                           NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                         FILED
                            FOR THE NINTH CIRCUIT                          MAY 12 2015

                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

MICHAEL ASHBEY,                                  No. 12-55912

              Plaintiff - Appellee,              D.C. No. 8:12-cv-00009-DOC-
                                                 RNB
  v.

ARCHSTONE PROPERTY                               MEMORANDUM*
MANAGEMENT, INC., a corporation,

              Defendant - Appellant.


                    Appeal from the United States District Court
                       for the Central District of California
                     David O. Carter, District Judge, Presiding

                       Argued and Submitted March 4, 2014
                              Pasadena, California

Before: BYBEE, BEA, and CHRISTEN, Circuit Judges.

       Defendant Archstone Communities LLC ('Archstone') appeals from the

district court's denial of its Motion to Compel Arbitration of Plaintiff Michael

Ashbey's claims. We reverse.




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       A party seeµing to compel arbitration has the burden under the Federal

Arbitration Act to show (1) the existence of a valid agreement to arbitrate and, if it

exists, (2) that the agreement to arbitrate encompasses the dispute at issue. Cox v.

Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008). State law governs

whether a valid agreement to arbitrate exists. Arthur Andersen LLP v. Carlisle,

556 U.S. 624, 630-31 (2009). The parties do not dispute that California law

applies to this case.

       The district court erred in finding there was no valid agreement to arbitrate.

California law permits parties to form contracts by incorporating other documents

by reference; and 'an employee may agree to arbitrate claims against his or her

employer by signing an acµnowledgment form that incorporates the employer's

employee handbooµ and the arbitration policy it contains.' Avery v. Integrated

Heathcare Holdings, Inc., 159 Cal. Rptr. 3d 444, 457 (Ct. App. 2013). The

acµnowledgment Ashbey signed incorporated the terms contained in Archstone's

employment manual, which included the arbitration policy. And though the

acµnowledgment stated the manual did not 'create any contractual rights,'

that exclusion of contractual obligations is placed within two sentences dealing

only with the at-will employment relationship between Ashbey and Archstone.

The exclusion therefore serves only to reinforce that Ashbey has no contractually


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created rights beyond those created by at-will employment. See Dyna-Med, Inc. v.

Fair Emp't & Hous. Comm'n, 743 P.2d 1323, 1329 n.14 (Cal. 1987) (explaining

that under the canon of noscitur a sociis 'the meaning of a word may be enlarged

or restrained by reference to the object of the whole clause in which it is used.'

(internal quotation marµs omitted)); Antonin Scalia & Bryan A. Garner, Reading

Law: The Interpretation of Legal Texts 197-98 (2012) (explaining that associated

phrases should be read together under the canon of noscitur a sociis). To interpret

the language otherwise would also create an absurdity: Ashbey would have no

contractual rights to enforce the other provisions of Archstone's employment

manual, which included provisions outlining Ashbey's compensation, sicµ leave,

vacation and holidays, and retirement savings, among others.

      The arbitration clause encompasses the dispute at issue because it applies to

'any dispute' arising out of or related to employment of the employee.

      The agreement to arbitrate is not substantively unconscionable under

California law for any of the reasons urged by Ashbey, assuming those reasons are

not preempted by the Federal Arbitration Act. See AT&T Mobility LLC v.

Concepcion, 131 S. Ct. 1740, 1746 (2011). The agreement permits the imposition

on Archstone of arbitration fees 'where required by law' and attorneys' fees if

Ashbey is entitled to them 'under applicable law.' And, contrary to Ashbey's


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assertions otherwise, the arbitration clause binds Archstone to arbitrate its claims

against Ashbey too because the clause requires 'all . . . disputes between Employee

and the Company to be resolved only by an arbitrator through final and binding

arbitration and not by way of court or jury trial.' Finally, unilateral modification

provisions, such as the one in the acµnowledgment Ashbey signed, are not

substantively unconscionable because they are always subject to the limits

'imposed by the covenant of good faith and fair dealing implied in every contract.'

Serpa v. Cal. Sur. Investigations, Inc., 155 Cal. Rptr. 3d 506, 514 (App. 2013).

Ashbey has neither pleaded nor claimed that Archstone has acted unreasonably to

alter the terms of any policy contained in the manual, including the arbitration

clause, so as to breach the implied covenant of good faith and fair dealing. Under

California law, a contract is unconscionable only if it is both procedurally and

substantively unconscionable. See Peng v. First Republic Banµ, 162 Cal. Rptr. 3d

545, 550 (App. 2013). The contract here is not substantively unconscionable and

therefore we need not opine on its procedural validity. The contract is enforceable.

REVERSED.




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                                                                            FILED
Ashbey v. Archstone Property Management, Inc., No. 12-55912                  MAY 12 2015

                                                                         MOLLY C. DWYER, CLERK
CHRISTEN, Circuit Judge, concurring:                                      U.S. COURT OF APPEALS



      I concur in the result reached by the court's memorandum disposition. I

write separately to stress that my concurrence is based on the specific facts of this

case, namely, the language of the acµnowledgment Ashbey signed and the

arguments Ashbey has raised concerning unconscionability.

      Read in context, the acµnowledgment's disclaimer of contractual rights

refers only to the at-will employment relationship between Ashbey and Archstone.

The acµnowledgment is clear that by signing, Ashbey agreed 'to adhere to all of

the policies' contained in the employment manual, 'including the Dispute

Resolution Policy.' Under these circumstances, I agree that Ashbey entered into a

binding agreement to arbitrate. Cf. Sparµs v. Vista Del Mar Child & Family Servs.,

145 Cal. Rptr. 3d 318, 321-26 (Cal. Ct. App. 2012) (holding no agreement to

arbitrate formed where employment handbooµ wording suggested handbooµ was

informational rather than contractual, and acµnowledgment stated only, 'the

Handbooµ contains important information about [the employer's] general

personnel policies and on [the employee's] privileges and obligations as an

Employee . . . I understand that I am governed by the contents of the Handbooµ'

(internal quotation marµs omitted)).

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      Because the district court concluded there was no valid agreement to

arbitrate, it did not reach the parties' arguments concerning unconscionability.

'Typically, 'a federal appellate court does not consider an issue not passed upon

below.'' Davis v. Nordstrom, Inc., 755 F.3d 1089, 1094 (9th Cir. 2014) (quoting

Ïuinn v. Robinson, 783 F.2d 776, 814 (9th Cir. 1986)). This is particularly true

with respect to issues involving questions of fact, see id. at 1094-95, which

unconscionability almost always does, see Sonic-Calabasas A, Inc. v. Moreno, 311

P.3d 184, 203 (Cal. 2013). In this case, however, both in the district court and on

appeal, Ashbey raised only four limited arguments with respect to

unconscionability, none of which involve disputed questions of fact. Under these

circumstances, I concur in the court's decision to address Ashbey's arguments, and

I agree his arguments are unavailing. Cf. Elite Logistics Corp. v. Hanjin Shipping

Co., 589 F. App'x 817, 818 & n.1 (9th Cir. 2014) (memorandum disposition) (no

error where district court held arbitration agreement unconscionable, without

conducting discovery, where parties agreed there were no material factual

disputes).




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