Amicus Curiae Brief — Winston & Strawn LLP, Petitioner v. Constance Ramos, et al.

Supreme Court briefJun 17, 2019

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No. 18-1437

IN THE

Supreme Court of the United States

————

WINSTON & STRAWN LLP,

Petitioner,

CONSTANCE RAMOS; THE SUPERIOR COURT OF

SAN FRANCISCO COUNTY,

Respondents.

————

On Petition for a Writ of Certiorari to the

California Court of Appeal,

First Appellate District

————

BRIEF AMICUS CURIAE OF THE

CENTER FOR WORKPLACE COMPLIANCE

IN SUPPORT OF PETITIONER

————

RAE T. VANN

Counsel of Record

JOSÉ E. GALVAN

NT LAKIS, LLP

1501 M Street, N.W.

Suite 1000

Washington, DC 20005

rvann@ntlakis.com

(202) 629-5600

Attorneys for Amicus Curiae

Center for Workplace

Compliance

June 2019

WILSON-EPES PRINTING CO., INC. – (202) 789-0096 – WASHINGTON, D. C. 20002

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................

INTEREST OF THE AMICUS CURIAE ............

STATEMENT OF THE CASE ............................

SUMMARY OF REASONS FOR GRANTING

THE PETITION ...............................................

REASONS FOR GRANTING THE PETITION..

I. REVIEW OF THE DECISION BELOW

IS WARRANTED TO RESOLVE ISSUES

OF SUBSTANTIAL IMPORTANCE TO

THE EMPLOYER COMMUNITY ............

A. This Court’s FAA Jurisprudence

Makes It Clear That Courts Must Not

Enforce Rules That Apply Only To

Arbitration Agreements, And Not To

Other Types Of Contracts Generally ..

1. The FAA expresses a strong policy

favoring arbitration........................

2. This Court long has rejected state

rules disfavoring arbitration .........

B. California’s Armendariz Doctrine

Imposes Special Rules Regarding

The Enforceability Of Mandatory

Arbitration Agreements That Are Not

Required For Other Types Of Contracts, In Direct Contravention Of

This Court’s FAA Jurisprudence ........

(i)

TABLE OF CONTENTS—Continued

Page

1. The Armendariz doctrine is not

a generally applicable contract

defense within the meaning of the

FAA .................................................

2. Without further guidance from

this Court, California will remain

free to disregard the clear command in Concepcion that state

rules that burden arbitration are

preempted by the FAA ...................

3. California’s treatment of Concepcion

stands in stark contrast to that of

other states .....................................

II. ARMENDARIZ CALLS INTO QUESTION THE LONG-TERM VIABILTY OF

EMPLOYMENT ARBITRATION PROGRAMS OF CALIFORNIA EMPLOYERS

WITH MULTI-STATE OPERATIONS ....

A. Armendariz Makes It Harder For

California Employers With Arbitration Programs To Maintain And

Uniformly Enforce Such Agreements,

Disadvantaging

Employers

And

Employees Alike ..................................

1. Data show that California has the

most employers in the country,

with the majority maintaining

workplace arbitration programs ....

iii

TABLE OF CONTENTS—Continued

Page

2. Arbitration programs provide many

well-known benefits, including

the relatively quick and efficient

resolution of employment disputes ..

B. Armendariz Reinforces The LongDiscredited Notion That Arbitration

Is An Inferior Means Of Resolving

Employment Disputes, Increasing The

Risk That California Employers Will

Abandon Such Procedures Entirely ....

CONCLUSION ....................................................

TABLE OF AUTHORITIES

FEDERAL CASES

Page(s)

14 Penn Plaza LLC v. Pyett, 556 U.S. 247

(2009) .........................................................

American Express Co. v. Italian Colors

Restaurant, 570 U.S. 228 (2013) ..............

AT&T Mobility LLC v. Concepcion, 563

U.S. 333 (2011) .........................................passim

Circuit City Stores, Inc. v. Adams, 532 U.S.

105 (2001) ................................................ 3, 7, 21

DirectTV, Inc., v. Imburgia, 136 S. Ct. 463

(2015) .........................................................

Doctor’s Associates, Inc. v. Casarotto, 517

U.S. 681 (1996) .......................................... 8, 10

EEOC v. Waffle House, Inc., 534 U.S. 279

(2002) .........................................................

Epic Systems Corp. v. Lewis, 138 S. Ct.

1612 (2018) ................................................ 3, 16

Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991) ..................................... 3, 7, 8

Green Tree Financial Corp.-Alabama v.

Randolph, 531 U.S. 79 (2000) ..................

Hall Street Associates, L.L.C. v. Mattel,

Inc., 552 U.S. 576 (2008)...........................

Kindred Nursing Centers L.P. v. Clark, 137

S. Ct. 1421 (2017) ......................................

Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407

(2019) .........................................................

TABLE OF AUTHORITIES—Continued

Page(s)

Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614 (1985).........

Oxford Health Plans LLC v. Sutter, 569

U.S. 564 (2013) .......................................... 3, 22

Perry v. Thomas, 482 U.S. 483 (1987) . 8, 9, 10, 14

Rent-A-Center, West, Inc. v. Jackson, 561

U.S. 63 (2010) ............................................

Southland Corp. v. Keating, 465 U.S. 1

(1984) .........................................................

8, 9

Stolt-Nielsen

S.A.

AnimalFeeds

International Corp., 559 U.S. 662 (2010) .

3, 8

STATE CASES

Armendariz v. Foundation Health Psychcare

Services, Inc., 6 P.3d 669 (Cal. 2000) ......passim

Baltazar v. Forever 21, Inc., 367 P.3d 6 (Cal.

2016) ..........................................................

Discover Bank v. Superior Court, 113 P.3d

1100 (Cal. 2005) ........................................

Ex parte McNaughton,728 So.2d 592 (Ala.

