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

No. 18-1437

__________________________________________________________

I N T HE

Supreme Court of the United States

—————¨—————

WINSTON & STRAWN LLP,

Petitioner,

v.

CONSTANCE RAMOS; THE SUPERIOR COURT OF

SAN FRANCISCO COUNTY ,

Respondents.

—————¨—————

ON PETITION FOR A WRIT OF CERTIORARI TO THE

CALIFORNIA COURT OF APPEALS

FIRST APPELLATE DISTRICT

—————¨—————

BRIEF AMICUS CURIAE OF

ATLANTIC LEGAL FOUNDATION

IN SUPPORT OF PETITIONER

—————¨—————

M ARTIN S. K AUFMAN

Counsel of Record

ATLANTIC LEGAL FOUNDATION

500 Mamaroneck Avenue

Suite 320

Harrison, NY 10528

(914) 834-3322

mskaufman@atlanticlegal.org

Counsel for Amicus Curiae

June 2019

_____________________________________________________

i

QUESTION PRESENTED

The Petition presents two questions:

1. Whether the adherence of California state

courts to Armendariz v. Foundation Health

Psychare Services, Inc., 6 P.3d 669 (Cal.

2000)

disproportionately disadvantages

arbitration in contravention of and preempted

by the Federal Arbitration Act (see Kindred

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

1421, 1426 (2017) (internal quotation marks

omitted) because under Armendariz, an

arbitration provision in an employment

agreement cannot be enforced as written

unless it meets five judge-made “minimum

requirements” based on policy judgments

about what would be necessary to vindicate

state statutory rights in an arbitral forum,

and also complies with arbitration-specific

unconscionability rules.

2. Armendariz holds that when an arbitration

provision has more than one invalid term, the

whole provision is presumptively invalid. This

presumption applies only to arbitration

agreements. Is Armendariz’s requirement

that courts apply a more rigid severability

rule to arbitration agreements than to all

other contracts preempted by the FAA?

ii

TABLE OF CONTENTS

QUESTION PRESENTED. ................................. I

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

INTEREST OF AMICUS CURIAE. .................... 1

INTRODUCTORY STATEMENT. ...................... 2

SUMMARY OF ARGUMENT. .......................... 4

ARGUMENT. ....................................................... 6

I. FEDERAL LAW REQUIRES THAT

ARBITRATION AGREEMENTS BE

TREATED ON AN EQUAL FOOTING

WITH ALL OTHER CONTRACTS. ................ 7

II. CALIFORNIA LAW TREATS ARBITRATION

AGREEMENTS (IN THE EMPLOYMENT

CONTEXT) MUCH LESS FAVORABLY

THAN OTHER CONTRACTS. ..................... 10

III. THIS COURT SHOULD ONCE AGAIN

REMIND THE CALIFORNIA STATE

COURTS THAT ARBITRATION IS A

MATTER OF FEDERAL LAW AND THE

SUPREMACY CLAUSE APPLIES. ............ 16

CONCLUSION. .................................................. 19

iii

TABLE OF AUTHORITIES

Page

Federal Cases

Arthur Andersen LLP v. Carlisle,

556 U.S. 624 (2009)......................................... 8

AT&T Mobility LLC v. Concepcion,

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

Buckeye Check Cashing Inc. v. Cardegna,

546 U.S. 440, 443 (2006). .......................... 9, 10

Castillo v. CleanNet USA, Inc.,

358 F. Supp. 3d 912 (N.D. Cal. 2018)........... 17

DirecTV, Inc. v. Imburgia, 136 S. Ct. 463 (2015).

4, 6

Doctor’s Assocs., Inc. v. Casarotto,

517 U.S. 681 (1996)) .................................... 8, 9

Epic Sys. Corp. v. Lewis,

138 S. Ct. 1612 (2018). ............................... 2, 16

Henry Schein, Inc., v. Archer & White

Sales, Inc., 139 S.Ct. 524 (2019).................... 16

Kindred Nursing Ctrs. Ltd. P’ship v. Clark,

137 S. Ct. 1421 (2017). ........................ I, 3, 5, 15

MHN Gov’t Servvs., Inc. v Zaborowski,

136 Ct. 27 (2015)(No. 14-1458),

2015 WL 2637766, dismissed as moot,

136 S. Ct. 1539 (2016). ......................... .4, 6, 15

Mortensen v. Bresnan Commc’ns, LLC,

722 F.3d 1151 (9th Cir. 2013) ................ 5-6, 18

Moses H. Cone Memorial Hospital Mercury

Construction Corp., 460 U.S. 1 (1983).

