Isagenix International LLC et al v. Hodgin

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Isagenix International LLC, et al.,
Petitioners,
v.
Noah Hodgin,
Respondent.
No. CV-25-01587-PHX-DGC
ORDER
Respondent Noah Hodgin brought a class action against Petitioners Isagenix
International LLC; Isagenix Worldwide, Inc. (collectively “Isagenix”); and Isagenix
corporate officers Sharron Walsh, Simon Davies, and Jim Dunlap in the Superior Court of
California, which defendants removed to the Central District of California (the “California
Class Action”). See Hodgin v. Isagenix Int’l LLC, No. 8:25-cv-00616-SRM-DFM.1
Isagenix and the individual defendants then filed a petition in this Court to compel
arbitration of Hodgin’s claims asserted in the California Class Action. Doc. 1. The class
action has been stayed while this petition is resolved.
Hodgin moves to dismiss the petition, and Isagenix and the individual defendants
cross-move to compel arbitration. Docs. 35, 39. The motions are fully briefed and the
Court held oral argument on December 18, 2025. The Court will compel arbitration and
deny the motion to dismiss.
1 Hodgin also brought the class action against Isagenix founders Jim Coover and Kathy
Coover, who are not parties to this petition to compel arbitration. Doc. 13-4 at 2.
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I. Background.
Isagenix is a network marketing company. It sells health-related products through
thousands of Associates who agree to its Policies and Procedures (“P&Ps”) and related
documents. Doc. 1 ¶¶ 5, 7. The P&Ps state that Associates are independent contractors,
not employees, and are responsible for their own hours, working space, and business
expenses, among other terms. Doc. 13-2 at 66.2
Noah Hodgin resides in California. Doc. 35-1 ¶ 2. He has a high school education
and obtained a certification in health and wellness from the Spencer Institute. Id. ¶ 3. His
work focuses primarily on coaching and personal training; he has no legal training. Id. In
September 2019, Hodgin entered into an online Agreement to become an Isagenix
Associate – a commission-based sales representative. See Doc. 1 ¶¶ 5-6, 11. The
Agreement included the P&Ps, the Isagenix Team Compensation Plan, and Guidance
Documents. See Doc. 13-2 at 77. Hodgin entered the Agreement to earn extra money.
Doc. 35-1 ¶ 4. He previously had been an Isagenix Associate, but “de-activated” that
relationship before rejoining in 2019. Id. ¶ 5; Doc. 1 ¶ 11 n.3. Hodgin’s California Class
Action alleges that Isagenix improperly classified him as an independent contractor rather
than an employee, in violation of California labor laws. Doc. 35 at 10. He asserts that
Isagenix owes him various employment benefits required by California statutes.
The P&Ps Hodgin accepted include the following arbitration agreement (the
“Arbitration Provision”):
ANY CONTROVERSY OR CLAIM ARISING OUT OF, OR RELATING
TO, THESE POLICIES AND PROCEDURES, THE COMPENSATION
PLAN, OR THE GUIDANCE DOCUMENTS, OR THE BREACH
THEREOF, SHALL BE SETTLED BY CONFIDENTIAL ARBITRATION
ADMINISTERED BY THE AMERICAN ARBITRATION
ASSOCIATION UNDER ITS COMMERCIAL ARBITRATION RULES,
AND JUDGMENT ON THE AWARD RENDERED BY THE
ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING
2 Citations throughout this order are to page numbers attached at the top of each page by
the Court’s CMECF system.
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JURISDICTION THEREOF. IF YOU FILE A CLAIM OR
COUNTERCLAIM AGAINST ISAGENIX OR ITS OWNERS,
DIRECTORS, OFFICERS OR EMPLOYEES, YOU MAY ONLY DO SO
ON AN INDIVIDUAL BASIS AND NOT WITH ANY OTHER
INDIVIDUAL OR AS PART OF A CLASS ACTION. YOU WAIVE ALL
RIGHTS TO TRIAL BY JURY OR TO ANY COURT.
* * *
All arbitration proceedings shall be held in Maricopa County, State of
Arizona, unless the laws of the jurisdiction where you reside expressly
require the application of its laws, in which case the arbitration shall be held
in the capital of that jurisdiction.
* * *
In the event that a dispute or claim arising out of, or relating to this
Agreement, is not subject to arbitration as set forth above, the laws of the
state of Arizona shall govern, and the parties agree that proper jurisdiction
and venue shall be in the state and federal courts of Arizona.
* * *
If the laws of your place of residence impose any requirement that is different
from or in addition to those set forth in these Policies, then these Policies
shall be deemed amended in conformance with those laws as to that
jurisdiction only.
Doc. 13-2 at 78-79 (capitalization in original).3
Isagenix argues that this provision requires Hodgin to arbitrate the claims he made
in the California Class Action, and petitions this Court to compel the arbitration. Doc. 1 at
1-2. Hodgin opposes arbitration and asks the Court to dismiss the Isagenix petition so he
can proceed with the California Class Action. Doc. 35 at 1-2.
II. Legal Standard.
The Federal Arbitration Act (“FAA”) controls when an arbitration provision is
contained in an agreement that affects interstate commerce. See 9 U.S.C. § 2. Because the
Agreement in this case concerns the interstate retention of sales associates and interstate
3 The parties cite to the Arbitration Provision contained in the Isagenix August 20, 2020
P&Ps (Docs. 35 at 11 n.1, 40 at 19:27), and the Court will too. The Court cites to the copy
attached to Hodgin’s original Motion to Stay (Doc. 13-2 at 64, 78-79).
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sales of goods, it clearly affects interstate commerce, and no party argues otherwise. The
“overarching purpose” of the FAA “is to ensure the enforcement of arbitration agreements
according to their terms so as to facilitate streamlined proceedings.” AT&T Mobility LLC
v. Concepcion, 563 U.S. 333, 344 (2011). The FAA “provides that arbitration agreements
‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.’” Chalk v. T-Mobile USA, Inc., 560 F.3d 1087,
1092 (9th Cir. 2009) (quoting 9 U.S.C. § 2). Agreements to arbitrate may “be invalidated
by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability[.]’”
AT&T Mobility LLC, 563 U.S. at 339 (citation omitted).
“Generally, in deciding whether to compel arbitration, a court must determine two
‘gateway’ issues: (1) whether there is an agreement to arbitrate between the parties; and
(2) whether the agreement covers the dispute.” Brennan v. Opus Bank, 796 F.3d 1125,
1130 (9th Cir. 2015). These “gateway issues” of arbitrability “can be expressly delegated
to the arbitrator where the parties clearly and unmistakably” so provide. Id. (citations
omitted). If gateway issues are not clearly delegated, they must be resolved by the court.
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947 (1995) (“[B]ecause the
Kaplans did not clearly agree to submit the question of arbitrability to arbitration, the Court
of Appeals was correct in finding that the arbitrability of the Kaplan/First Options dispute
was subject to independent review by the courts.”); Houghton v. Polychain Alchemy, LLC,
No. 24-7243, 2025 WL 2965204, at *3 (9th Cir. Oct. 21, 2025) (same).
III. Have Gateway Issues Clearly Been Delegated to the Arbitrator?
Isagenix notes that the Arbitration Provision expressly incorporates the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”), and argues that this
incorporation constitutes a clear and unmistakable choice by the parties to delegate
arbitrability issues to the arbitrator. Doc. 40 at 9, 12. Hodgin disagrees, contending that
“the Arbitration Provision (including any delegation clause therein) is unconscionable and
unenforceable.” Doc. 35 at 12. The phrase “delegation clause” is a bit of a misnomer in
this case. The Arbitration Provision quoted above says nothing about delegating gateway
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issues to an arbitrator; its incorporation of AAA rules is the claimed source of a clear and
unmistakable delegation.
The Commercial Arbitration Rules do indeed delegate questions of arbitrability to
the arbitrator. See Doc. 35-8 at 15, R. 7(a) (“The arbitrator shall have the power to rule on
his or her own jurisdiction, including any objections with respect to the existence, scope,
or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim,
without any need to refer such matters first to a court.”). As a result, the Ninth Circuit has
held that an arbitration provision’s express incorporation of the AAA rules “constitutes
clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability.”
Brennan, 796 F.3d at 1130. Isagenix relies on Brennan. Hodgin contends that Brennan
does not apply here because he is not sophisticated and Brennan involved two sophisticated
parties. See id. at 1131. While Brennan explained that its “holding does not foreclose the
possibility that this rule could also apply to unsophisticated parties,” it expressly limited
its holding “to the facts of the present case, which do involve an arbitration agreement
‘between sophisticated parties.’” Id. at 1130-31.
