Kevin Breazeale v. Victim Services, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KEVIN BREAZEALE; KAREN Nos. 15-16549

SOLBERG; KEVIN HIEP VU; NANCY 16-16495

MORIN; NARISHA BONAKDAR, on

their own behalf and on behalf of

others similarly situated, D.C. No.

Plaintiffs-Appellees, 3:14-cv-05266-

VC

v.

VICTIM SERVICES, INC., DBA OPINION

CorrectiveSolutions; NATIONAL

CORRECTIVE GROUP, INC., DBA

CorrectiveSolutions; MATS

JONSSON,

Defendants-Appellants.

Appeal from the United States District Court

for the Northern District of California

Vince Chhabria, District Judge, Presiding

Argued and Submitted September 13, 2017

San Francisco, California

Filed December 27, 2017

2 BREAZEALE V. VICTIM SERVICES

Before: Mary M. Schroeder and Richard C. Tallman,

Circuit Judges, and Robert H. Whaley,* District Judge.

Opinion by Judge Schroeder

SUMMARY**

Jurisdiction / Arbitration

In an action under the Fair Debt Collection Practices Act

and California consumer protection law, the panel:

(1) dismissed for lack of jurisdiction an interlocutory appeal

from the district court’s denial of defendants’ motion to strike

claims under California’s Anti-SLAPP statute, and

(2) affirmed the district court’s denial of defendants’ motion

to compel arbitration.

Pursuant to an agreement with the district attorney’s

office, defendants sent notices to plaintiffs that to avoid

criminal prosecution under California’s bad check statute,

they could participate in California’s bad check diversion

program, including payment of specified fees. The notices

included an arbitration clause.

The panel held that it lacked jurisdiction to review the

district court’s denial of defendants’ Anti-SLAPP motion

*

The Honorable Robert H. Whaley, United States District Judge for

the Eastern District of Washington, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

BREAZEALE V. VICTIM SERVICES 3

because, under the terms of the state statute, such a denial in

a case deemed to be filed in the public interest is not

immediately appealable.

The panel affirmed the district court’s denial of

arbitration as to a plaintiff who elected to participate in the

diversion program because the diversion program agreement

was not a private or commercial contract subject to the

provisions of the Federal Arbitration Act.

COUNSEL

Sean M. Hardy (argued) and Michael A. Taitelman,

Freedman & Taitelman LLP, Los Angeles, California, for

Defendants-Appellants.

Deepak Gupta (argued) and Matthew W.H. Wessler, Gupta

Wessler PLLC, Washington, D.C.; Paul Arons, Law Offices

of Paul Arons, Friday Harbor, Washington; Beth E. Terrell

and Blythe Chandler, Terrell Marshall Law Group PLLC,

Seattle, Washington; for Plaintiffs-Appellees.

R. Orion Danjuma, Rachel Goodman, Nusrat J. Choudhury,

and Dennis D. Parker, New York, New York, as and for

Amicus Curiae American Civil Liberties Union Foundation

Inc.

Jennifer D. Bennett and Brian Hardingham, Public Justice

P.C., Oakland, California; David Seligman, Towards Justice,

Denver, Colorado; for Amici Curiae Public Justice, The

National Consumer Law Center, Towards Justice, and

Professors of Arbitration, Consumer, and Contract Law.

4 BREAZEALE V. VICTIM SERVICES

OPINION

SCHROEDER, Circuit Judge:

Plaintiffs are individuals who are subject to potential

prosecution for violations of California’s bad check statute,

which criminalizes the writing of bad checks with intent to

defraud. The Defendants, Victim Services and related

companies (collectively, “VSI”), pursuant to an agreement

with the District Attorney’s office, sent notices to the

Plaintiffs that to avoid criminal prosecution they could

participate in California’s Bad Check Diversion Program,

including payment of specified fees. Plaintiffs filed this

putative class action claiming VSI’s practices violated state

law and the federal Fair Debt Collection Practices Act,

15 U.S.C. § 1692 et seq. They seek injunctive as well as

monetary relief.