7-8, 9, 10

iv

Nitro-Lift Techs., L.L.C. v. Howard,

568 U. S. 17 (2012). ......................................... 2

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

Preston v. Ferrer, 552 U.S. 346 (2008). ......... 8, 14

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

561 U.S. 63 (2010)).......................................... 7

Stolt-Nielsen S.A. v. AnimalFeeds

International Corp.,

…,……………………………7,

559 U.S. 662 (2010).

16

Volt Information Sciences, Inc. v. Board

of Trs. of Leland Stanford Jr. Univ.,

489 U.S. 468 (1989). .................................... 7, 9

State Cases

Armendariz v. Found. Health Psychcare

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

Sanchez v. Valencia Holding Co., LLC,

353 P.3d 741 (Cal. 2015). .............................. 17

Sonic-Calabasas A, Inc. v. Moreno,

311 P.3d 184 (Cal. 2013). .............................. 17

S TATUTES AND RULES

Federal Statutes

Federal Arbitration Act, 9 U.S.C. §§1-16.. passim

9 U.S.C. §2. ............................................ 8, 9, 11

9 U.S.C. §3. ...................................................... 9

9 U.S.C. §4. ...................................................... 9

v

Other

William F. Highberger, Compelling Arbitration:

Who Knows the Rules to Apply? (Dec. 6,

2 0 1 2 ) ,

a v a i l a b l e

a t

http://apps.americanbar.org/

buslaw/committees/CL150000pub/

newsletters/201208/compelling_arbitration.

pdf. (last accessed June 14, 2019). ........... 15

1

INTEREST OF AMICUS CURIAE 1

The Atlantic Legal Foundation is a nonprofit public interest law firm founded in

1976 whose mandate is to advocate and

protect the principles of less intrusive and

more accountable government, a marketbased economic system, and individual rights.

It seeks to advance this goal through

litigation and other public advocacy and

through education. Atlantic Legal

Foundation’s board of directors and legal

advisory committee consist of legal scholars,

corporate legal officers, private practitioners,

business executives, and prominent scientists.

Atlantic Legal’s directors and advisors are

familiar with the role arbitration clauses play

in the contracts entered into between

companies and between companies and

consumers. Some of Atlantic Legal’s directors

and advisers have decades of experience with

arbitration – as legal counsel, as arbitrators,

and as m em bers or supporters of

organizations that administer arbitration

1

The parties were given timely notice of our intent to file

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

brief, which consents have been lodged with the Court

Pursuant to Rule 37.6, amici affirm that no counsel for

any 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 than amici curiae or their counsel made a

monetary or other contribution to the preparation or

submission of this brief.

2

regimes. They are familiar with the benefits

of arbitration, especially the role of

arbitration (and other “alternative dispute

resolution” m echanism s) in facilitating

business and commerce and in alleviating the

burdens on courts and parties.

Atlantic Legal Foundation has appeared

before this Court frequently as amicus or

as counsel for amici in numerous cases

concerning arbitration and the preemptive

effect of the FAA, including several cases

cited in the petition and in this brief.

INTRODUCTORY STATEMENT

The petition should be granted to correct

and, hopefully, deter the very “judicial

hostility towards arbitration” Nitro-Lift

Techs., L.L.C. v. Howard, 133 S. Ct. 500, 503

(2012) (per curiam); Concepcion, 563 U.S. at

339; Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20, 24 (1991) on the part of

California appellate courts which the FAA

was intended to foreclose. This Court has

very recently promised that it would “be alert

to new devices and formulas” used to effect

“judicial antagonism toward arbitration.” Epic

Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1623

(2018). In AT&T Mobility LLC v. Concepcion,

131S.Ct.1740 (2011), the Court held that the

Federal Arbitration Act

(FAA) requires

courts to “place arbitration agreements on an

3

equal footing with other contracts.” 563 U.S.