The Ninth Circuit recently reiterated that it “has not yet decided whether Brennan’s
holding should extend to arbitration clauses in consumer contracts between a sophisticated
entity and an average unsophisticated consumer.” Patrick v. Running Warehouse, LLC, 93
F.4th 468, 481 (9th Cir. 2024). District courts in this circuit have split on whether
incorporation of the AAA rules binds an unsophisticated party to arbitrate arbitrability.
Compare Bazine v. Kelly Servs. Glob., LLC, No. 22-CV-07170-BLF, 2023 WL 4138252,
at *6 (N.D. Cal. June 21, 2023) (“[I]ncorporation of the AAA rules is sufficient to delegate
the arbitrability question to the arbitrator” despite the plaintiff’s “self-characterization as
‘unsophisticated’”), with Cornell v. Desert Fin. Credit Union, No. CV-21-00835-PHX-
DWL, 2021 WL 4710173, at *3 (D. Ariz. Oct. 8, 2021) (distinguishing Brennan, in part,
because the plaintiff was unsophisticated).
The Supreme Court has underscored the significance of delegating gateway issues
to an arbitrator, noting that “[a] party often might not focus . . . upon the significance of
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having arbitrators decide the scope of their own powers,” and that finding delegation too
readily might “often force unwilling parties to arbitrate a matter they reasonably would
have thought a judge, not an arbitrator, would decide.” First Options, 514 U.S. at 945.
Because of these real-world consequences and the fact that the Ninth Circuit has left the
question unresolved, the Court will not construe the Arbitration Provision’s incorporation
of the AAA rules as a clear and unmistakable delegation of gateway questions to the
arbitrator. The Court instead will look to the facts of this case to decide whether there is
other clear and unmistakable evidence that the parties agreed to arbitrate arbitrability. See
Meadows v. Dickey’s Barbecue Rests. Inc., 144 F. Supp. 3d 1069, 1078 (N.D. Cal. 2015)
(explaining the court should consider the position of the parties).4
Isagenix and Hodgin were in very different positions when the Agreement was
entered in 2019. Isagenix is a sophisticated corporate party that drafted the Agreement.
Hodgin’s declaration shows that he had limited business and no legal background to inform
him. See Docs. 35 at 17; 35-1 ¶¶ 3-5, 7. Nothing in the evidence presented by the parties
suggests that Hodgin was aware of, let alone focused on, delegating arbitrability to the
arbitrator or the significance of that decision. In these circumstances, the Court cannot find
that both parties clearly and unmistakably chose to delegate gateway issues to the
arbitrator.
4 The Court does not find the District of Arizona cases cited by Isagenix to be persuasive.
Two of the cases read Brennan as implying that its rule applies to unsophisticated parties.
See Brumley v. Austin Ctrs. for Exceptional Students Inc., No. CV-18-00662-PHX-DLR,
2019 WL 1077683, at *3 (D. Ariz. Mar. 7, 2019) (“Plaintiffs contend that Brennan is
inapplicable where, as here, one party is unsophisticated. The Court disagrees. Brennan
expressly dispels this argument[.]” (citation omitted)); LaCross v. Knight Transp. Inc., No.
CV-15-00990-PHX-JJT, 2016 WL 11527434, at *3 (D. Ariz. Sept. 22, 2016) (“[I]n
Brennan, the Ninth Circuit made an effort not to limit its holding to cases in which the
agreements were executed by sophisticated parties.”). The third case is silent on the
parties’ respective levels of sophistication. See Cayenne Med., Inc. v. MedShape, Inc., No.
2:14-CV-0451-HRH, 2015 WL 5363717, at *4 (D. Ariz. Sept. 15, 2015) (“[I]ncorporation
of the AAA Rules effectively delegates jurisdictional questions, including arbitrability and
validity, to the arbitrator.” (citation omitted)).
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The Court accordingly must resolve the gateway issues. First Options, 514 U.S. at
947. These include Hodgin’s arguments that the Arbitration Provision is unconscionable
and therefore unenforceable, and that his claims in the California Class Action are not
within the scope of the Arbitration Provision. 5
IV. Choice of Law.
Hodgin argues that the Court should apply California law in deciding whether the
Arbitration Provision is unconscionable and covers the claims in the California Class
Action. Doc. 35 at 13. Isagenix argues Arizona law should control. Doc. 42 at 7-8.
As the Agreement clearly affects interstate commerce, the Court begins by applying
federal law under the FAA. Brennan, 796 F.3d at 1129 (“For any arbitration agreement
within the coverage of the [FAA], [t]he court is to make th[e] [arbitrability] determination
by applying the federal substantive law of arbitrability, absent clear and unmistakable
evidence that the parties agreed to apply non-federal arbitrability law.” (citation modified)).
When addressing enforcement defenses such as unconscionability, however, federal
arbitration law is supplemented by state law. See Ticknor v. Choice Hotels Int’l, Inc., 265
F.3d 931, 936-37 (9th Cir. 2001) (explaining that “state law is not entirely displaced from
federal arbitration analysis,” and “is applicable if that law arose to govern issues
concerning the validity, revocability, and enforceability of contracts generally” (emphasis
and citation omitted)). The Court therefore must choose whether to apply California or
Arizona law to Hodgin’s unconscionability and scope arguments.
A. The Agreement’s Choice of Law.
Because the Court and not the arbitrator must resolve the question of arbitrability in
this case, the parties’ Agreement chooses Arizona law. The Arbitration Provision states
that “[i]n the event that a dispute or claim arising out of, or relating to this Agreement, is
not subject to arbitration as set forth above, the laws of the state of Arizona shall govern[.]”
5 The Court has considered Hodgin’s supplemental authority, Houghton v. Polychain
Alchemy, LLC, No. 24-7243, 2025 WL 2965204, at *1 (9th Cir. Oct. 21, 2025) (Doc. 44),
but need not address that case in light of its finding that incorporation of the AAA rules
does not require Hodgin to arbitrate arbitrability.
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Doc. 13-2 at 79. The gateway issues that must be decided by the Court – whether the
Agreement’s Arbitration Provision is enforceable and whether Hodgin’s claims fall within
its scope – clearly relate to the Agreement, making the choice of law provision applicable
to the Court’s decision. But the Agreement’s choice of Arizona law does not fully resolve
the choice of law question. The Ninth Circuit has instructed, in an arbitration case, that
“[f]ederal courts sitting in diversity look to the law of the forum state in making a choice
of law determination.” Ticknor, 265 F.3d at 937. Arizona choice of law rules address
contractual choice of law provisions like the one contained in the Agreement. The Court
therefore must look to Arizona choice of law rules to decide whether the Agreement’s
choice of Arizona law controls in this case.
B. Restatement § 187.
Arizona law generally enforces contractual choice of law provisions, see Landi v.
Arkules, 835 P.2d 458, 462 (Ariz. Ct. App. 1992), but the validity of a particular provision
must be assessed under Restatement (Second) of Conflict of Laws § 187, see Cardon v.
Cotton Lane Holdings, Inc., 841 P.2d 198, 203 (Ariz. 1992). Section 187 provides:
(1) The law of the state chosen by the parties to govern their contractual rights
and duties will be applied if the particular issue is one which the parties could
have resolved by an explicit provision in their agreement directed to that
issue.
(2) The law of the state chosen by the parties to govern their contractual rights
and duties will be applied, even if the particular issue is one which the parties
could not have resolved by an explicit provision in their agreement directed
to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the
transaction and there is no other reasonable basis for the parties’ choice,
or
(b) application of the law of the chosen state would be contrary to a
fundamental policy of a state which has a materially greater interest than
the chosen state in the determination of the particular issue and which,
under the rule of § 188, would be the state of the applicable law in the
absence of an effective choice of law by the parties.
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Restatement (Second) Conflict of Laws § 187.
1. Subsection 187(1).
Under § 187(1), a contractual choice of law provision will be applied if “the
particular issue is one which the parties could have resolved by an explicit provision in
their agreement directed to that issue.” Id. § 187(1). The “particular issue” presented here
is actually two issues – the gateway issues mentioned above.
One issue is whether Hodgin’s claims fall within the scope of the Arbitration
Provision. That issue could have been resolved by an explicit provision in the Agreement.
In fact, the Court finds below that it was resolved in the Agreement. Thus, the gateway
issue of the scope of the Arbitration Provision falls within § 187(1) and the Agreement’s
choice of Arizona law applies to it.
The second gateway issue – whether the Arbitration Provision is unconscionable –
could have been resolved through a provision in the Agreement. Arizona courts so hold.