Before us are two consolidated appeals from separate

orders of the district court. VSI first pursues an interlocutory

appeal of the district court’s denial of its motion to strike

under California’s Anti-SLAPP statute. We lack jurisdiction

to consider the district court’s denial, however, because under

the terms of the state statute, such a denial in a case deemed

to be filed in the public interest is not immediately

appealable. VSI also appeals the district court’s denial of its

motion to compel arbitration. We have jurisdiction over that

appeal and affirm the arbitration denial because this is not a

private contract subject to the provisions of the Federal

Arbitration Act. We therefore affirm and remand to the

district court for the conduct of further proceedings.

BREAZEALE V. VICTIM SERVICES 5

FACTUAL AND PROCEDURAL BACKGROUND

A. California’s Bad Check Diversion Program

California’s bad check diversion program permits district

attorney offices throughout the state to defer prosecution of

those accused of writing bad checks if the accused satisfies

certain criteria established by statute. The district attorneys

may contract with private parties to administer the program.

Plaintiffs here allege that VSI, a private administrator under

the program, exceeded its statutory authority and

administered the program in violation of federal and state

laws applicable to debt collection practices.

The bad check diversion program attempts to address a

public policy problem facing the California criminal justice

system. California criminalizes the writing of bad checks

with intent to defraud. See Cal. Penal Code § 476a (added in

1907). And while the enactment of this proscription

addressed the problem of bad check writing, California began

to face a problem of overload: prosecutions of accused bad

check writers eventually “inundat[ed] the state’s criminal

courts.” del Campo v. Kennedy, 491 F. Supp. 2d 891, 895

(N.D. Cal. 2006), aff’d, 517 F.3d 1070 (9th Cir. 2008). In

response, California in 1985 passed Cal. Penal Code

§ 1001.60 et seq., authorizing a diversion program for bad

check writers that could be administered by private entities

under contract with the local district attorney. The statutory

scheme permits, but does not require, district attorneys

throughout the state of California to create within their offices

a diversion program for those who write bad checks. Of

particular relevance here, the statute allows the program to be

“conducted by the district attorney or by a private entity

6 BREAZEALE V. VICTIM SERVICES

under contract with the district attorney.” Cal. Penal Code § 1001.60.

The bad check diversion program is designed to operate

in accordance with certain statutory requirements that track

the life of a bad check case from investigation to

resolution—all without formal criminal prosecution—if

certain criteria are met. A district attorney may refer a case

to the bad check diversion program only if there is probable

cause that the bad check statute has been violated. Id. The

district attorney’s office that receives a grievance suggesting

a possible bad check prosecution must also consider a non-

exclusive list of factors before deciding to refer cases to the

diversion program. See Cal. Penal Code § 1001.62. These

factors include the amount of the bad check; the check

writer’s prior criminal record and whether that person has

been previously referred to the program; the number of bad

check grievances the district attorney has previously received

against the person, and “[t]he strength of the evidence, if any,

of intent to defraud the victim.” Id. These factors afford the

district attorney discretion to forgo prosecution, for example,

of those subject to prosecution for the first time, while

focusing the limited resources of the office instead on

prosecution of those who have been the subject of numerous

accusations.

After the district attorney has considered these factors and

concluded that there is probable cause that Cal. Penal Code

§ 476a has been violated, and that referral to the program is

appropriate, the person identified as a potential participant is

notified of referral to the program. Such person must receive

notice by mail of the referral. See Cal. Penal Code § 1001.63.

The statute provides the notice must include the date and

amount of the check; the name of the payee; the date by

which the potential participant must contact someone

BREAZEALE V. VICTIM SERVICES 7

designated by the district attorney, and a statement of the

penalty for writing a bad check. Id. To complete the

diversion program successfully, the person must then

complete a class conducted by the district attorney, or by the

private entity under contract with the district attorney’s

office, pay full restitution to the victim, and pay the diversion

fees. See Cal. Penal Code § 1001.64. Pending successful

completion of those conditions, the district attorney may

“enter into a written agreement with the person to forego

prosecution on the bad check for a period to be determined by

the district attorney . . . .” Id. Admission of guilt is not a

prerequisite to placement in the program. See Cal. Penal

Code § 1001.66.

VSI administers contracts with various county district

attorneys in California. VSI is a registered corporation in

Delaware, and VSI and its subsidiaries operate in a number

of states. Under VSI’s contracts, local district attorneys

retain prosecutorial discretion and approve the fees VSI

requests from bad check writers. VSI receives a cut of the

fees collected.