1998) ..........................................................

Machado v. System4 LLC, 989 N.E.2d 464

(Mass. 2013) ..............................................

McGill v. Citibank, N.A., 393 P.3d 85 (Cal.

2017) ..........................................................

McKenzie Check Advance of Florida, LLC v.

Betts, 112 So.3d 1176 (Fla. 2013) .............

TABLE OF AUTHORITIES—Continued

Page(s)

Sanchez v. Valencia Holding Co., LLC, 353

P.3d 741 (Cal. 2015) ..................................

Schnuerle v. Insight Communications Co.,

L.P., 376 S.W.3d 561 (Ky. 2012) ...............

Sonic-Calabasas A, Inc. v. Moreno, 247

P.3d 130 (Cal. 2011), vacated, 565 U.S.

973 (2011) .................................................. 14, 15

Sonic-Calabasas A, Inc. v. Moreno, 311

P.3d 184 (Cal. 2013) ..................................

Tallman v. Eighth Judicial District Court,

359 P.3d 113 (Nev. 2015) ..........................

Taylor v. Extendicare Health Facilities,

Inc., 147 A.3d 490 (Pa. 2016) ....................

FEDERAL STATUTES

Federal Arbitration Act,

9 U.S.C. §§ 1–16 .......................................passim

9 U.S.C. § 2 ................................................ 5, 7, 9

OTHER AUTHORITIES

Alexander J.S. Colvin, Economic Policy

Institute, The growing use of mandatory

arbitration (Apr. 6, 2018) ......................... 20, 24

California Employment Development Department, Size of Business Data for California

(Quarterly) .................................................

vii

TABLE OF AUTHORITIES—Continued

Page(s)

E. Gary Spitko, Federal Arbitration Act

Preemption of State Public-Policy-Based

Employment Arbitration Doctrine: An

Autopsy and an Argument for Federal

Agency Oversight, 20 Harv. Negot. L.

Rev. 1 (2015)..............................................

Griffin Toronjo Pivateau, Mandating

Individual Arbitration: The Legality of

Class Action Waivers in Employment

Arbitration Agreements, 52 Gonz. L. Rev.

541 (2017) ............................................ 21, 22, 23

Michael G. McGuinness & Adam J. Karr,

California’s “Unique” Approach to Arbitration: Why This Road Less Traveled

Will Make All the Difference on the Issue

of Preemption Under the Federal Arbitration Act, 2005 J. Disp. Resol. 61 (2005) ....

Michael Schneidereit, A Cold Night: Unconscionability As a Defense to Mandatory

Arbitration Clauses in Employment Agreements, 55 Hastings L.J. 987 (2004) ..........

Robert Hardaway et al., E-Discovery’s

Threat to Civil Litigation: Reevaluating

Rule 26 for the Digital Age, 63 Rutgers L.

Rev. 521 (2011)..........................................

viii

TABLE OF AUTHORITIES—Continued

Page(s)

Roy Weinstein et al., Micronomics, Efficiency

and Economic Benefits of Dispute Resolution Through Arbitration Campared

with U.S. District Court Proceedings

(2017) ......................................................... 21, 22

U.S. Census Bureau, QuickFacts United

States, Total employer establishments

(2016) .........................................................

IN THE

Supreme Court of the United States

————

No. 18-1437

————

WINSTON & STRAWN LLP,

Petitioner,

CONSTANCE RAMOS; THE SUPERIOR COURT OF

SAN FRANCISCO COUNTY,

Respondents.

————

On Petition for a Writ of Certiorari to the

California Court of Appeal,

First Appellate District

————

BRIEF AMICUS CURIAE OF THE

CENTER FOR WORKPLACE COMPLIANCE

IN SUPPORT OF PETITIONER

————

The Center for Workplace Compliance (CWC)

respectfully submits this brief amicus curiae with the

consent of the parties. The brief supports the petition

for a writ of certiorari.1

Counsel of record for all parties received notice at least 10

days prior to the due date of the amicus curiae’s intention to file

this brief. All parties have consented to the filing of this brief.

No counsel for a party authored this brief in whole or in part, and

no counsel or party made a monetary contribution intended to

fund the preparation or submission of this brief. No person other

INTEREST OF THE AMICUS CURIAE

Founded in 1976, the Center for Workplace

Compliance (CWC) (formerly the Equal Employment

Advisory Council (EEAC)) is the nation’s leading

nonprofit association of employers dedicated exclusively to helping its members develop practical and

effective programs for ensuring compliance with fair

employment and other workplace requirements. Its

membership includes over 200 major U.S. corporations, collectively providing employment to millions

of workers. CWC’s directors and officers include many

of industry’s leading experts in the field of equal

employment opportunity and workplace compliance.

Their combined experience gives CWC a unique depth

of understanding of the practical, as well as legal,

considerations relevant to the proper interpretation

and application of fair employment policies and

requirements.

CWC’s member companies are strongly committed

to equal employment opportunity and seek to establish

and enforce internal policies that are consistent

with federal employment nondiscrimination laws.

This commitment extends to the prompt and effective

resolution of employment disputes using a variety

of tools, including arbitration and other forms of

Alternative Dispute Resolution (ADR). Many of them

have adopted companywide policies requiring the

use of binding arbitration to resolve all employmentrelated disputes. CWC thus has a direct and ongoing

interest in the issues presented in this matter

regarding the validity of arbitration-specific rules that

effectively preclude the use of binding, pre-dispute

than amicus curiae, its members, or its counsel made a monetary

contribution to its preparation or submission.

arbitration by any employer with a business presence

in California.