See Effio v. FedEx Ground Package, No. CV-08-1522-PHX-ROS, 2009 WL 775408, at *2
(D. Ariz. Mar. 20, 2009) (conducting a § 187(1) analysis and explaining that “the issue of
unconscionability could not have been resolved through a contractual provision”); Landi,
835 P.2d at 462 (“The legality and validity of a contract provision . . . cannot be resolved
by an explicit provision in the contract[.]” (citation omitted)). As a result, § 187(1) does
not make the Agreement’s choice of law provision applicable to the gateway question of
unconscionability, and the Court must look further to § 187(2).
2. Subsection 187(2).
Subsection 187(2) says the choice of law provision will be enforced unless one of
two conditions exists: either (a) Arizona has “no substantial relationship to the parties or
the transaction and there is no other reasonable basis for the parties’ choice,” or (b)
application of the chosen state law “would be contrary to a fundamental policy of a state
which has a materially greater interest than the chosen state in the determination of the
particular issue,” which would also “be the state of the applicable law in the absence of an
effective choice of law by the parties.” § 187(2)(a)-(b). The Court consequently must
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determine whether one of these two conditions exist. If they do not, § 187(2) says the
Agreement’s choice of law provision is enforceable.
a. Subsection 187(2)(a).
Hodgin does not argue that subsection (a) is satisfied (Doc. 35 at 13), and for good
reason. Arizona clearly has a substantial relationship with the parties to the Agreement.
Isagenix International LLC is headquartered and incorporated in Arizona, Isagenix
Worldwide, Inc. is headquartered in Arizona (Docs. 1 ¶ 2a-b; 13-2 ¶¶ 18-19), and “[a]
substantial relationship exists where one of the parties is domiciled or incorporated in the
chosen state.” ABF Capital Corp. v. Osley, 414 F.3d 1061, 1065 (9th Cir. 2005) (citation
omitted); see also Consul Ltd. v. Solide Enters., Inc., 802 F.2d 1143, 1147 (9th Cir. 1986)
(“[I]f one of the parties resides in the chosen state, the parties have a reasonable basis for
their choice.” (citation omitted)); LaCross v. Knight Transp. Inc., No. CV-15-00990-PHX-
JJT, 2024 WL 249162, at *11 (D. Ariz. Jan. 23, 2024) (holding an Arizona-based company
had a substantial relationship with Arizona for purposes of § 187(2)(a), and there was a
reasonable basis for choosing Arizona law). Subsection (a) therefore does not make the
Agreement’s Arizona choice of law provision unenforceable.
b. Subsection 187(2)(b).
The drafters’ comments to § 187 describe the requirements of subsection (2)(b) as
two-step: “Application of the chosen law will be refused only (1) to protect a fundamental
policy of the state which,” as per the rule of § 188, “would be the state of the otherwise
applicable law, provided (2) that this state has a materially greater interest than the state of
the chosen law in the determination of the particular issue.” Restatement (Second) Conflict
of Laws § 187 cmnt. g. The Ninth Circuit divides subsection (2)(b) into four requirements:
Subsection 2(b) of [§ 187] enables a party to avoid his agreement to apply a
particular state’s law if he can show these things: (1) application of the law
of the chosen state violates a policy of a state, (2) the policy is fundamental,
(3) the state with the contrary policy has a materially greater interest than the
chosen state in the determination of the particular issue, and (4) the state with
the contrary policy would be the state of the applicable law under section 188
were it not for the choice of law provision.
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Int’l Bus. Machines Corp. v. Bajorek, 191 F.3d 1033, 1038 (9th Cir. 1999).
Whether the requirements of § 187(2)(b) are divided into two or four parts, it is clear
that Hodgin has not addressed all of them. He never addresses whether, “under the rule
of § 188, [California] would be the state of the applicable law in the absence of an effective
choice of law by the parties.” § 187(2)(b). Indeed, his briefs never mention § 188. See
Docs. 35, 41. And he makes only passing reference to the requirement that California must
have a materially greater interest in this issue than Arizona. Doc. 35 at 13. Because Hodgin
bears the burden of showing that § 187 invalidates the Agreement’s choice of law
provision, Bajorek, 191 F.3d at 1038, and has not shown that all requirements of
§ 187(2)(b) are satisfied, he fails in this challenge to the Agreement’s choice of Arizona
law.
Hodgin addresses some parts of subsection (2)(b). He argues that Arizona law is
contrary to a fundamental policy of California (Doc. 35 at 13), but even this limited
argument is not persuasive. His motion does not identify any way Arizona law is contrary
to a fundamental policy of California. See id. Instead, Hodgin cites Senne v. Kansas City
Royals Baseball Corp., 934 F.3d 918 (9th Cir. 2019), for the general proposition that
applying Arizona law would be contrary to a fundamental policy of California. But Senne
did not apply § 187(2)(b). Indeed, it did not even address whether a contract’s choice of
law provision was enforceable. Instead, Senne considered whether the district court’s class
certification decision correctly chose to apply California’s minimum wage law to a
subclass of California baseball players, and did so by applying “California’s three-step
governmental interest analysis for choice-of-law questions.” Id. at 929. That analysis
certainly does not control this Court’s application of § 187(2)(b).
Further, the issue in Senne – whether California had “a strong interest in applying
its overtime law to all nonexempt workers, and all work performed, within its borders” (id.
(citation omitted)) – is significantly different from the question this Court must decide
under § 187(2)(b) – whether application of Arizona unconscionability law would be
contrary to a fundamental policy of California. Senne is not helpful on this issue.
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The only other case cited by Hodgin’s motion is LaCross, 2024 WL 249162. It too
was a class action involving the application of California labor laws, and the district court
held under § 187(2)(b) that California wage law would apply to work done entirely within
California, while Arizona law would apply to interstate work. Id. at *13. LaCross is not
fully persuasive in this case, however, because the interest of California wage laws in the
outcome of this case is unresolved. The Agreement says Hodgin is not an employee subject
to such laws; Hodgin claims that he is an employee. Doc. 35 at 10. That issue will need
to be resolved during the arbitration if it is ordered, or in the California Class Action if
arbitration is not ordered. As an unresolved issue, the Court cannot find it strongly invokes
the policies of California wage laws. What is more, LaCross did not address application
of California’s unconscionability law and therefore says little about the specific issue this
Court must decide.
Hodgin’s reply brief is no more persuasive. Rather than specifying how application
of Arizona unconscionability law would undermine a fundamental policy of California,
Hodgin states that “the Isagenix Parties’ opposition identifies many differences between
the two states’ laws.” Doc. 41 at 15. But Hodgin does not specify these differences or
explain why they undermine fundamental California policies. He simply argues that “to
the extent those differences are dispositive to the unconscionability question,” they
undermine California public policy. Id. Under § 187, however, “courts will not refrain
from applying the chosen law merely because this would lead to a different result than
would be obtained under the local law of the state of the otherwise applicable law.”
Wainwright v. Melaleuca, Inc., 844 F. App’x 958, 960 (9th Cir. 2021) (citation modified);
see also Restatement (Second) Conflict of Laws § 187 cmnt. g (“The forum will not refrain
from applying the chosen law merely because this would lead to a different result than
would be obtained under the local law of the state of the otherwise applicable law.”). Mere
differences between Arizona and California law are not dispositive.
Hodgin’s reply mentions only one difference – Arizona permits fee-shifting and
California does not in employer-employee disputes. Doc. 41 at 15. Hodgin cites Lim v.
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TForce Logistics, LLC, 8 F.4th 992 (9th Cir. 2021), for the proposition that fee-shifting in
employer-employee disputes is against California public policy. But Lim did not engage
in a choice of law analysis; the parties agreed that the unconscionability question was
governed by California law. Id. at 1000 n.3. The Ninth Circuit held that the fee-shifting
provision was unconscionable under California law, but it did not address whether a
competing state’s law (in this case, Arizona’s) undermined a fundamental California
policy. Id. at 1003. And even if Lim could be viewed as holding that Arizona fee-shifting
statutes would undermine a fundamental policy of California law, Hodgin has not – as
shown above – addressed the other requirements of § 187(2)(b). Applying Lim in this case
would still leave Hodgin well short of the goal.
Further, the Ninth Circuit has found the unconscionability law of California and
competing states to be insufficiently fundamental to invalidate a choice of law provision.
See, e.g., Wainwright, 844 F. App’x at 960 (“Wainwright fails to identify a fundamental
policy difference between California’s and Idaho’s unconscionability laws. Under § 187,
a ‘fundamental’ policy difference must be a ‘substantial one,’ and courts ‘will not refrain
from applying the chosen law merely because this would lead to a different result than
would be obtained under the local law of the state of the otherwise applicable law.’”