The named plaintiffs in this case each received letters

from VSI describing probable criminal prosecution, with a

potential punishment of up to a year in jail, if they chose not

to participate in the BCDP. The letters they received were

sent on district attorney letterhead and were signed by the

local district attorney. The letters informed the recipients that

they had “been accused of violating California Penal Code

476a,” and that they could avoid criminal prosecution by

enrolling in the bad check diversion program and paying the

associated fees and restitution. The letters provided the

recipients thirty days to dispute the allegations in writing,

which would be reviewed by the “authorized administrator of

8 BREAZEALE V. VICTIM SERVICES

the Bad Check Restitution Program.” The letter does not

identify VSI by name, although it states that the BCDP is

“administered by a private entity under contract” with the

district attorney.

Under the terms of the letter, recipients who make full or

partial payment of fees and restitution “agree[] to be enrolled

in the Bad Check Restitution Program.” The letter also

includes an arbitration clause, which provides:

Agreement to Arbitrate: You and

Administrator agree to resolve any and all

claims and disputes relating in any way to the

Program (“Claims”), except for Claims

concerning the validity, scope or

enforceability of this Arbitration Agreement,

t h r o u g h B IN D IN G IN D IV ID U A L

ARBITRATION before the American

Arbitration Association (“AAA”). This

means you will be unable to have Claim(s)

resolved by a court or jury, or to participate in

a class action or class arbitration. Other rights

you would have if you went to court may be

unavailable or limited in arbitration, including

your right to appeal. The only exception to

this agreement to arbitrate is that you and/or

Administrator may seek relief in a small

claims court for Claims within the jurisdiction

of that court in any particular state.

The terms then stipulate the agreement is to be governed by

and enforceable under the FAA on only an individual basis.

No arbitrator or court can “permit or certify a class action,

representative action, private attorney-general action or

BREAZEALE V. VICTIM SERVICES 9

consolidated arbitration in connection with [the] arbitration

agreement.” Participants in the program are allowed to opt

out of arbitration in writing within sixty days of enrollment in

the program.

One of the named plaintiffs, Narisha Bonakdar, elected to

participate in the BCDP, while the others declined.

B. Plaintiffs’ Complaint

Plaintiffs instituted this action in the United States

District Court for the Northern District of California on

December 1, 2014. They filed their First Amended

Complaint—the operative complaint in this case—on

February 6, 2015.

The complaint alleges VSI’s programs violate state and

federal consumer-protection laws governing collection

abuses, and also shirk the requirements imposed under the

very state statutes governing bad check diversion programs.

Included were alleged violations of the Fair Debt Collection

Practices Act, (“FDCPA”), 15 U.S.C. § 1692 et seq., which

governs the conduct of statutorily defined “debt collectors.”

Plaintiffs allege that VSI’s use of official district attorney

letterhead conveys the false impression the letters were sent

by law enforcement, that the letters contained the false threat

that failure to pay would result in arrest or imprisonment, and

that the initial form letter failed to contain statutorily required

notices, all in violation of the FDCPA’s substantive

protections. See 15 U.S.C. §§ 1692d(6), 1692e(3)–(5), (9),

(11), and (14), 1692g(a).

Plaintiffs also allege violations of the California Unfair

Competition Law (“UCL”), California Business &

10 BREAZEALE V. VICTIM SERVICES

Professions Code § 17200 et seq., which broadly prohibits

unlawful, unfair, or fraudulent business practices, as well as

false or misleading advertising. Plaintiffs claim that VSI’s

conduct exceeds the authority granted under the diversion

program’s governing statutes, and therefore is “unlawful”

within the meaning of the UCL. Plaintiffs also allege that

VSI’s conduct constitutes the unauthorized and deceptive

practice of law. Also included were common law claims of

fraudulent and negligent misrepresentation.

Plaintiffs further allege that under VSI’s administration of

this program, no prosecutor has reviewed the evidence

against the accused, or made a probable cause determination

as required by the statute. Instead, Plaintiffs allege VSI

typically receives referrals directly from retailers and private

agencies—not from district attorneys. Indeed, Plaintiffs

allege that “very few” bad check writers sent collection letters

from VSI will ever be prosecuted, even if they make only

partial payment or no payment at all.