Because of its strong interest in the subject, CWC

has filed amicus curiae briefs supporting the enforceability of arbitration agreements in numerous cases

before this Court. See, e.g., Lamps Plus, Inc. v. Varela,

139 S. Ct. 1407 (2019); Epic Sys. Corp. v. Lewis, 138 S.

Ct. 1612 (2018); American Express Co. v. Italian Colors

Rest., 570 U.S. 228 (2013); Oxford Health Plans LLC

v. Sutter, 569 U.S. 564 (2013); AT&T Mobility LLC

v. Concepcion, 563 U.S. 333 (2011); Rent-A-Center,

West, Inc. v. Jackson, 561 U.S. 63 (2010); Stolt-Nielsen

S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010);

Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001);

and Gilmer v. Interstate/Johnson Lane Corp., 500

U.S. 20 (1991). CWC thus has an interest in, and a

familiarity with, the legal and public policy issues

presented in this case. Because of its significant

experience in these matters, CWC is well-situated to

brief this Court on the importance of the issues beyond

the immediate concerns of the parties to this case.

STATEMENT OF THE CASE

Petitioner Winston & Strawn LLP (Winston) is a

global law firm that provides legal services across

multiple industries. Pet. App. 5a. When Respondent

Constance Ramos joined the firm as an income

partner, she signed a partnership agreement that

contained a binding arbitration provision. Id. The

arbitration provision required the parties to mediate

any dispute arising under the agreement, and if

mediation was unsuccessful, to submit the dispute to

binding arbitration. Id. at 5a-6a. The partnership

agreement also included a severability clause providing in part that “if any provision of this Agreement, or

any application of such provision, shall be held invalid

or unenforceable, the remainder of this Agreement ...

shall not be affected thereby.” Pet. App. 43a-44a.

Ramos resigned from her employment and filed suit

in San Francisco County Superior Court, asserting

a variety of discrimination, retaliation, and wrongful

termination claims under California law without

first attempting to mediate or arbitrate her claims.

Pet. App. 8a. Winston moved to compel arbitration

pursuant to the binding arbitration provision contained in the partnership agreement. Id.

The trial court found that several provisions in the

arbitration clause were unconscionable, but severed

them in accordance with the agreement and compelled

arbitration. Pet. App. 9a-10a. Ramos insisted that

the agreement was invalid and filed a petition for a

writ of mandate in the California Court of Appeal,

arguing that under Armendariz v. Foundation Health

Psychcare Services, Inc., 6 P.3d 669 (Cal. 2000), the

arbitration provision was unenforceable in its entirety

because it failed to satisfy California’s arbitrationspecific “minimum requirements” and was procedurally and substantively unconscionable. Pet. App. 4a,

26a.

Agreeing, the California Court of Appeal granted

Ramos’s writ and reversed the trial court’s decision.

Pet. App. 4a. Despite the agreement containing a

severability clause, the Court of Appeal refused to

sever the unenforceable provisions, reasoning that

under Armendariz, an agreement containing “multiple

defects” cannot be enforced in any form. Pet. App. 44a45a. After its petition for review was denied by the

California Supreme Court, Winston filed a Petition for

a Writ of Certiorari with this Court on May 17, 2019.

Winston & Strawn LLP v. Constance Ramos, et al., No.

18-1437 (U.S. May 17, 2019).

SUMMARY OF REASONS FOR

GRANTING THE PETITION

The court below, relying on the California Supreme

Court’s decision in Armendariz v. Foundation Health

Psychcare Services, Inc., 6 P.3d 669 (Cal. 2000),

improperly refused to enforce Petitioner’s employment

arbitration provision because it failed to meet

Armendariz’s onerous unconscionability and process

“minimum requirements.” 6 P.3d at 674. Given a

choice between severing the offending clauses pursuant to the agreement’s severability provision and

invalidating the arbitration provision entirely, the

court below elected the latter, and in doing so acted in

contravention of the Federal Arbitration Act (FAA), 9

U.S.C. §§ 1-16, as interpreted repeatedly by this

Court. Accordingly, review by this Court is warranted.

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.” 9 U.S.C. § 2. In AT&T

Mobility LLC v. Concepcion, 563 U.S. 333 (2011), this

Court made it clear that states may not enforce rules

that “apply only to arbitration or that derive their

meaning from the fact that an agreement to arbitrate

is at issue.” Id. at 339 (citations omitted).

Yet California does just that by enforcing the

arbitration-specific rules established nearly two

decades ago in Armendariz to determine the general

enforceability of arbitration agreements. Despite

having ample opportunity to do so, California has

repeatedly declined to reassess the validity of

Armendariz post-Concepcion, including in the case

below. Its misapplication of Concepcion is not the

result of ignorance or confusion, but rather of willful

disregard, as this Court’s conclusion in Concepcion –

that state rules disfavoring arbitration are preempted

by the FAA – could not be clearer. Indeed, numerous

other states have refused to enforce anti-arbitration

rules in light of Concepcion.

Armendariz not only disadvantages California employers, but also those with multi-state operations

that incorporate uniform arbitration programs across

their workforces. If Armendariz is allowed to stand,

multi-state employers are all but assured that their

agreements to arbitrate will be deemed unenforceable

in California, resulting in both employers and employees losing the well-recognized benefits of arbitration,

including “‘lower costs, greater efficiency and speed,

and the ability to choose expert adjudicators to resolve

specialized disputes.’” Concepcion, 563 U.S. at 348.

Accordingly, review and reversal of the decision below

is warranted.