(citation omitted)).6 Further, both Arizona and California “have an interest in governing
the behavior of entities operating within [them], and in protecting or vindicating the right
of their citizens.” Effio, 2009 WL 775408, at *2. Given that Hodgin cites few differences
in the unconscionability laws of Arizona and California, and that both states have interests
6 The Court notes that while the Ninth Circuit invalidated a choice of law provision in favor
of California law in an unconscionability dispute, that case concerned fundamental policies
of the California Franchise Investment Law (“CFIL”), which are inapplicable here. See
Bridge Fund Cap. Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1003 (9th Cir. 2010)
(“Enforcement of the arbitration clause in the franchise agreements in this case would
contravene the fundamental California public policy in favor of protecting franchisees from
unfair and deceptive business practices, as established by the CFIL.”).
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in protecting their citizens, Hodgin has failed to show that Arizona law is contrary to a
fundamental policy of California.
Finally, as noted above, Hodgin makes only passing reference to the subsection
(2)(b) requirement that California have a materially greater interest in this case than
Arizona. Doc. 35 at 13. California does not. Isagenix is headquartered in Arizona, four
of the five Isagenix officers subject to the underlying action reside in Arizona (the fifth
resides in Texas), and Hodgin attended Isagenix employment events in Arizona. Docs. 1
¶ 2a-b, d-e, ¶ 25; 13-2 at 10, ¶¶ 21-24. And the competing contacts are not strictly localized
in California. Hodgin worked from his California residence (Doc. 35 at 10), but his work
was conducted online and presumably reached customers outside of California. See
Doc. 13-2 at 35, ¶ 112 (“Plaintiff understood . . . that sales efforts were to be predominately
online.”), ¶ 115 (“Plaintiff rarely, if ever, sold to customers in-person, and his advertising
and messaging was done online.”). Given the multiple Arizona contacts in this case and
the less compelling California contacts, the Court cannot conclude that California has a
materially greater interest than Arizona. See Netzel v. Am. Express Co., No. CV-22-01423-
PHX-SMB, 2023 WL 4959587, at *4 (D. Ariz. Aug. 3, 2023), aff’d, No. 23-16083, 2024
WL 3493285 (9th Cir. July 22, 2024) (finding plaintiffs “failed to establish that California
ha[d] a greater material interest in the enforceability of the arbitration agreements” where
“[b]ased on the[] widely dispersed contacts, the Court [could not] conclude that California
law would [have] been the state of applicable law absent the New York choice of law
provision”).
In short, Hodgin fails to satisfy any of the requirements of § 187(2)(b). He has not
shown that California law would be chosen under § 188, that application of Arizona
unconscionability law would undermine a fundamental policy of California law, or that
California has a materially greater interest in this case than Arizona. Because none of the
factors in § 187(2)(b) have been shown to apply, the Agreement’s choice of Arizona law
will be enforced by the Court.
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This outcome is supported by the underlying policy of § 187. Comments to the
section explain that a “[p]rime objective[] of contract law [is] to protect the justified
expectations of the parties,” which “may best be attained in multistate transactions by
letting the parties choose the law to govern the validity of the contract[.]” Restatement
(Second) Conflict of Laws § 187 cmnt. e; see also Wainwright, 844 F. App’x at 960 (“The
principles set forth in Restatement section 187 . . . reflect a strong policy favoring
enforcement of [choice of law] provisions.” (citation modified)).
V. Gateway Issues.
The Court will first address whether the Arbitration Provision is unenforceable
because it is unconscionable, and then whether Hodgin’s claims fall within its scope.
A. Unconscionability.
As the party opposing arbitration, Hodgin bears the burden of proving
unconscionability. Lim, 8 F.4th at 999. In Arizona, unconscionability includes both
procedural and substantive unconscionability, and either may be used to invalidate a
contract. Coup v. Scottsdale Plaza Resort, LLC, 823 F. Supp. 2d 931, 947 (D. Ariz. 2011).
“Procedural or process unconscionability is concerned with ‘unfair surprise,’ fine
print clauses, mistakes or ignorance of important facts or other things that mean bargaining
did not proceed as it should.” Maxwell v. Fid. Fin. Servs., Inc., 907 P.2d 51, 57-58 (Ariz.
1995) (citation omitted). Procedural unconscionability resembles fraud and duress. Id. at
58.
“Substantive unconscionability is an unjust or ‘one-sided’ contract.” Id. (citation
omitted). “Indicative of substantive unconscionability are contract terms so one-sided as
to oppress or unfairly surprise an innocent party, an overall imbalance in the obligations
and rights imposed by the bargain, and significant cost-price disparity.” Id. (citation
omitted). The Court will address each of Hodgin’s unconscionability arguments.
1. Procedural Unconscionability.
Hodgin argues that the Agreement was procedurally unconscionable as a “take-it-
or-leave-it” contract of adhesion (Doc. 35 at 19); that he lacked bargaining power, resulting
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in a contract that did not reflect a true meeting of the minds (id. at 20); that the Arbitration
Provision was an “unfair surprise” because the Agreement was “especially onerous and
unfair” due to its “many different components” (id. at 21-22); and that the P&Ps lacked a
table of contents and were in the same “small, grey” front as the Arbitration Provision,
without contrast (id.).
a. Contract of Adhesion.
Hodgin acknowledges that “[u]nder Arizona law, whether a contract is adhesive, or
presented to the non-drafting party on a take-it-or-leave-it basis, does not alone indicate
procedural unconscionability.” Doc. 35 at 19 (citing Broemmer v. Abortion Servs., 840
P.2d 1013, 1016 (Ariz. 1992)). Cases applying Arizona law agree. See Longnecker v. Am.
Express Co., 23 F.Supp.3d 1099, 1109 (D. Ariz. 2014) (“[E]ven if the arbitration
agreements were contracts of adhesion that would not mean that they are procedurally
unconscionable. Contracts of adhesion are not per se unenforceable.”); R & L Ltd. Invs.,
Inc. v. Cabot Invs. Properties, LLC, 729 F.Supp.2d 1110, 1115 (D. Ariz. 2010) (explaining
Arizona law does not support the assertion that a finding of adhesion equates to a finding
of procedural unconscionability).
Given this law, the Court cannot find unconscionability based on the fact that
Hodgin had no choice but to sign the Agreement if he wanted to become an Isagenix
Associate. The Court will, however, keep this fact in mind as it addresses his other
procedural unconscionability arguments.
b. Lack of Bargaining Power.
Hodgin’s lack-of-bargaining-power argument is essentially the same as his adhesion
argument. Hodgin asserts he was presented with a take-it-or-leave-it contract and had no
power to make changes. Doc. 35 at 20. But he cites only a California case for the
proposition that this is indicative of oppression. Id.
Mere inequality in bargaining power is not sufficient to invalidate an arbitration
agreement. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991). And under
Arizona law, an agreement may be enforceable even if the terms are not negotiable. See
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Broemmer, 840 P.2d at 1016. Even if a weaker party does not understand all the terms of
an agreement, the agreement will still be enforceable if consistent with reasonable
expectations and not unduly oppressive. See id. That Hodgin lacked bargaining power is
therefore not dispositive.
c. Unfair Surprise.
Hodgin argues that the Agreement included a “large number of moving parts” that
“put an ongoing burden on the Associate to understand changing rights and obligations.”
Doc. 35 at 21. He further contends that the “delegation clause” was not included in the
P&Ps, but instead was found in separate AAA Commercial Arbitration Rules that were not
provided to him. Id. at 21-22. He asserts that the rules and various other provisions in the
P&Ps make it difficult for an Associate to understand how arbitration will proceed. Id. at
21.
But Hodgin never claims that he was unfairly surprised, either in his motion (id. at
21-22) or in his attached declaration (Doc. 35-1). Nor can the Court conclude the
Arbitration Provision is unconscionable because it did not include a copy of the AAA rules.
The Arbitration Provision, in all capital letters, stated that arbitration would be conducted
under the rules. See Doc. 13-2 at 78, ¶ 9.10. Courts applying Arizona law have rejected
the argument that incorporation by reference amounts to unconscionability. See Coup, 823
F. Supp. 2d at 953 (finding Arizona law rejects the argument that incorporation by
reference of an arbitration clause is substantively unconscionable); Weatherguard Roofing
Co. v. D.R. Ward Const. Co., 152 P.3d 1227 (Ariz. Ct. App. 2007) (holding a subcontract’s
incorporation by reference of general construction contract documents which included an
arbitration clause was enforceable against a subcontractor because physical attachment of
the incorporated document is not necessary if it is clearly incorporated by reference).
d. Formatting Argument.