The remedies pursued are broad. Specifically, Plaintiffs

seek declaratory relief that VSI’s debt collection practices

violate the FDCPA and the California UCL. They seek a

preliminary and permanent injunction enjoining VSI from,

among other things, continuing to participate in the bad check

diversion program and further communicating with accused

bad check writers unless disclosing in each communication

that it is a debt collector, and not a district attorneys office.

Plaintiffs also seek actual damages, restitution, statutory

damages under 15 U.S.C. § 1692k, punitive damages, and

costs and reasonable attorneys’ fees.

BREAZEALE V. VICTIM SERVICES 11

C. VSI’s Motion to Strike State Law Claims Under

California’s Anti-SLAPP Statute

On April 17, 2015, VSI moved under California’s Anti-

SLAPP law to strike the UCL and fraudulent

misrepresentation claims. California passed its Anti-SLAPP

statute in 1992 to address a spike in lawsuits aimed at chilling

the exercise of the rights to free speech and to petition for

redress of grievances. See Cal. Civ. Proc. Code § 425.16(a).

“SLAPP” stands for strategic lawsuits against public

participation. See Batzel v. Smith, 333 F.3d 1018, 1023–24

(9th Cir. 2003).

It’s helpful to think of a “SLAPP” as a lawsuit defined by

a particular strategy: obtaining an economic advantage over

a defendant, and not necessarily the vindication of a

cognizable legal right. See Wilcox v. Superior Court, 27 Cal.

App. 4th 809, 816 (1994), as modified on denial of reh’g

(Sept. 15, 1994). The paradigm SLAPP, as a California Court

of Appeal has described, “is a suit filed by a large land

developer against environmental activists or a neighborhood

association intended to chill the defendants’ continued

political or legal opposition to the developers’ plans.” Id. at

815. The causes of action favored by those who bring these

suits—most often businesses—“are defamation, various

business torts such as interference with prospective economic

advantage, nuisance and intentional infliction of emotional

distress.” Id. at 816.

Attempting to root out these harassing cases, the

California statute provides for pre-trial dismissal of a SLAPP

through a “special motion to strike” the cause of action. Cal.

Civ. Proc. Code § 425.16(b)(1). The filing of the motion

stays all discovery proceedings. Cal. Civ. Proc. Code

12 BREAZEALE V. VICTIM SERVICES

§ 425.16(g). A court’s order granting or denying a special

motion to strike was immediately appealable under the

original SLAPP statute. Cal. Civ. Proc. Code §§ 425.16(i),

904.1(a)(13). Recognizing in 2003 that the statute may have

gone too far, however, the legislature added an exception, so

the statute now “does not apply to any action brought solely

in the public interest or on behalf of the general public[.]”

Cal. Civ. Proc. Code § 425.17(b). This has come to be known

as the statute’s “public-interest exception.” See, e.g.,

Blanchard v. DIRECTV, Inc., 123 Cal. App. 4th 903, 914

(2004).

A litigant defending against a motion to strike by

invoking the public interest exception must make the

following showing:

(1) The plaintiff does not seek any relief

greater than or different from the relief

sought for the general public or a class of

which the plaintiff is a member . . . .

(2) The action, if successful, would enforce

an important right affecting the public

interest, and would confer a significant

benefit, whether pecuniary or

nonpecuniary, on the general public or a

large class of persons.

(3) Private enforcement is necessary and

places a disproportionate financial burden

on the plaintiff in relation to the plaintiff's

stake in the matter.

Cal. Civ. Proc. Code § 425.17(b).

BREAZEALE V. VICTIM SERVICES 13

While orders disposing of SLAPP motions remain

generally immediately appealable, there is no right to

immediate appeal when the trial court has determined the

public interest exception applies. See Cal. Civ. Proc. Code

§ 425.17(e) (providing no immediate appeal “[i]f any trial

court denies a special motion to strike on the grounds that the

action or cause of action is exempt” under the public-interest

exception).

In VSI’s motion to strike, it argued plaintiffs were seeking

to discourage VSI’s communications made in connection

with proceedings authorized by law, and that plaintiffs did not

have a reasonable possibility of prevailing because, inter alia,

VSI was entitled to prosecutorial immunity. VSI also argued

the public interest exception to the Anti-SLAPP statute did

not apply. The district court rejected these contentions and

denied VSI’s Anti-SLAPP motion on the ground that the case

was within the public-interest exception.