REASONS FOR GRANTING THE PETITION

I. REVIEW OF THE DECISION BELOW IS

WARRANTED TO RESOLVE ISSUES OF

SUBSTANTIAL IMPORTANCE TO THE

EMPLOYER COMMUNITY

This Court should review the decision below to

resolve an issue of significant importance to the

employer community: whether California’s arbitrationspecific rules in Armendariz v. Foundation Health

Psychcare Services, Inc., 6 P.3d 669 (Cal. 2000), are

preempted by the Federal Arbitration Act (FAA),

9 U.S.C. §§ 1-16, as interpreted by this Court in a

consistent line of cases, including AT&T Mobility LLC

v. Concepcion, 563 U.S. 333 (2011). Despite this

Court’s pronouncement in Concepcion that states

cannot enforce rules that apply only to arbitration

agreements, id. at 339, California courts, relying on

Armendariz, continue to do so. Those decisions have

the effect, if not intended purpose, of disadvantaging

arbitration and enforcing state rules that apply

specifically and only to arbitration. California has

had multiple opportunities since Concepcion to correct

this error, but has repeatedly refused to do so. Review

by this Court thus is sorely needed to correct the

persistent recalcitrance of the California courts to

conform to federal arbitration law.

A. This Court’s FAA Jurisprudence Makes

It Clear That Courts Must Not Enforce

Rules That Apply Only To Arbitration

Agreements, And Not To Other Types

Of Contracts Generally

1. The FAA expresses a strong policy

favoring arbitration

The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16,

“was enacted in 1925 in response to widespread

judicial hostility to arbitration agreements.” AT&T

Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011).

Section 2 of the FAA is the “primary substantive

provision” of the Act. Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 24 (1991). It 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.”

9 U.S.C. § 2. Accordingly, Section 2’s savings clause

permits the invalidation of arbitration only on the

basis of generally applicable contract defenses, such as

fraud, duress, or unconscionability.

This Court repeatedly has reaffirmed the strong

federal policy favoring the enforceability of arbitration

agreements, see, e.g., Circuit City Stores, Inc. v.

Adams, 532 U.S. 105 (2001), which aims “to place

arbitration agreements upon the same footing as other

contracts.” Gilmer, 500 U.S. at 24 (citations omitted);

see also Hall Street Associates, L.L.C. v. Mattel, Inc.,

552 U.S. 576, 581 (2008); EEOC v. Waffle House, Inc.,

534 U.S. 279, 289 (2002); Green Tree Fin. Corp.-Ala. v.

Randolph, 531 U.S. 79, 89 (2000). Indeed, this Court

has declared “on numerous occasions that the central

or ‘primary’ purpose of the FAA is to ensure that

‘private agreements to arbitrate are enforced according to their terms.’” Stolt-Nielsen S.A. v. AnimalFeeds

Int’l Corp., 559 U.S. 662, 682 (2010) (citation omitted);

see also Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 625-26 (1985) (“‘The

preeminent concern of Congress in passing the Act

was to enforce private agreements into which parties

had entered,’ a concern which ‘requires that [courts]

rigorously enforce agreements to arbitrate’”) (citation

omitted).

2. This Court long has rejected state

rules disfavoring arbitration

To that end, this Court’s longstanding precedent

makes clear that no state may hold private agreements to arbitrate to a higher standard of enforceability than is generally applicable to other private

contracts without running afoul of the FAA. See, e.g.,

Southland Corp. v. Keating, 465 U.S. 1 (1984); Perry v.

Thomas, 482 U.S. 483 (1987); Doctor’s Assocs., Inc. v.

Casarotto, 517 U.S. 681 (1996). Whether statutorily

or judicially created, a state law that imposes greater

burdens on the enforceability of mandatory agreements to arbitrate than apply to other types of

contracts is incompatible with, and therefore is preempted by, the FAA. Because Armendariz represents

such a rule, this Court should grant the petition,

overturn Armendariz, and reverse the decision below.

In Southland Corp. v. Keating, this Court held that

a state law requiring resolution by judicial forum

of all applicable claims – and thus precluding the

enforcement of valid mandatory arbitration agreements – impermissibly conflicts with, and is preempted by, Section 2 of the FAA. 465 U.S. at 16. It

observed:

We discern only two limitations on the enforceability of arbitration provisions governed by the

Federal Arbitration Act: they must be a part of

a written ... contract “evidencing a transaction

involving commerce” and such clauses may be

revoked upon “grounds as exist at law or in equity

for the revocation of any contract.”

465 U.S. at 10-11 (footnote omitted).

This Court in Southland thus concluded, “In

enacting [Section] 2 of the federal Act, Congress

declared a national policy favoring arbitration and

withdrew the power of the states to require a judicial

forum for the resolution of claims which the

contracting parties agreed to resolve by arbitration.”

Id. at 10. The Court reaffirmed that principle in Perry

v. Thomas, observing that:

[S]tate law, whether of legislative or judicial

origin, is applicable if that law arose to govern

issues concerning the validity, revocability, and

enforceability of contracts generally. A state-law

principle that takes its meaning precisely from

the fact that a contract to arbitrate is at issue does

not comport with this requirement of § 2. A court

may not, then, in assessing the rights of litigants

to enforce an arbitration agreement, construe

that agreement in a manner different from that

in which it otherwise construes nonarbitration

agreements under state law.

482 U.S. at 492 n.9 (citations omitted).

Subsequently, in Doctor’s Associates, Inc. v.

Casarotto, this Court ruled that “[c]ourts may not ...

invalidate arbitration agreements under state laws

applicable only to arbitration provisions.” 517 U.S.

at 687. There, the Court considered the validity of a

Montana state law that imposed a special notice

requirement for all contracts subject to arbitration.

Because this special notice requirement applied only

to agreements to arbitrate, and not “‘any contract,’”

the Court concluded that the requirement “is thus

inconsonant with, and is therefore preempted by, the

federal law.” Id. at 688.