Hodgin argues that the 18-page P&Ps, which locate the Arbitration Provision near
the end, are “in small, grey (not black) font, the [Arbitration] Provision is in the same font
as the rest of the P&Ps, and no table of contents is included.” Doc. 35 at 22. Hodgin cites
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Duenas v. Life Care Ctrs. of Am., Inc., 336 P.3d 763, 768 (Ariz. Ct. App. 2014), for the
proposition that the absence of “conspicuous typeface” can be a factor in evaluating
procedural unconscionability. Doc. 35 at 22. But Duenas said nothing more about this
factor and found the arbitration agreement before it not unconscionable. Duenas, 336 P.3d
at 769 (“[T]he superior court correctly concluded that the undisputed facts did not show
procedural unconscionability.”). And even if typeface is a factor, the Arbitration Provision
in this case is set forth in all-capital letters, unlike most of the P&Ps. See Doc. 13-2 at 78,
¶ 9.10. Further, a later provision in the Agreement states in bold type: “You agree that
any unresolved dispute will be resolved and settled in accordance with and pursuant
to Policy 9.10 (Arbitration and Government Law).” Id. at 61.
Significantly, Hodgin does not assert in his declaration that he could not read the
P&Ps because of the font size or color, that he did not read the Arbitration Provision when
he twice became an Associate, or that the placement of the provision in paragraph 9.10 of
the P&Ps somehow made it unreviewable by him. See Doc. 35-1. Nor does he contend
that he was unable to read the P&Ps before he agreed to them, or that Isagenix somehow
misrepresented their contents. See id. Hodgin’s formatting argument is unpersuasive.
e. Procedural Unconscionability Conclusion.
Even considering the fact that the P&Ps constitute a contract of adhesion, Hodgin
has not carried his burden of showing procedural unconscionability under Arizona law.
2. Substantive Unconscionability.
Hodgin argues that unconscionability arises from the arbitrator selection criteria
(Doc. 35 at 22-23), the Arbitration Provision’s alleged non-mutuality (id. at 24), and
various specific clauses of the provision (id. at 25-31).
a. Arbitrator Bias.
Hodgin argues that the Arbitration Provision’s specifications for an arbitrator are
unconscionable because only an arbitrator biased in favor of multi-level marketing
companies could meet them. Id. at 22-23. Arizona courts have recognized that “arbitration
terms that by themselves create a partial forum would be . . . unconscionable for failure to
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provide a person with the ability to effectively vindicate their rights before a neutral
arbitrator.” Gullett v. Kindred Nursing Ctrs. W., L.L.C., 390 P.3d 378, 384 (Ariz. Ct. App.
2017). For example, “arbitration agreements are unconscionable and unenforceable when
they give an employer unrestricted control over the selection of arbitrators such that the
employer’s own managers can serve as the sole decision makers in the dispute.” Falcone
Bros. & Assocs., Inc. v. City of Tucson, 381 P.3d 276, 283 (Ariz. Ct. App. 2016).
The only Arizona case cited by Hodgin is Gullett, and that case declined to find
unconscionability based on the arbitrator selection process. Gullett found the selection
procedures sufficiently neutral where “the Agreement . . . require[d] the arbitration be
conducted by an independent impartial entity” and precluded the employer “from
designating a captive arbitration company or a specific arbitrator.” 390 P.3d at 385.
The Arbitration Provision in this case states that “[a]t least one arbitrator shall be an
attorney at law experienced in business law transactions and network marketing.” Doc. 13-
2 at 78, ¶ 9.10. From this sentence, Hodgin claims the arbitrator necessarily will be a pro-
defense insider from the network marketing industry. Hodgin’s counsel identifies a few
potential arbitrators known to counsel, and characterizes them in this way. But Hodgin
does not address the actual procedures that will be used under the AAA rules to select the
arbitrator. Those rules provide the following protections:
• If the parties have not selected the arbitrator (as is true in this case), the AAA
shall send the parties a list of 10 arbitrators from its National Roster and the
parties will be “encouraged to agree” on an arbitrator from the list. Doc. 35-8 at
19, R. 13(a). If the parties are unable to agree, each party shall strike arbitrators
from the list and provide an order of preference for those who remain, and the
AAA will select the arbitrator from those remaining on the list. Id.
• If for any reason a selection cannot be made from the list, “the AAA shall have
the power to make the appointment from among other members of the National
Roster without the submission of additional lists.” Id. at 19-20, R. 13(b).
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• Any person appointed as an arbitrator “shall disclose to the AAA any
circumstance likely to give rise to justifiable doubt as to the arbitrator’s
impartiality or independence, including any bias or any financial or personal
interest in the result of the arbitration or any past or present relationship with the
parties or their representatives.” Id. at 21, R. 18(a).
• “Any arbitrator shall be impartial and independent and shall perform his or her
duties with diligence and in good faith, and shall be subject to disqualification
for . . . partiality or lack of independence[.]” Id. at 22, R. 19(a).
• “Upon objection of a party to the continued service of an arbitrator, or on its own
initiative, the AAA shall determine whether the arbitrator should be disqualified
on the grounds set out above, and shall inform the parties of its decision, which
decision shall be conclusive.” Id., R. 19(c).
These safeguards are at least as great as those found to be sufficiently neutral in
Gullett. And the mere fact that one of the arbitrators in this case – or the single arbitrator
if there is only one – must be “an attorney at law experienced in business law transactions
and network marketing” (Doc. 13-2 at 78, ¶ 9.10) does not change this conclusion. That
description could undoubtedly include Hodgin’s attorneys in this case, and they certainly
cannot be characterized as industry insiders. The Supreme Court has “declin[ed] to indulge
the presumption that the parties and arbitral body conducting a proceeding will be unable
or unwilling to retain [a] competent, conscientious, and impartial arbitrator[].” Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 634 (1985). The Court
likewise will not indulge such a presumption, and cannot conclude that the description of
the arbitrator in the Arbitration Provision is sufficient to show that an unfair arbitrator will
be appointed given the governing AAA procedures.
For the same reasons, the Court is not persuaded by Hodgin’s argument that the
Arbitration Provision is unconscionable because it does not require an arbitrator familiar
with the state law governing the arbitration, creating the possibility that the arbitrator may
“substitute industry customs for actual law.” Doc. 35 at 24. Experienced arbitrators like
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those on the AAA national roster undoubtedly deal often with competing state laws and
understand that the law, not industry customs, governs their decisions.
b. Non-Mutuality.
Hodgin argues the Arbitration Provision is non-mutual and thus substantively
unconscionable because the P&Ps state that “Isagenix may, at its sole discretion, amend”
any part of the Agreement, and the amendment becomes binding after three days’ notice to
Hodgin. Docs. 13-2 at 76, ¶ 8; 35 at 24. Hodgin again relies on Gullett, but that case
declined to find an arbitration provision unconscionable on the ground that it was non-
mutual. Gullett, 390 P.3d at 386. Gullett instead noted that the agreement reflected “a
mutual obligation to arbitrate[.]” Id. The Arbitration Provision in this case likewise applies
to both parties; Isagenix makes no claim that it is not bound by the terms of the provision.
Hodgin argues that the Arbitration Provision is unconscionable because it could be
amended unilaterally by Isagenix, but he does not claim it has been amended in this case.7
The provision is binding on both parties, as it was in Gullett, and the Court cannot find it
unconscionable under Arizona law.
Additionally, the Agreement provides that it may be terminated at will by either
Isagenix or Hodgin. Doc. 13-2 at 60 (“You may terminate your IAAA at any time and for
any reason . . . . Isagenix may also terminate your IAAA or Position at any time for any
reason.” (emphasis omitted)). Arizona law holds that unilateral amendment provisions in
at-will agreements are not unconscionable. See, e.g., Pinto v. USAA Ins. Agency Inc. of
Tex. (FN), 275 F. Supp. 3d 1165, 1171 (D. Ariz. 2017) (explaining provisions permitting
unilateral termination or amendments with notice “are not substantively unconscionable
under Arizona law when . . . employment is on an at-will basis” (citation omitted)).
c. Choice of Law Clauses.
Hodgin argues the Arbitration Provision contains two ambiguous clauses relating to
the choice of law which “impose extreme hurdles to an Associate’s ability to understand
7 Hodgin notes that the provision was amended in 2025, after he terminated his relationship
with Isagenix, but agrees those amendments do not apply to him. Doc. 35 at 25.