On August 3, 2015, VSI filed its notice of appeal from the

district court’s order. The district court subsequently denied

VSI’s motion to stay proceedings pending appeal, and it also

denied plaintiffs’ motion to certify VSI’s appeal as frivolous.

D. VSI’s Motion to Compel Arbitration

After filing its Anti-SLAPP appeal to this Court, VSI filed

in the district court a motion to compel arbitration against

Narisha Bonakdar, the only plaintiff who had elected to

participate in the BCDP and hence the only plaintiff party to

the arbitration agreement. VSI contended that the Federal

Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., applied and

required arbitration of Bonakdar’s claims.

14 BREAZEALE V. VICTIM SERVICES

The district court twice requested further briefing as to

whether the FAA applies. Then in an order filed July 27,

2016, the district court denied VSI’s motion to compel

arbitration, concluding the FAA does not apply to the type of

agreement at issue here, which it described as “an agreement

between a criminal suspect and the local authorities about

how to resolve a potential state-law criminal violation.” The

agreement was outside the purview of the FAA and not “a

contract evidencing a transaction involving commerce” as

Congress intended in 9 U.S.C. § 2. The court then applied

California law and concluded the agreement between

Bonakdar and the El Dorado County District Attorney is

contrary to California public policy because California public

policy requires the conduct of its agents be subject to judicial

review. VSI on August 24, 2016, filed its notice of appeal to

this Court from the district court’s order denying the motion

to compel arbitration. We then granted VSI’s motion to

consolidate these appeals.

In its consolidated appeals, VSI argues the district court

erred in applying the Anti-SLAPP statute’s public interest

exception. VSI also argues the district court erred in denying

its motion to compel arbitration. We address each issue in

turn, agreeing with plaintiffs that we lack jurisdiction to

review the denial of the Anti-SLAPP motion and that the

district court correctly denied the motion to compel

arbitration. The facts for purpose of this appeal are not

disputed and both appeals present issues of law we review de

novo.

BREAZEALE V. VICTIM SERVICES 15

ANALYSIS

A. This Court Lacks Appellate Jurisdiction to Review

the District Court’s Denial of VSI’s Motion to

Strike

VSI attempts to appeal on an interlocutory basis the

district court’s denial of its motion to strike under

California’s Anti-SLAPP statute. See Appeal No. 15-16549.

Our appellate jurisdiction is generally limited to “final

decisions” of district courts. 28 U.S.C. § 1291. Some orders,

however, finally decide issues collateral to the merits of the

case and are appealable as collateral orders. Under the

“collateral order doctrine,” federal appellate courts have

jurisdiction over “not only judgments that ‘terminate an

action,’ but also a ‘small class’ of collateral rulings that,

although they do not end the litigation, are appropriately

deemed ‘final.’” Mohawk Indus., Inc. v. Carpenter, 558 U.S.

100, 106 (2009) (quoting Cohen v. Beneficial Indus. Loan

Corp., 337 U.S. 541, 545–46 (1949)). To establish

jurisdiction under the collateral order doctrine, the appellants

must show the order they seek to appeal determines the

disputed question conclusively, resolves an important issue

completely separate from the merits of the action, and is

effectively unreviewable on appeal from a final judgment.

See Will v. Hallock, 546 U.S. 345, 349 (2006) (citation

omitted).

VSI argues this Court’s decision in Batzel v. Smith,

333 F.3d 1018 (9th Cir. 2003), expressly permits

interlocutory appeals from district court rulings on motions to

strike under California’s Anti-SLAPP statute. Yet later

statutory history shows our decision in Batzel is no longer

controlling. In Batzel, relying on analysis similar to that we

16 BREAZEALE V. VICTIM SERVICES

use in considering issues of qualified immunity, we

concluded we had collateral order jurisdiction to review an

appeal from a trial court’s denial of a motion to strike under

California’s Anti-SLAPP law, as it then provided. Id. at

1024–26. We looked to California’s legislative intent and

reasoned the statute’s provision granting the right of

immediate appeal from a denial of a motion to strike, Cal.

