FILED

NOT FOR PUBLICATION

FEB 13 2018

UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRANDYN RIDGEWAY and TIM No. 15-56673 SMITH, on behalf of themselves and all others similarly situated and the general D.C. No. public, 2:15-cv-03436-DDP-VBK

Plaintiffs-Appellees,

MEMORANDUM*

v.

NABORS COMPLETION &

PRODUCTION SERVICES CO., a Delaware corporation,

Defendant,

and

CITY OF LONG BEACH, a California municipality; TIDELANDS OIL PRODUCTION COMPANY, a Texas General Partnership,

Defendants-Appellants.

BRANDYN RIDGEWAY and TIM No. 15-56675 SMITH, on behalf of themselves and all others similarly situated and the general D.C. No. public, 2:15-cv-03436-DDP-VBK

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Plaintiffs-Appellees,

v.

NABORS COMPLETION &

PRODUCTION SERVICES CO., a Delaware corporation,

Defendant-Appellant,

and

CITY OF LONG BEACH, a California municipality; TIDELANDS OIL PRODUCTION COMPANY, a Texas General Partnership,

Defendants.

Appeal from the United States District Court for the Central District of California Dean D. Pregerson, District Judge, Presiding

Argued and Submitted February 6, 2018 Pasadena, California

Before: GRABER and HURWITZ, Circuit Judges, and MARBLEY,** District Judge.

Defendants Nabors Completion and Production Services Co., Tidelands Oil

Production Company, and the City of Long Beach timely appeal the district court’s

** The Honorable Algenon L. Marbley, United States District Judge for the Southern District of Ohio, sitting by designation. 2 denial of their motion to compel Plaintiffs Brandyn Ridgeway and Tim Smith to

arbitrate their labor-related claims against Defendants. Reviewing de novo,

Kilgore v. KeyBank, N.A., 718 F.3d 1052, 1057 (9th Cir. 2013) (en banc), we

reverse and remand.

1. The district court correctly held that the arbitration agreement involved a

moderate level of procedural unconscionability because it was a nonnegotiable

requirement of Plaintiffs’ employment. Armendariz v. Found. Health Psychcare

Servs., Inc., 6 P.3d 669, 690 (Cal. 2000). But, with two exceptions, we disagree

that the provisions at issue were substantively unconscionable. See Poublon v.

C.H. Robinson Co., 846 F.3d 1251, 1261 (9th Cir. 2017) (discussing standards for

determining substantive unconscionability).

Section 11 of the Nabors Dispute Resolution Rules, which pertains to

discovery, is not substantively unconscionable because, by stating that the

arbitrator has "discretion to determine the form, amount and frequency of

discovery," it presupposes that the arbitrator will order discovery beyond the

required information about witnesses and documents. See Armendariz, 6 P.3d at

682 ("Such an arbitration agreement is lawful if it . . . provides for more than

minimal discovery . . . ." (internal quotation marks omitted)). Paragraphs A, B,

and G of section 32, the fees and expenses provision, are not unconscionable,

3 because they contain the phrase "except as otherwise provided by law." And

paragraphs E and F of that section are not unconscionable because, when they are

read together with paragraph G, it is clear that an employee initiating arbitration

will pay only $150—the rest of the fees "shall be borne equally by the Parties who

are not Employees/Applicants." Section 6 of the Nabors Dispute Resolution

Program, which allows Nabors to modify the agreement unilaterally, is not

unconscionable because there is an implied covenant of good faith and fair dealing.

Poublon, 846 F.3d at 1269.

2. Paragraphs C and D of section 32, however, are substantively

unconscionable because they flatly prohibit the arbitrator from shifting discovery

costs and expert fees to the losing party, no matter the circumstances and even

when California law dictates a different result. But those provisions are severable

in their entirety. Section 32(G) fills in the gaps left by severing those paragraphs

because it governs "all other expenses, fees, and costs."

3. Private Attorneys General Act of 2004 ("PAGA") claims are not

waivable, but they can be arbitrated. See Sakkab v. Luxottica Retail N. Am., Inc.,

803 F.3d 425, 429, 438 (9th Cir. 2015) ("[P]arties are free to arbitrate [PAGA

claims] using the procedures of their choice."). Therefore, the amendment to

section 4(B) of the Nabors Dispute Resolution program is invalid, but section 4(C)

4 is valid. On remand, the district court shall consider the limited issue of whether to

certify Plaintiffs’ PAGA claims.

4. Tidelands and the City of Long Beach have standing to enforce the

arbitration agreement because Plaintiffs alleged in their complaint that those

Defendants are agents of Nabors and the arbitration agreement defines "the

Company" subject to the arbitration agreement to include agents of Nabors. See

Dryer v. L.A. Rams, 709 P.2d 826, 833–34 (Cal. 1985).

REVERSED and REMANDED with instructions.

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