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and protect her legal rights” and rise to the level of unconscionability. Doc. 35 at 25.
Specifically, Hodgin argues the Arbitration Provision’s forum selection provision, which
identifies the location where arbitration proceedings will occur, and the residence
amendment clause, which instructs when the P&Ps should incorporate the law of the
Associate’s residence, are unconscionable. Id. at 26.
This argument is not easy to follow. Hodgin contends that the clauses do not specify
what kind of law applies and queries whether they include common law, statutes,
administrative regulations, city ordinances, Attorney General opinions, and so forth. Id. at
25. But this would appear to be a common failing of all choice of law provisions; they
never contain that level of granular detail. Hodgin also asks what happens if a plaintiff
asserts claims under the laws of more than one state (a commonly occurring event) and
cannot tell in advance which claims will be viable. Id. But he cites no case holding that a
choice of law provision which lacks his preferred level of specificity, or which fails to
clearly identify in advance what kinds of claims will be viable, renders a contract
unconscionable.
Hodgin points to differences between Arizona and California misclassification laws
and notes that application of Arizona law would leave him with no viable California claims.
Id. at 26-27. But again, such an outcome is possible in many cases where there are
substantive choice of law issues to be resolved, and Hodgin does not explain why that
possibility makes this Arbitration Provision unconscionable.
Hodgin further notes that an Associate cannot know his rights in advance of an
arbitration ruling, but how is that any different from the uncertainty every claimant faces
when a choice of law decision must be made by a court or an arbitrator? He frames the
same argument in different language, saying the arbitrator in this case is empowered to
strip him of his California rights by choosing Arizona law. Id. at 28. But again, that is
what judges and arbitrators must do all the time when they make choice of law decisions
and resolve disputes involving more than one state. See Hoyt v. WeLink Commc’ns, Inc.,
No. CV-23-00287-PHX-SMB, 2024 WL 169671, at *1 (D. Ariz. Jan. 16, 2024) (“[W]here
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there is a valid arbitration agreement, conflicts of law analysis is reserved for the
arbitrator.” (citation omitted)).
Further, the Supreme Court has instructed that a court “should not, on the basis of
‘mere speculation’ that an arbitrator might interpret [an] ambiguous agreement[] in a
manner that casts [its] enforceability into doubt, take upon [itself] the authority to decide
the antecedent question of how the ambiguity is to be resolved.” PacifiCare Health Sys.,
Inc. v. Book, 538 U.S. 401, 406-07 (2003) (citation omitted). The Court therefore will not
predict that the arbitrator’s decision in this case will be unfair or a surprise to Hodgin. And
while a “contractual ambiguity could itself be characterized as raising a ‘gateway’ question
of arbitrability,” id. at 407 n.2, that is not the case here. The clauses in question only
instruct where arbitration should proceed and what laws apply during arbitration, not
whether arbitration should be compelled. Any ambiguities, therefore, should be resolved
in the arbitration.
Finally, “when a court interprets provisions in an agreement covered by [the FAA],
due regard must be given to federal policy favoring arbitration, and ambiguities as to the
scope of the arbitration clause itself must be resolved in favor of arbitration.” Farnam
Companies, Inc. v. Golden Crown Corp., No. CIV030791PHX-EHC, 2003 WL 22331489,
at *3 (D. Ariz. July 30, 2003) (citing Mitsubishi Motors Corp., 473 U.S. at 626). The Court
need not resolve the ambiguity of the provisions cited by Hodgin because they do not rise
to the level of unconscionability and do not implicate other gateway questions, which are
the only questions being decided today.
d. Modification and Severability Clause.
Without citing any case law, much less any Arizona law, Hodgin argues that the
modification and severability provisions of the P&Ps render the Arbitration Provision
unconscionable because they empower Isagenix to “make up standards on the fly” and save
the arbitration requirement from any challenge raised. Doc. 35 at 29. But the provision
does not authorize Isagenix to sever provisions; that authority rests with the Court or an
arbitrator. See Doc. 13-2 at 78, ¶ 9.8. And “Arizona law embraces the doctrine of
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severability in the context of contractual unconscionability.” Prime Loyalty LLC v.
GoDaddy Inc., 2025 WL 1807721, at *12 (D. Ariz. July 1, 2025) (citing A.R.S. § 47-2302).
Courts applying Arizona law have discretion to “either (1) refuse to enforce an
unconscionable contract, (2) refuse to enforce any unconscionable portion of a contract, or
(3) limit the application of any unconscionable clause of a contract to avoid any
unconscionable result.” Maxwell, 907 P.2d at 60 (citing A.R.S. § 47–2302(A)). Thus, the
severability provision does not require an arbitrator to do Isagenix’s bidding as Hodgin
asserts. Rather, the arbitrator is encouraged by Arizona law to reach a fair result, whether
that involves severing a provision or not severing it and invalidating the contract. Hodgin
has not shown that the severability and modification provisions of the P&Ps render the
Arbitration Provision unconscionable.
e. Confidentiality Clause.
Hodgin argues the Arbitration Provision’s confidentiality clause, which “requires
the ‘written consent of both parties’ to disclose the ‘existence, content, or results’ of an
arbitration,” is unconscionable. Doc. 35 at 29 (quoting Doc. 13-2 at 78). He argues it will
prevent him from disclosing the results of the arbitration to a court, discussing the
arbitration with fact and expert witnesses, and collecting evidence in support of his claims.
Id. Isagenix states this “is not the intent of the language” and specifically “consent[s] to
the blue penciling and/or severance of this clause to the extent necessary to permit the
parties to fully and fairly prepare their case and present their claims.” Doc. 40 at 24
(emphasis omitted).
Hodgin’s motion cites only one Arizona case, Adams v. UHS of Tucson, LLC, 2021
Ariz. Super. LEXIS 218 (Ariz. Super. Ct. Aug. 11, 2021). In addition to the fact that this
state trial court decision is not precedential and therefore does not establish Arizona law,
the case actually supports the solution proposed by Isagenix. After finding that a
confidentiality provision was unconscionable because it would interfere with case
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preparation before the arbitrator, the trial judge severed the provision. Id. at *15
(eliminating confidentiality provision by blue penciling it out of the arbitration provision).8
In his reply brief, Hodgin cites Longnecker, 23 F. Supp. 3d 1099, but that case
applied California law. Id. at 1110. And after finding the confidentiality provision
unconscionable, that court also adopted Isagenix’s proposed solution and severed the
confidentiality provision. Id. at 1111-12.
The Court concludes that the confidentiality clause’s potentially broad scope, as
feared by Hodgin, can be cured by the arbitrator’s severance of the clause, a remedy to
which Isagenix has consented. Doc. 40 at 24. The clause therefore will not hinder
Hodgin’s case preparation or prevent his seeking court enforcement of any decision.
In addition, the Court notes that mutually binding confidentiality provisions, such
as the one here, generally are found not to be unconscionable under Arizona law. See, e.g.,
Shelby v. Brookdale Senior Living Inc., No. CV-20-00804-PHX-MTL, 2021 WL 718183,
at *4 (D. Ariz. Feb. 24, 2021), aff’d, No. 21-15547, 2022 WL 1657245 (9th Cir. May 25,
2022) (explaining that under Arizona law “[t]he mere fact that an arbitration agreement
contains a confidentiality provision does not make it per se unconscionable,” and the
confidentiality provision was not unconscionable where it was a “standard confidentiality
agreement and it applie[d] equally to both parties”); Aldrete v. Metro Auto Auction LLC,
No. CV-21-00622-PHX-SMB, 2022 WL 60544, at *5 (D. Ariz. Jan. 6, 2022) (holding a
mutually binding confidentiality clause was not substantively unconscionable under
Arizona law).
Given these considerations, including the consented-to blue-penciling of the
confidentiality clause by the arbitrator, the Court does not find that the confidentiality
clause renders the Arbitration Provision unconscionable.
/ / /
8 The trial judge declined to compel arbitration because he found the arbitration provision
was not governed by the FAA (id. at *9), but that decision was reversed by the Arizona
Court of Appeals, see UHS of Tucson, LLC v. Metcalf, 2022 Ariz. App. Unpub. LEXIS
241, at *10 (Ariz. Ct. App. Mar. 8, 2022).
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f. Cost-Shifting Clause.
Hodgin argues that the cost-shifting mechanism of the Arbitration Provision is
unconscionable. Doc. 35 at 30. That clause provides that “[e]ach party to the arbitration
shall be responsible for its own costs and expenses, including legal and filing fees;
provided, however, that the arbitrator will have discretion to award legal fees and other
costs to the prevailing party.” Doc. 13-2 at 78, ¶ 9.10.