Civ. Proc. Code § 425.16(i), was to ensure that if the statute

applied there would be no trial. “California lawmakers

wanted to protect speakers from the trial itself rather than

merely from liability.” Batzel, 333 F.3d at 1025. A

defendant’s rights under the California statute, we said, are

thus “in the nature of immunity: [t]hey protect the defendant

from the burdens of trial, not merely from ultimate judgments

of liability.” Id. We were bound by the state law. We said

that because “California law recognizes the protection of the

anti-SLAPP statute as a substantive immunity from suit, this

Court, sitting in diversity, will do so as well.” Id. at 1025–26.

After our decision in Batzel, however, the California

legislature amended the Anti-SLAPP law to add the public-

interest exception to the right of immediate appeal of orders

denying Anti-SLAPP motions. The amendment effectively

stripped the right of immediate appealability from all cases in

which the trial court determines the public interest exception

applies. See Cal. Civ. Proc. Code § 425.17(e) (providing “[i]f

any trial court denies a special motion to strike on the

grounds that the action or cause of action is exempt” under

the public-interest exception, the appeal provisions “do not

apply”). The law has thus changed since we decided Batzel.

That case is no longer controlling. The California legislature

has now made the substantive determination that in public

interest cases, the Anti-SLAPP statute does not provide

immunity from suit, and denials of Anti-SLAPP motions to

BREAZEALE V. VICTIM SERVICES 17

strike are no longer immediately appealable. Here, as in

Batzel, we must follow the intent of the California legislature

under the applicable state law. See Batzel, 333 F.3d at

1025–26.

Accordingly, we lack jurisdiction to review the district

court’s order denying the motion to strike. The appeal from

that order must be dismissed for lack of jurisdiction.

B. Denial of the Motion to Compel Arbitration

VSI separately appeals on an interlocutory basis the

district court’s denial of its motion to compel arbitration. See

Appeal No. 16-16495. The parties in this appeal do not

dispute our appellate jurisdiction. It rests on 28 U.S.C.

§ 1292 and 9 U.S.C. § 16. For the reasons that follow, we

affirm the district court’s order denying the motion to compel

arbitration.

VSI relied on the arbitration provision in the diversion

agreement, invoking the FAA. The FAA has preemptive

sweep and requires that arbitration agreements be enforced

like other private contractual agreements. See AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 341, 352 (2011) (the FAA

displaces state law rules that prohibit “outright the arbitration

of a particular type of claim,” or that pose an obstacle to the

“accomplishment and execution of the full purposes and

objectives of Congress” in passing that Act) (internal

quotation marks and citation omitted).

The Act provides:

A written provision in any maritime

transaction or a contract evidencing a

18 BREAZEALE V. VICTIM SERVICES

transaction involving commerce to settle by

arbitration a controversy thereafter arising out

of such contract or transaction, or the refusal

to perform the whole or any part thereof, or an

agreement in writing to submit to arbitration

an existing controversy arising out of such a

contract, transaction, or refusal, shall be valid,

irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the

revocation of any contract.

9 U.S.C. § 2. The district court concluded the FAA does not

apply to an arbitration provision in the type of agreement at

issue in this case. The court reasoned the agreement was not

“a contract evidencing a transaction involving commerce”

under 9 U.S.C. § 2. The district court explained its reading

was supported by the language of the FAA and further

bolstered by the lack of any indication that Congress intended

the FAA to cover agreements between prosecutors and

criminal suspects resolving potential violations of state law.

The district court observed that even if Congress intended the

FAA to capture the type of agreement at issue in this case,

“this would likely exceed the scope of Congress’s commerce

power.”

We agree with the district court that Congress never

intended the FAA to apply to agreements between citizens

and prosecutors resolving an individual’s potential criminal

liability. As the Supreme Court’s seminal decision in

Concepcion noted, the FAA applies to privately negotiated

commercial agreements. See 563 U.S. at 344. An agreement

with an entity acting on behalf of a prosecutor is not a private

agreement. The FAA would therefore provide no basis to

compel arbitration here or in any contract where the

BREAZEALE V. VICTIM SERVICES 19

underlying agreement is a plea agreement, quasi-plea

agreement, or deferred prosecution agreement between an

individual and a party acting on behalf of the state.