Reinforcing those principles, the Court in AT&T

Mobility LLC v. Concepcion made it abundantly clear

that state rules purporting to place burdens on

arbitration agreements that do not exist for other

types of contracts are incompatible with the FAA and,

therefore, are invalid. 563 U.S. at 340. Concepcion

addressed the question whether California’s special

rule in Discover Bank v. Superior Court, 113 P.3d 1100

(Cal. 2005), to determine the enforceability of an

arbitration agreement containing a class action waiver

was preempted by the FAA. 563 U.S. at 352. In

holding that it was, this Court reasoned that Section

2’s savings clause allows for general contract defenses

to invalidate an arbitration agreement, but “nothing

in it suggests an intent to preserve state-law rules that

stand as an obstacle to the accomplishment of the

FAA’s objectives.” Id. at 343. Therefore, by essentially

“[r]equiring the availability of classwide arbitration,”

id. at 344, California’s Discover Bank rule “create[d] a

scheme inconsistent with the FAA,” id., that “[stood]

as an obstacle to the accomplishment and execution of

the full purposes and objectives of Congress.” Id. at 352.

This Court’s command in Concepcion was clear:

“States cannot require a procedure that is inconsistent

with the FAA, even if it is desirable for unrelated

reasons.” Id. at 351. Yet, California does just that,

if not more, by continuing to apply Armendariz’s

arbitration-specific rules to determine the general

enforceability only of arbitration agreements and

not contracts in general, based on a misguided

policy rationale that this Court rejected outright in

Concepcion. Because this Court’s FAA jurisprudence

makes it clear that states may not enforce special rules

that apply to and disadvantage only arbitration agreements, California’s Armendariz doctrine, on which the

lower court relied in refusing to compel arbitration,

is preempted by the FAA. Accordingly, review and

reversal of the decision below is warranted.

B. California’s Armendariz Doctrine Imposes Special Rules Regarding The

Enforceability Of Mandatory Arbitration Agreements That Are Not Required

For Other Types Of Contracts, In Direct

Contravention Of This Court’s FAA

Jurisprudence

1. The Armendariz doctrine is not a

generally applicable contract defense

within the meaning of the FAA

In Armendariz v. Foundation Health Psychcare

Services, Inc., the California Supreme Court invalidated an employment arbitration agreement that

would have required the plaintiffs to arbitrate their

state-based discrimination claims rather than commence a civil action in a judicial forum. 6 P.3d at 679.

In reaching that conclusion, the court crafted a number

of special rules to determine the enforceability of an

arbitration agreement, purportedly to ensure that the

plaintiffs’ statutory rights may be fully vindicated.

First, the court adopted a five-factor “minimum

requirements” test that must be met in order for an

arbitration agreement to be found enforceable. Id. at

681-82. The court found that an arbitration agreement is lawful only if it:

(1) provides for neutral arbitrators, (2) provides

for more than minimal discovery, (3) requires a

written award, (4) provides for all of types of relief

that would otherwise be available in court, and

(5) does not require employees to pay either

unreasonable costs or any arbitrators’ fees or

expenses as a condition of access to the arbitration

forum.

Id. at 682 (citation omitted). Thus, only if those

conditions are met, “an employee who is made to use

arbitration as a condition of employment ‘effectively

may vindicate [his or her] statutory cause of action in

the arbitral forum.’” Id. (citation omitted). In crafting

these requirements, the court reasoned that forcing an

employee to waive the right to pursue discrimination

claims in court would violate the strong public policies

underlying the state’s antidiscrimination laws. Id. at

680-82.

Second, the court adopted a special rule of unconscionability under which an employer must present

a “reasonable justification” for imposing binding arbitration. Id. at 692. “Without such justification,” the

court said, the agreement is assumed to be unconscionable. Id. at 694. Third, the court created a “twostrike” rule whereby an arbitration agreement is

unenforceable in its entirety if it fails to comply

with two or more of the minimum requirements, even

where the agreement contains an express severability

provision. Id. at 695-96.

Applying Armendariz, the court below held that

Winston’s arbitration agreement was unenforceable

because it purportedly failed to satisfy several of the

minimum requirements, including by forcing Ramos to

“pay her own attorney’s fees, [and] bear half of the

cost of arbitration, and [by] limiting the arbitrator’s

authority to provide relief authorized by statute ….”

Pet. App. 36a. The court also found these terms and

the agreement’s confidentiality clause to be substantively unconscionable, concluding that the latter

provision was especially offensive as it ostensibly

prevented Ramos from gathering evidence to present

her case. Pet. App. 36a-40a.

Compounding its error, the court, again relying on

Armendariz, refused to sever the offending provisions

despite the agreement’s explicit severability clause,

holding that the arbitration clause was entirely

unenforceable “as a matter of law,” Pet. App. 41a,

because the court was “unable to cure the unconscionability simply by striking these clauses and

would instead have to reform the parties’ agreements

in order to enforce it.” Pet. App. 45a.

California’s Armendariz doctrine is in direct contravention of this Court’s FAA jurisprudence because

its rules do not constitute general contract defenses

applicable to all other types of contracts. As this

Court emphasized in Concepcion, “[a]lthough § 2’s

saving clause preserves generally applicable contract

defenses, nothing in it suggests an intent to preserve

state-law rules that stand as an obstacle to the

accomplishment of the FAA’s objectives.” 563 U.S. at

343 (citations omitted). As such, under this Court’s

precedents – including Perry and Concepcion – “it is

not logically possible to abstain from considering the

uniqueness of arbitration as a basis for unconscionability … while simultaneously finding that factors

unique to arbitration support a finding of unconscionability, as in Armendariz.” Michael Schneidereit, A

Cold Night: Unconscionability As a Defense to Mandatory Arbitration Clauses in Employment Agreements,

55 Hastings L.J. 987, 1005 (2004).

Therefore, to the extent the court below reflexively

applied Armendariz without regard to its questionable

continued viability in light of Concepcion, review and

reversal of its decision is warranted.

