintiffs were prejudiced by incurring costs
in defending against Aegis's motion to dismiss
plaintiffs' complaint, the district court did not err in
concluding that Aegis waived its right to arbitrate.
Senior Communities, LLC, appeals from the district
court's order denying its motion to compel arbitration.
Because Aegis knew of its right to compel arbitration, but
made an intentional decision not to compel arbitration in
order to take advantage of the judicial forum, and because
the plaintiffs incurred costs as a direct result, the
district court did not err in concluding that Aegis waived
its right to arbitrate. Therefore, we affirm.
Newirth, Margaret Pierce, and Barbara Feinberg were residents
of three different senior living communities, all operated by
Aegis Senior Communities, LLC (Aegis).Each of them
(through a representative holding a valid power of attorney)
entered into an agreement with Aegis which included an
arbitration provision. The provision stated "that any
legal claim or civil action arising out of or relating to
care or services provided" by Aegis "will be
determined by submission to arbitration as provided in
accordance with California law."
her arbitration agreement, Newirth filed a class action
complaint against Aegis in California state court in April
2016, alleging that Aegis engaged in a scheme to defraud
seniors by falsely representing that staffing levels would be
determined by the overall needs of the residents, when in
fact staffing was based on budget
considerations.Aegis removed the complaint to district
court in July 2016, and filed a motion to compel arbitration
as well as a motion to dismiss a week later.
of pursuing these motions, however, Aegis and Newirth filed a
stipulated agreement a week later. Pursuant to the
stipulation, Newirth filed a second amended complaint in
August 2016, adding additional plaintiffs. For its part,
Aegis withdrew its motion to compel arbitration and its
motion to dismiss. In September 2016, it filed a new motion
to dismiss the second amended complaint, in which it made no
mention of arbitration or the arbitration agreements. The
following day, the parties filed an agreement stating they
were attempting mediation of their dispute.
the next 11 months, while the second motion to dismiss was
pending, the parties actively engaged in the discovery
process. The parties participated in a discovery conference,
entered into a court-approved stipulation regarding the
production of documents and electronic records, and submitted
a proposed joint conference report that included a proposed
schedule for discovery, class certification briefing and
hearing dates, and a date for trial. In December 2016, the
parties served their initial disclosures. In the early stages
of discovery, Aegis disclosed a copy of ...