The history of the FAA, the various cases construing its

reach, and the body of law governing the formation and

interpretation of plea-agreements bear this out. The Supreme

Court has recognized the import of the history leading up to

the FAA. Because courts were refusing to order

arbitration,“[t]he preeminent concern of Congress in passing

the Act was to enforce private agreements into which parties

had entered . . . .” Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213, 221 (1985). As the Court pointed out in

Concepcion, “[t]he FAA was enacted in 1925 in response to

widespread judicial hostility to arbitration agreements.”

563 U.S. at 339. That judicial hostility dated back centuries

to a time when English courts “refused to enforce specific

agreements to arbitrate upon the ground that the courts were

thereby ousted from their jurisdiction.” Byrd, 470 U.S. at 220

n.6 (1985) (quoting H. R. Rep. No. 96, 68th Cong., 1st Sess.,

1–2 (1924)). This hostile principle became embedded in the

English common law and was thereby adopted by the

American courts. Id. It would take an act of Congress to

place arbitration agreements on an equal footing with other

contracts. Enter the FAA.

The point of the FAA was to enforce private agreements

between contracting parties. A unanimous Supreme Court

surveyed the history of the FAA and expressly stated that

intent: “[t]he legislative history of the Act establishes that the

purpose behind its passage was to ensure judicial enforcement

of privately made agreements to arbitrate.” Id. at 219. The

Court went on to explain that it is the contractual intent of the

parties that controls. The Act “does not mandate the

20 BREAZEALE V. VICTIM SERVICES

arbitration of all claims, but merely the enforcement—upon

the motion of one of the parties—of privately negotiated

arbitration agreements.” Id. The Court apparently believed

the point worth repeating. See id. at 221 (stating “[t]he

preeminent concern of Congress in passing the Act was to

enforce private agreements into which parties had entered”).

The Supreme Court again considered the history of the

FAA in Volt Info. Scis., Inc. v. Bd. of Trustees of Leland

Stanford Junior Univ., 489 U.S. 468 (1989). The Court once

more emphasized the FAA’s primary purpose is to ensure

enforcement of private agreements to arbitrate. Volt,

489 U.S. at 479. The Court said the FAA “simply requires

courts to enforce privately negotiated agreements to arbitrate,

like other contracts, in accordance with their terms.” Id. at

478. Over twenty years later, in an opinion emphasizing the

robust reach of the FAA, the Supreme Court in Concepcion

repeated that the Act’s “‘principal purpose’ . . . is to ‘ensur[e]

that private arbitration agreements are enforced according to

their terms.’” 563 U.S. at 344 (quoting Volt, 489 U.S. at 478)

(emphasis added).

Against this historical backdrop, it is apparent that

Congress never contemplated that the FAA would apply to

agreements between prosecutors and citizens resolving

alleged violations of a state’s criminal law. VSI, of course,

can point to a steady march of Supreme Court cases affirming

the broad reach of the FAA, but all the underlying disputes

arose from privately negotiated agreements. See, e.g.,

Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421

(2017) (private agreements between nursing homes and

residents’ relatives); Concepcion, 563 U.S. at 333 (agreement

between cell phone provider and customers); Circuit City

Stores, Inc. v. Adams, 532 U.S. 105 (2001) (contract of

BREAZEALE V. VICTIM SERVICES 21

employment); Buckeye Check Cashing, Inc. v. Cardegna,

546 U.S. 440 (2006) (agreements between individuals and

check cashing service); Allied-Bruce Terminix Cos., Inc. v.

Dobson, 513 U.S. 265 (1995) (agreement between

homeowner and company for protection against termite

infestation); Volt, 489 U.S. at 468 (construction contract

governing installation of electrical conduits); Prima Paint

Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967)

(consulting agreement between two corporations). None even

remotely suggest the FAA’s application in the criminal law

context.