2. Without further guidance from this

court, California will remain free to

disregard the clear command in

Concepcion that state rules that

burden arbitration are preempted

by the FAA

While it may have been arguably understandable for

the California Supreme Court prior to Concepcion to

refrain from overturning or limiting its scope, the

court has had ample opportunity post-Concepcion to

reassess the continued viability of the Armendariz

doctrine, but has continuously refused to do so. In

Sonic-Calabasas A, Inc. v. Moreno (“Sonic I”), for

example, decided pre-Concepcion, it refused to compel

individual arbitration of the plaintiff’s state wage

claims, concluding that doing so would deprive the

plaintiff of his right to invoke a special, statutorilycreated wage dispute resolution mechanism referred

to as the “‘Berman’ hearing.” 247 P.3d 130, 133

(Cal. 2011). This Court subsequently granted the

employer’s petition for a writ of certiorari, vacated the

judgment, and remanded the case for reconsideration

in light of Concepcion. Sonic-Calabasas A, Inc. v.

Moreno, 565 U.S. 973 (2011).

On remand, the California Supreme Court thus

held, as directed, that “the FAA preempts Sonic I’s

rule requiring arbitration of wage disputes to be

preceded by a Berman hearing ....” Sonic-Calabasas

A, Inc. v. Moreno, 311 P.3d 184, 205 (Cal. 2013) (“Sonic

II”). It nevertheless refused to compel arbitration,

concluding that further fact-finding was required

regarding whether the agreement is unconscionable

under “generally applicable state laws” and thus

unenforceable on that ground. Id. at 207 (emphasis

added). Likewise, in Sanchez v. Valencia Holding Co.,

LLC, the court recognized that “‘Concepcion ... make[s]

clear that such rules, even when facially nondiscriminatory, must not disfavor arbitration as applied by

imposing procedural requirements that ‘interfere[]

with fundamental attributes of arbitration,’” 353

P.3d 741, 750 (Cal. 2015), but insisted still that

Armendariz’s unconscionability test accords with the

FAA as interpreted in Concepcion because unconscionability itself is a general contract defense.

The California Supreme Court has had many other

opportunities to revisit the validity of Armendariz

post-Concepcion, including here, Pet. App. 48a, but

has failed to act. See also McGill v. Citibank, N.A., 393

P.3d 85, 94 (Cal. 2017) (acknowledging Concepcion,

but finding that “[t]he contract defense at issue here—

‘a law established for a public reason cannot be contravened by a private agreement’ (Civ. Code, § 3513)—is

a generally applicable contract defense, i.e., it is

a ground under California law for revoking any

contract”) (citation omitted); Baltazar v. Forever 21,

Inc., 367 P.3d 6 (Cal. 2016) (failing to even mention

Concepcion, but recognizing Armendariz in its dis-

cussion on whether an arbitration agreement was

enforceable). Further, as the court below itself

acknowledged, “[s]ince Concepcion was decided, the

California Supreme Court has reaffirmed the validity

of Armendariz multiple times.” Pet. App. 19a. Laying

bare its dim opinion of Concepcion, the lower court

went on to say, “Winston cites no applicable authority

holding that Armendariz has been invalidated on

any ground other than that stated in Concepcion.” Id.

(emphasis added).

California’s stubborn refusal to adhere to this

Court’s binding FAA precedent cannot be chalked up

to confusion or ignorance. Rather, its actions amount

to a clear contravention of the FAA and disregard for

Concepcion. Therefore, this Court should intervene to

correct, once and for all, the California courts’ chronic

misapplication of Concepcion and their efforts to evade

compliance with the FAA. Otherwise, California will

continue to misapply, or even worse, disregard,

Concepcion’s mandate that rules that “apply only to

arbitration or that derive their meaning from the fact

that an agreement to arbitrate is at issue,” Concepcion,

563 U.S. at 339 (citations omitted), are unenforceable.

3. California’s treatment of Concepcion

stands in stark contrast to that of

other states

Indeed, other state supreme courts heard this

Court’s command in Concepcion loud and clear and

have followed it by refusing to enforce state rules that

apply only to arbitration or derive their meaning from

an arbitration agreement. See also DirectTV, Inc., v.

Imburgia, 136 S. Ct. 463, 471 (2015); Kindred Nursing

Centers L.P. v. Clark, 137 S. Ct. 1421, 1426 (2017);

Epic Sys. Corp., 138 S. Ct. at 1622. While specifically

addressing questions on the enforceability of class

waivers in arbitration agreements, the fundamental

principle applied in these cases is the same – that the

FAA requires courts to enforce arbitration agreements

as they would any other contract, and state rules

disfavoring arbitration – like Armendariz – are preempted by the FAA.

In Machado v. System4 LLC, for example, the

Massachusetts Supreme Court enforced an arbitration

agreement containing a class waiver, noting in light of

Concepcion that “Massachusetts public policy in favor

of class proceeding in certain contexts may no longer

serve, in and of itself, as grounds to invalidate a class

waiver in an arbitration agreement ....” 989 N.E.2d

464, 467 (Mass. 2013) (emphasis added). The court

observed that “where the right to a class proceeding

has been waived as part of an agreement to arbitrate,

Concepcion interprets the FAA to require enforcement

of that class waiver regardless of any State law or

policy to the contrary.” Id. at 471 (emphasis added).

Similarly, in enforcing an arbitration agreement

containing a class waiver, the Nevada Supreme

Court in Tallman v. Eighth Jud. Dist. Ct. held that

“Concepcion does not permit a state court to invalidate

a class arbitration wavier ... on the basis that

individual arbitration hampers effective vindication of

an employee’s state-law-based overtime and minimum

wage claims.” 359 P.3d 113, 122 (Nev. 2015); see also

Schnuerle v. Insight Commc’ns, Co., L.P., 376 S.W.3d

561, 569 (Ky. 2012) (“federal policy favoring arbitration preempts any state law or policy invalidating the

class action waiver as unconscionable based solely

upon the ground that the dispute involves many

de minimis claims which are, individually, unlikely to

be litigated”); Ex parte McNaughton, 728 So.2d 592,

598 (Ala. 1998) (declining to apply the Alabama

doctrine of mutuality of remedy or the doctrine of

unconscionability because both approaches would

rely on “the uniqueness of the concept of arbitration

[and would assign] a suspect status to arbitration

agreements [thereby flying] in the face of Doctor’s

Associates”).