Hodgin relies on Lim, which applied California law and policy to hold that a fee-
shifting clause in an employment-related arbitration clause was unconscionable. See Lim,
8 F.4th at 1003. Hodgin cites no comparable Arizona law or policy, and Arizona statutes
permit the award of attorneys’ fees and costs to prevailing parties in cases arising out of
contract. See A.R.S. § 12-341.01. The Court cannot conclude the cost-shifting clause is
unconscionable under Arizona law. See, e.g., Holmes v. CVS Health, No. CV-19-04936-
PHX-SMB, 2020 WL 4365881, at *4 (D. Ariz. July 30, 2020) (“Plaintiff’s mere
speculation that she will lose in arbitration and the arbitrator will award costs to
[Defendant] does not make her Arbitration Agreement unconscionable.”).
3. Unconscionability Conclusion.
Hodgin bears the burden of proving the Arbitration Provision is substantively
unconscionable under Arizona law. He has not carried this burden, and the Court
accordingly finds the provision enforceable.
B. Scope of the Arbitration Provision.
The Arbitration Provision applies to “any controversy or claim arising out of, or
relating to, these policies and procedures, the compensation plan, or the guidance
documents, or the breach thereof[.]” Doc. 13-2 at 78, ¶ 9.10 (capitalization omitted).
Hodgin argues that because his claims are based on California wage laws and not the P&Ps,
they fall outside the scope of the Arbitration Provision. See Doc. 35 at 32.
The P&Ps provide that “Isagenix Independent Associates, in whatever form, are
independent contractors.” Doc. 13-2 at 66, ¶ 2.8. Signing Associates “acknowledge and
agree that [they] are not an agent, employee, legal representative or franchisee of
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Isagenix[.]” Id. They also “agree that [they] will not be treated as an employee . . . for
purposes of [various federal and state laws].” Id.
The P&Ps further provide:
As a self-employed independent contractor, you will be operating your own
independent business, buying and selling products and services available
through and by Isagenix on your own accord. You have complete freedom
in determining the number of hours you will devote to your business, and
you have the sole discretion of scheduling such hours. Isagenix will not
provide you with a place of business, and if you desire a place of business
other than your own residence, you will be responsible for procuring,
furnishing, equipping, and paying for such place of business.
Id. These terms inform the Court’s analysis of Hodgin’s scope argument.
1. Are Hodgin’s Claims Within the Scope of the Arbitration
Provision?
Hodgin’s complaint alleges that Isagenix misclassified him as an independent
contractor when he really was an employee, and that Isagenix failed to provide him meal
periods, rest periods, minimum wages, overtime wages, timely wages, separation wages,
wage statements, and reimbursements of expenses, and failed to maintain payroll records,
all in violation of California labor statutes. Doc. 40-3 at 4; see also Doc. 13-2 at 1-55. The
gravamen of Hodgin’s complaint is that the relationship established by the Agreement,
including the P&Ps, is fundamentally different than the Agreement provides. He does not
dispute that he twice entered into the Agreement, but he nonetheless asserts that the benefits
he was owed by Isagenix are not those described in the Agreement. His claims arise out
of California labor statutes, but they clearly present, as the Arbitration Provision provides,
a “controversy or claim . . . relating to, [the] policies and procedures, the compensation
plan, or the guidance documents, or the breach thereof[.]” Doc. 13-2 at 78 (emphasis
added) (capitalization omitted).
The Agreement, including the P&Ps, lay out Hodgin’s responsibilities as an
Isagenix Associate, as well as Isagenix’s responsibilities (and lack of responsibilities) with
respect to Hodgin’s work. The Compensation Plan, which is part of the Agreement as
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noted above, lays out the terms of Hodgin’s compensation. Any court or arbitrator
addressing Hodgin’s claim that his relationship with Isagenix entitled him to the pay and
benefits of California labor law will need to refer to and understand the Agreement and
Compensation Plan in order to understand the parties’ relationship. California cases
illustrate this point. California courts often consult the terms of the underlying employment
agreement when deciding whether a plaintiff has been misclassified. See, e.g., S. G.
Borello & Sons, Inc. v. Dep’t of Indus. Rels., 769 P.2d 399, 409 (Cal. 1989) (explaining “a
worker’s express or implied agreement to forego coverage as an independent contractor is
‘significant’” when deciding his employment status for purposes of a claim under the
Worker’s Compensation Act (citation omitted)); Bradley v. Networkers Int’l, LLC, 150
Cal. Rptr. 3d 268, 281 (Cal. Ct. App. 2012), as modified on denial of reh’g (Jan. 8, 2013)
(discussing the terms of an independent contractor agreement as “evidence relevant to the
factual question [of] whether the class members were employees or independent
contractors”); Gonzalez v. Workers’ Comp. Appeals Bd., 1593, 54 Cal. Rptr. 2d 308, 313
(Cal. Ct. App. 1996) (consulting the employment contract’s terms in finding that the
“circumstances strongly indicate[d] an employment relationship”). And surely Isagenix
will invoke the Agreement in its arguments that Hodgin is not an employee under
California law. Employers often do. See, e.g., S. G. Borello & Sons, Inc., 769 P.2d at 403
(employer arguing workers “expressly accepted their independent status” and pointing to
contract terms in support). The Court therefore concludes that Hodgin’s claims are, in the
words of the Arbitration Provision, “related to” the “policies and procedures, the
compensation plan, or the guidance documents, or the breach thereof[.]” Doc. 13-2 at 78,
¶ 9.10 (capitalization omitted). They accordingly fall within the scope of the Arbitration
Provision.
Hodgin cites a number of cases to argue that his statutory labor claims are not within
the scope of the Arbitration Provision, but those cases have a significant distinguishing
characteristic – they each addressed a narrower arbitration clause than the one at issue here.
The provision in this case covers claims “arising out of, or relating to” the parties’
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agreements. See Doc. 13-2 at 78, ¶ 9.10 (emphasis added) (capitalization omitted). None
of the cases cited by Hodgin addressed an arbitration clause with the broad “relating to”
language. See Narayan v. EGL, Inc., 616 F.3d 895 (9th Cir. 2010) (contract provided that
it “shall be interpreted and enforced” through arbitration); Perez Bautista v. Juul Labs, Inc.,
478 F. Supp. 3d 865, 867 (N.D. Cal. 2020) (covering “disputes over the terms of this
Agreement”); Elijahjuan v. Super. Ct., 147 Cal. Rptr. 3d 857, 861 (Cal. Ct. App. 2012)
(covering “any dispute that arises with regard to [the Agreements’] application or
interpretation”); Washington v. Freedom of Expression LLC, No. CV-21-01318-PHX-
MTL, 2023 WL 7048942, at *1 (D. Ariz. Sept. 28, 2023) (covering “[a]ny dispute or claim
arising under or with respect to this Lease”).
And while the scope issue in this case is governed by Arizona law, even California
cases that have addressed “relating to” language have compelled arbitration. See Khalatian
v. Prime Time Shuttle, Inc., 188 Cal. Rptr. 3d 113, 118-19 (Cal. Ct. App. 2015) (compelling
arbitration and explaining: “The complaint alleges that plaintiff was misclassified as an
independent contractor, and was entitled to protections conferred upon employees by the
Labor Code, notwithstanding the representations made in the Agreement. . . . The language
‘arising out of or relating to’ as used in the parties’ arbitration provision is generally
considered a broad provision. . . . Broad arbitration clauses such as this one are consistently
interpreted as applying to extracontractual disputes between the contracting parties.”
(emphasis added)). Indeed, one of the cases cited by Hodgin specifically notes that its
outcome would have been different if the arbitration provision included “relating to”
language. See Perez Bautista, 478 F. Supp. 3d at 873 (“Without question, Defendants
could have drafted the arbitration provision to cover labor code misclassification causes of
action by, for example, expressly providing for arbitration of disputes or claims arising out
of, or related to, Plaintiffs’ employment[.]” (emphasis added)).
The Ninth Circuit similarly has held that arbitration clauses covering claims
“relating to” a contract are construed broadly. See Cape Flattery Ltd. v. Titan Maritime,
LLC, 647 F.3d 914, 922 (9th Cir. 2011) (“[W]hen parties intend to include a broad
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arbitration provision, they provide for arbitration ‘arising out of or relating to’ the
agreement.” (emphasis added) (citation omitted)); Schoenduve Corp. v. Lucent Techs., Inc.,
442 F.3d 727, 732 (9th Cir. 2006) (holding a contract “which required arbitration ‘if a
dispute arises out of or relates to this Agreement[]’ was broad enough to include a claim
for commissions based on quasi-contract or estoppel” (emphasis added)). Thus, the cases
cited by Hodgin do not support his scope argument.