VSI similarly fails to direct us to any cases from the

federal courts of appeals suggesting the FAA applies to plea

agreements, quasi-plea agreements, or deferred-prosecution

agreements. Indeed, the only authority we have located that

discusses the issue dismissed any contention that the FAA

could apply. In Neal v. LaRiva, the Seventh Circuit ruled the

Bureau of Prisons was not required to arbitrate a dispute with

a prisoner because “the Federal Arbitration Act governs only

maritime contracts and contracts involving interstate

commerce,” and the prisoner’s documents, which he claimed

compelled arbitration of his habeas corpus claim, “involve[d]

neither kind of contract.” 765 F.3d 788, 790 (7th Cir. 2014)

The foundational principle, underlined repeatedly in all

these decisions, as our Court aptly put it not too long ago, is

that “[a] plea bargain is not a commercial exchange. It is an

instrument for the enforcement of the criminal law.” United

States v. Barron, 172 F.3d 1153, 1158 (9th Cir. 1999) (en

banc). Contract law doctrines operate in the realm of

criminal plea bargains by analogy only—and even then,

“[t]he contract analogy is imperfect.” United States v.

Partida-Parra, 859 F.2d 629, 634 (9th Cir. 1988); see also

22 BREAZEALE V. VICTIM SERVICES

Barron, 172 F.3d at 1158 (“reliance on contract law is by

analogy”). In the context of plea bargains, traditional black

letter rules applicable to commercial contracts between

private parties often yield, as they must, to substantive and

procedural requirements, including federal or state rules of

criminal procedure, that protect the various rights of the

accused. See, e.g., Fed. R. Crim. P. 11 (governing plea

agreements). We acknowledged as much in Partida-Parra,

when we said “[t]he formation of binding plea agreements is

governed not by the Uniform Commercial Code, but by the

Federal Rules of Criminal Procedure, which requires, among

other things, that the court approve the plea agreement and

find it to have a factual basis.” 859 F.2d at 634.

We expanded on the nature of plea agreements in Barron,

where we explained why interests greater than contractual

rights are involved:

A plea bargain is not a commercial exchange.

It is an instrument for the enforcement of the

criminal law. What is at stake for the

defendant is his liberty. On rescission of the

agreement, the prisoner can never be returned

to his “original position”: he has served time

by reason of his guilty plea and his surrender

of basic constitutional rights; the time he has

spent in prison can never be restored, nor can

his cooperation in his punishment. What is at

stake for the government is its interest in

securing just punishment for violation of the

law and its interest that an innocent act not be

punished at all. The interests at stake and the

judicial context in which they are weighed

BREAZEALE V. VICTIM SERVICES 23

require that something more than contract law

be applied.

172 F.3d at 1158.

California courts agree that plea bargains are not the same

as private or commercial contracts. In Brown v. Cty. of Los

Angeles, for example, a California Court of Appeal concluded

an appellant’s reliance on the California Civil Code to argue

plea bargains with minors are void was “misplaced.”

229 Cal. App. 4th 320, 323 (2014). The court reasoned the

appellant “incorrectly assume[d] that since civil statutes

govern contracts in general, they must govern plea bargains

as well.” Id. Plea bargains in California are governed by the

California Penal Code, not civil law, and so “principles of

contract law should not be imported wholesale into the plea

bargaining process.” Id.

Principles of federalism also militate against the FAA’s

application in this context. In our system of dual sovereignty,

“[s]tates possess primary authority for defining and enforcing

the criminal law,” and “the administration of criminal justice

rests with the States except as Congress . . . has created

offenses against the United States.” United States v. Lopez,

514 U.S. 549, 561 n.3 (1995) (internal quotation marks and

citations omitted).

Once it held the FAA did not apply, the district court

looked to California law to see whether it would compel

arbitration. The district court ruled that an agreement to

arbitrate disputes invoking the criminal law would be

contrary to public policy. California law supports this

conclusion. See, e.g., Bayscene Resident Negotiators v.

Bayscene Mobilehome Park, 15 Cal. App. 4th 119, 129

24 BREAZEALE V. VICTIM SERVICES

(1993) (threats of criminal prosecution “to force individuals

to give up their legal rights and to agree to binding arbitration

implicates strong public policy considerations”). VSI does

not argue that California law would compel arbitration. It

simply disagrees with the district court’s ruling that state law

would prohibit arbitration in this case. The controlling issue

with respect to arbitration is therefore whether the FAA

applies. The district court correctly decided it does not.

CONCLUSION

VSI’s appeal from the district court’s denial of its motion

to strike is DISMISSED for lack of appellate jurisdiction.

The district court’s order denying VSI’s motion to compel

arbitration against Narisha Bonakdar is AFFIRMED. We

remand to the district court for the conduct of further

proceedings.