And the list does not end there. In McKenzie Check

Advance of Florida, LLC v. Betts, the Florida Supreme

Court upheld an arbitration agreement with a class

waiver, reasoning that “the FAA preempts invalidating

the class action waiver in this case on the basis of the

waiver being void as against public policy.” 112 So.3d

1176, 1178 (Fla. 2013). More recently, the Pennsylvania Supreme Court also recognized that this Court

had “directed in Concepcion that state courts may not

rely upon principles of general law when reviewing an

arbitration agreement if that law undermines the

enforcement of arbitration agreements.” Taylor v.

Extendicare Health Facilities, Inc., 147 A.3d 490, 510

(Pa. 2016).

The point is clear: while other state supreme courts

have properly understood Concepcion as requiring

that arbitration agreements be set “on an equal footing

with other contracts,” 563 U.S. at 339 (citation

omitted), California pays lip service to this Court’s

message, while ignoring its force by continuing to

apply the arbitration-specific Armendariz doctrine.

II. ARMENDARIZ CALLS INTO QUESTION

THE LONG-TERM VIABILTY OF EMPLOYMENT ARBITRATION PROGRAMS

OF CALIFORNIA EMPLOYERS WITH

MULTI-STATE OPERATIONS

A. Armendariz Makes It Harder For California Employers With Arbitration

Programs To Maintain And Uniformly

Enforce Such Agreements, Disadvantaging Employers And Employees

Alike

Despite the many well-recognized benefits of arbitration, including “‘lower costs, greater efficiency and

speed, and the ability to choose expert adjudicators to

resolve specialized disputes,’” Concepcion, 563 U.S. at

348 (citation omitted), California’s arbitration-specific

rules create real, practical implications for multi-state

employers, among them making it virtually impossible

to implement and uniformly apply an arbitration

program across the employer’s entire enterprise.

1. Data show that California has the

most employers in the country, with

the majority maintaining workplace

arbitration programs

California is the home to more employers than

any other state in the Union. U.S. Census Bureau,

QuickFacts United States, Total employer establishments (2016).2 Indeed, census data show that in 2016,

almost 12% of the nation’s employers resided in

California, earning California the top spot in the

country, followed by Texas and Florida. Id. And the

Available at https://www.census.gov/quickfacts/geo/chart/

US/BZA010216 (last visited June 17, 2019).

number of employers with business operations in

California continues to increase. In 2016, for example,

California reported having a total of 1,498,017

employer establishments, and that number increased

to 1,538,815 in 2017 and to 1,551,834 through the

second quarter of 2018. Cal. Emp’t Dev. Dep’t, Size of

Business Data for California (Quarterly) (Table 1).3 In

addition, a large proportion of those employers is

likely to have operations in multiple states. While

there is a lack of data on the exact number of

employers implementing arbitration agreements in

the country, a recent study conducted by the Economic

Policy Institute shows that in 2018, at least 53.9% of

employers nationwide maintained arbitration programs,

with 67.4% of California employers doing the same.

Alexander J.S. Colvin, Economic Policy Inst., The

growing use of mandatory arbitration 7 (Table 2) (Apr.

6, 2018).4

2. Arbitration programs provide many

well-known benefits, including the

relatively quick and efficient resolution of employment disputes

There is a reason why more than half of employers

nationwide, and over two thirds in California, reportedly have implemented workplace arbitration procedures. As this Court best described it in Concepcion,

“[t]he point of affording parties discretion in designing

arbitration processes is to allow for efficient, streamlined procedures tailored to the type of dispute ... [a]nd

the informality of arbitral proceedings is itself desira3

Available at https://www.labormarketinfo.edd.ca.gov/LMID/

Size_of_Business_Data_for_CA.html (last visited June 17, 2019).

Available at https://www.epi.org/files/pdf/144131.pdf (last

visited June 17, 2019).

ble, reducing the cost and increasing the speed of

dispute resolution. 563 U.S. at 344-45 (citations

omitted). And “for parties to employment contracts ...

there are real benefits to the enforcement of arbitration provisions.” Circuit City Stores, Inc. v. Adams,

532 U.S. 105, 122-23 (2001).

One of those benefits is the opportunity to resolve

disputes in arbitration significantly faster than in

court. Griffin Toronjo Pivateau, Mandating Individual Arbitration: The Legality of Class Action Waivers

in Employment Arbitration Agreements, 52 Gonz. L.

Rev. 541, 583 (2017). Indeed, a recent study by

Micronomics showed that “cases going to award at

arbitration are fully adjudicated in less time than

it takes district court cases to get to trial.” Roy

Weinstein et al., Micronomics, Efficiency and Economic Benefits of Dispute Resolution Through Arbitration Campared with U.S. District Court Proceedings 10

(2017).5 The study found:

U.S. district court cases took more than 12 months

longer to get to trial than cases adjudicated in

arbitration (24.2 months v. 11.6 months); when

the comparison involved time through appeal,

U.S. district and circuit cases required at least 21

months longer than arbitration to resolve (33.6

months v. 11.6 months).

Weinstein at 2 (footnote omitted). And in California,

cases in district court take nearly 15 months longer

than in arbitration to resolve (28.1 months v. 13.2

months). Id. (Table 2.5). While this study only focused

on the adjudication of federal district court cases,

Available at http://www.micronomics.com/articles/Efficiency_

Economic_Benefits_Dispute_Resolution_through_Arbitration_C

ompared_with_US_District_Court_Proceedings.pdf (last visited

June 17, 2019).