In any event, Arizona law governs the scope issue in this case. “Arizona has a strong
policy interest in enforcing arbitration provisions[.]” Henderson v. Moskowitz, No. CV-
24-0215-PR, 2025 WL 3310164, at *3 (Ariz. Nov. 28, 2025) (citations omitted). Arizona
cases instruct that an “arbitration clause should be construed liberally and any doubts as to
whether or not the matter in question is subject to arbitration should be resolved in favor
of arbitration.” New Pueblo Constructors, Inc. v. Lake Patagonia Recreation Ass’n, 467
P.2d 88, 91 (Ariz. Ct. App. 1970). The language of an arbitration clause must therefore be
construed liberally. See Sec. Alarm Fin. Enters., L.P. v. Fuller, 398 P.3d 578, 583 (Ariz.
Ct. App. 2017) (“[A]ny doubts concerning the scope of arbitrable issues should be resolved
in favor of arbitration, [including] whether the problem at hand is the construction of the
contract language itself[.]” (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24-25 (1983)).
Arizona courts interpret an arbitration clause broadly when it includes “relating to”
language. See, e.g., Sun Valley Ranch 308 Ltd. P’ship ex rel. Englewood Props., Inc. v.
Robson, 294 P.3d 125, 130 (Ariz. Ct. App. 2012) (“The arbitration clause at issue here
encompasses ‘any’ controversies or disputes ‘aris[ing] out of or relating to’ the Partnership
Agreement. It is ‘the paradigm of a broad clause.’ . . . The duty to arbitrate attaches not
only to controversies arising under the Partnership Agreement, but also to disputes ‘relating
to’ that agreement. ‘Relating to’ is broader than ‘arising from.’” (citations omitted)).
Arizona cases further explain that “in order for [a] dispute to be characterized as
arising out of or related to the subject matter of the contract, and thus subject to arbitration,
it must, at the very least, raise some issue the resolution of which requires a reference to or
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construction of some portion of the contract itself.” Dusold v. Porta-John Corp., 807 P.2d
526, 530 (Ariz. Ct. App. 1990) (finding personal injury claims not within the scope of the
licensing agreement); see also Sun Valley Ranch, 294 P.3d at 131 (citing and applying
Dusold standard).
As explained above, Hodgin’s claims will require reference to the Agreement. Any
court or arbitrator deciding whether his relationship with Isagenix entitled him to the pay
and benefits of California labor law will need to consult the Agreement and Compensation
Plan to understand the relationship. And Isagenix will invoke the Agreement in its
arguments that Hodgin is not an employee under California law. As in the California cases
cited above, Hodgin’s misclassification claims will require reference to the Agreement.
They therefore are “related to” the Agreement under Arizona law and come within the
scope of the Arbitration Provision. See Sun Valley Ranch, 294 F.3d at 131-32 (finding
that adjudication of unjust enrichment claim required reference to or construction of the
parties’ contract and that arbitration was therefore required).
2. Hodgin’s Related Argument.
Hodgin raises a related argument. The Agreement in this case is between Isagenix
International, LLC and Hodgin. See Doc. 13-2 at 64. Petitioners Isagenix Worldwide, Inc.
and corporate officers Walsh, Davies, and Dunlap are defendants in the California Class
Action and petitioners in this case seeking to compel arbitration, but they were not parties
to the Agreement. Doc. 41 at 17. Hodgin claims that they cannot, as non-signatories to
the Agreement, invoke the Arbitration Provision. Id. at 17-18.
“[A] litigant who was not a party to the relevant arbitration agreement may invoke
§ 3 [of the FAA],” which authorizes courts to compel arbitration, “if the relevant state
contract law allows him to enforce the agreement.” Arthur Andersen LLP v. Carlisle, 556
U.S. 624, 632 (2009). The Court therefore must look to Arizona law.
The most relevant Arizona case is Sun Valley Ranch, 294 P.3d 125. It considered
whether defendants who were non-signatories to an arbitration agreement could compel
the plaintiff, who was a signatory, to arbitrate his claims against them. Some of the claims
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arose directly out of the agreement, but others did not. Id. at 129 (claims included breach
of contract, breach of the implied covenant of good faith and fair dealing, unjust
enrichment, fraud and negligent misrepresentation, breach of fiduciary duty, dissolution
and accounting, and piercing the corporate veil). The Arizona Court of Appeals held that
the non-signatory defendants could compel the signatory plaintiff to arbitrate all claims.
Id. at 135. The court based this holding on two independent grounds.
Because the plaintiff claimed the defendants were alter egos of the corporation that
signed the arbitration agreement, the court held that they could demand arbitration to the
same extent as the corporation. Id. at 134. Hodgin does not claim the non-signatory
petitioners in this case are alter egos of Isagenix International LLC, so this part of Sun
Valley Ranch does not apply.
As “an additional, independent legal basis” for its decision, Sun Valley Ranch held
that a non-signatory defendant could compel the signatory plaintiff to arbitrate because “[1]
the trier of fact w[ould] be required to consider the Partnership Agreement and the
Construction Contract in resolving plaintiffs’ claims, and [2] [the non-signatory
defendant’s] conduct [was] intertwined with that of other defendants who signed the
Partnership Agreement.” Id. at 135. Both of these elements are present here.
First, as discussed above, the trier of fact in this case will be required to consider
the Agreement in resolving Hodgin’s claims.
Second, the alleged conduct of the non-signatory petitioners is intertwined with that
of signatory Isagenix International LLC. The non-signatories are alleged to have engaged
in the same conduct as Isagenix International LLC, in the same manner, and under the same
policies. See Doc. 13-2 at 1-55. Hodgin alleges that signatory Isagenix International LLC
and non-signatory Isagenix Worldwide, Inc. “hold themselves out to the public as a single
entity, known as Isagenix.” Id. at 9, ¶ 20. And he alleges that non-signatories Walsh,
Davis, and Dunlap, respectively, hold the officer positions of CEO, CFO, and CIO of
signatory Isagenix International LLC, and that all three officers engaged in exactly the
same conduct as Isagenix International LLC. Id. at 9-10, ¶¶ 21-23. The alleged conduct
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of the non-signatories thus is “intertwined” with the alleged conduct of signatory Isagenix
International LLC.
Because both of the factors identified in Sun Valley Ranch are satisfied, the Court
concludes that the non-signatory petitioners can invoke the Arbitration Provision and
compel signatory Hodgin to arbitrate his claims. Signatory Isagenix International LLC can
compel arbitration because it is a party to the Agreement.
VI. Isagenix’s Request for Fees and Costs.
Isagenix requests fees and costs associated with this dispute (Doc. 1 at 14), but fails
to state what part of the Agreement authorizes such an award. And even if the Agreement
or Arizona law permits such an award, the Court denies it as a matter of discretion.
VII. Isagenix’s Request to Order Arbitration Only of Hodgin’s Individual Claims.
Isagenix asks the Court to order Hodgin to arbitrate his claims solely on an
individual basis. Docs. 1 at 8, 40 at 32-33. It notes that the Arbitration Provision contains
a class action waiver. Docs. 1 at 8, 13-2 at 78, ¶ 9.10. It cites Supreme Court precedent in
support. See Lamps Plus, Inc. v. Varela, 587 U.S. 176, 185-89 (2019) (explaining the FAA
does not permit a court to compel class arbitration absent clear consent from the parties);
Epic Sys. Corp. v. Lewis, 584 U.S. 497, 502 (2018) (instructing that mandatory class action
waivers in employment-related arbitration agreements are enforceable under the FAA);
Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 684 (2010) (“[A] party may
not be compelled under the FAA to submit to class arbitration unless there is a contractual
basis for concluding that the party agreed to do so.”). Hodgin does not respond to this
request. See Doc. 41. The Court will order Hodgin to arbitrate his individual claims only.
IT IS ORDERED:
1. Hodgin’s Motion to Dismiss the Petition (Doc. 35) is denied.
2. The Motion to Compel Arbitration (Doc. 39) is granted. The parties shall
arbitrate Hodgin’s individual claims in accordance with the Arbitration Provision (Doc.
13-2 at 78, ¶ 9.10).
3. Isagenix’s request for attorneys’ fees and costs (Doc. 1) is denied.
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4. The Clerk is directed to terminate this matter.
5. The California Class Action is not pending in this Court, and its status
therefore will not be addressed by this judge.
Dated this 30th day of December, 2025.
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