“the situation in state courts is likely to be even

worse.” Id. at 3.

In addition, “the relative informality of arbitration

is one of the chief reasons that parties select arbitration,” 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 269

(2009), as it “reduc[es] the cost and increase[es] the

speed of dispute resolution.” Concepcion, 563 U.S. at

345 (citations omitted). Indeed, “[p]arties generally

favor arbitration precisely because of the economics of

dispute resolution,” 14 Penn Plaza, 556 U.S. at 257, as

it provides the “‘essential virtue of resolving disputes

straightaway.’” Oxford Health, 569 U.S. at 568

(citation omitted). Arbitration allows employees to

prosecute their claims without incurring substantial

fees in filing suit and conducting lengthy discovery. As

one commentator observed, “‘the costs of American

discovery have risen to such a high level that many

Americans with real disputes requiring resolution

are simply excluded from the courts and, thus, from

any real chance of obtaining justice in a peaceable

manner.’” Robert Hardaway et al., E-Discovery’s

Threat to Civil Litigation: Reevaluating Rule 26 for the

Digital Age, 63 Rutgers L. Rev. 521, 529 (2011)

(footnote omitted).

Furthermore, arbitration provides both employees

and employers with greater flexibility in how to

conduct the proceeding than is available in the courts.

Arbitrations typically are conducted in conference

rooms, not courtrooms, and schedules can also be

modified to accommodate all parties – something not

readily available in court. Pivateau, 52 Gonz. L. Rev.

at 583. Also, the parties in arbitration can shape

the manner of the proceeding by limiting evidentiary

rules, for instance to allow for the introduction of

otherwise inadmissible evidence. Id. at 583-84. Most

distinguishable, the parties in arbitration can select

the arbitrator of their choosing with an expertise in

the subject matter, reducing the time spent educating

the arbitrator, compared to the jury. Id.

Moreover, the confidential nature of arbitration is

beneficial for both employers and employees. On the

one hand, confidentiality allows employers to resolve

claims without causing disruption to the workplace.

Id. at 584. On the other, confidentiality allows

employees to protect the details of the complaint from

other coworkers, especially with respect to sensitive

matters. Id. Lastly, arbitration provides the parties

with a sense of finality, which ensures that disputes

do not linger for years to follow. Id. at 584-85.

Despite all the tangible benefits of employment

arbitration, decisions like the one below (and many

others before and after) only make it less likely

that employers will retain arbitration programs in

California and beyond. California courts continue to

exhibit a deep skepticism of (if not outright hostility

towards) arbitration. Indeed:

Today, courts in California translate their judicial

hostility into seemingly innocuous pronouncements of ‘unconscionability’ ... Beginning with the

California Supreme Court’s seminal decision in

Armendariz ... (and perhaps before), California

courts—and the Ninth Circuit—have taken the

FAA’s ‘savings clause’ where no court has gone

before.

Michael G. McGuinness & Adam J. Karr, California’s

“Unique” Approach to Arbitration: Why This Road

Less Traveled Will Make All the Difference on the Issue

of Preemption Under the Federal Arbitration Act, 2005

J. Disp. Resol. 61, 61-62 (2005) (footnote omitted). In

fact, Armendariz remains a particularly potent means

of invalidating arbitration agreements in California,

despite its “dubious validity from a preemption

standpoint.” E. Gary Spitko, Federal Arbitration Act

Preemption of State Public-Policy-Based Employment

Arbitration Doctrine: An Autopsy and an Argument for

Federal Agency Oversight, 20 Harv. Negot. L. Rev. 1, 5

(2015) (footnote omitted).

B. Armendariz Reinforces The LongDiscredited Notion That Arbitration

Is An Inferior Means Of Resolving

Employment

Disputes,

Increasing

The Risk California Employers Will

Abandon Such Procedures Entirely

Armendariz poses a significant impediment to

alternative dispute resolution in California among

the 67.4% of employers with arbitration agreements,6

especially those with multi-state operations. If, for

example, an employer’s companywide arbitration agreement is held unenforceable (and inseverable) by a

California court applying Armendariz, that action invariably will send a wave of disruption to the employer’s

operations across states.

In that situation, does the employer modify its

arbitration procedures completely to conform to

California’s Armendariz rules? Or, are employers

required to litigate every time the agreement gets

invalidated hoping the next California court gets it

right, if at all? What if another state court has upheld

the validity of the employer’s arbitration agreement in

accordance with Concepcion, but California finds it

unenforceable based on Armendariz? The answer

is not simple. But, what is clear is that California’s

Colvin at 7 (Table 2).

adherence to Armendariz creates significant practical

issues for employers in California with multi-state

operations that utilize arbitration procedures to

resolve employment disputes.

If Armendariz is allowed to stand, multi-state

employers are all but assured that their pre-dispute

agreements to arbitrate, which as noted are often part

of a larger alternative dispute resolution program, will

be deemed unenforceable in California, contrary to

this Court’s holding and rationale in Concepcion.

Consequently, employees and employers would lose

the well-recognized benefits of arbitration, including

“lower costs, greater efficiency and speed, and the

ability to choose expert adjudicators to resolve specialized disputes.” Concepcion, 563 U.S. at 348 (citation

omitted). Such an outcome would significantly undercut the strong federal policy, as embodied in the FAA

and repeatedly endorsed by this Court, favoring

private arbitration of employment disputes.

CONCLUSION

Accordingly, the petition for a writ of certiorari

should be granted.

Respectfully submitted,

RAE T. VANN

Counsel of Record

JOSÉ E. GALVAN

NT LAKIS, LLP

1501 M Street, N.W.

Suite 1000

Washington, DC 20005

rvann@ntlakis.com

(202) 629-5600

Attorneys for Amicus Curiae

Center for Workplace

Compliance

June 2019

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.