333, 339 (2011). Courts may not apply “legal

rules that ‘apply only to arbitration or that

derive their meaning from the fact that an

agreement to arbitrate is at issue.’” Kindred

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

1421, 1426 (2017) (quoting Concepcion, 563

U.S. at 339). The California courts, including

the state’s supreme court, nevertheless

reaffirm and apply a pre-Concepcion

precedent, Armendariz v. Foundation Health

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

to Concepcion.

Armendariz has been interpreted by

California courts as setting forth three

arbitration-specific rules, which were the

basis of the decision of the California Court of

Appeal in this case:

-- An arbitration clause in an employment

agreement is invalid unless it satisfies

numerous arbitration-specific “m inimum

requirem ents,” that

vindicate rights

conferred by state law when a dispute is being

arbitrated.

– a term in an employment agreement

arbitration provision is unconscionable per se

if it fails to satisfy one of those “minimum

requirements” or otherwise fails to satisfy

any number of ad hoc arbitration-specific

rules designed to protect employees.

4

–,In contrast to a liberal policy toward

severability in every other context, when an

arbitration provision has more than one

invalid term,

the whole provision is

presumptively invalid and the parties must

litigate in court, rather than reforming the

con tra ct by severing the “offen siv e”

provisions.

Four years ago, this Court granted in a

case raising a similar Armendariz-based

arbitration-specific severability

rule.,

Zaborowski v. MHN Gov’t Servs., Inc., 601 F.

App’x 461, 462 (9th Cir. 2014), cert. granted,

136 S. Ct. 27 (2015), but that case was mooted

by settlement, 136 S. Ct. 1539 (2016).

This Court has found it necessary to

confront anti-arbitration obstructionism

repeatedly and announce that “lower courts

must follow this Court’s holding in

Concepcion.” See, e.g., DirecTV, Inc. v.

Imburgia, 136

S. Ct. 463, 468 (2015).

Apparently, the California courts must be

reminded again that, simply put, Armendariz

is no longer good law.

SUMMARY OF ARGUMENT

In AT&T Mobility LLC v. Concepcion, 563

U.S. 333, 339 (2011) (and consistently since) ,

this Court reiterated that the Federal

Arbitration Act (FAA) requires courts to

“place arbitration agreements on an equal

5

footing with other contracts.”. That means

that courts may not craft “legal rules that

a p p ly on ly t o a r b it r a t io n ” o r t h a t

disproportionately disadvantage arbitration

compacts. See Kindred Nursing Ctrs., 137 S.

Ct. at 1426 (internal quotation marks

omitted).

In this case, the California Court of

Appeal invalidated an arbitration agreement

in light of its pre-Concepcion opinion,

Armendariz v. Foundation Health Psychare

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

the California Supreme Court has repeatedly

insisted is “good law.” More significant and

troubling is the California judiciary’s

persistent and obdurate defiance of this

Court’s clear rulings on arbitration.

In Concepcion this Court held that courts

(and state legislatures) may not craft “legal

rules that ‘apply only to arbitration or that

derive their meaning from the fact that an

agreement to arbitrate is at issue.’” Kindred

Nursing Ctrs., 137 S. Ct. at 1426 (2017)

(quoting Concepcion, 563 U.S. at 339). The

California Supreme Court uniquely and

openly has reaffirmined its pre-Concepcion

Armendariz decision that does exactly that.

After this Court’s decision in Concepcion, no

other jurisdiction of which we are aware has

mandated

that

its

pre-existing

6

arbitration-specific rules survive FAA

preemption. Even the Ninth Circuit has

vocally

protested

Armendariz’s

arbitration-specific rules as being at odds

with this Court’ holding in Concepcion. See,

e.g., Mortensen v. Bresnan Commc’ns, LLC,

722 F.3d 1151, 1159 (9th Cir. 2013) These

protests have fallen on deaf ears in the

California appellate courts.

This Court recognized this anomaly four

years ago, when it granted a petition for

certiorari directly addressing Armendariz’s arbitration specific severability rule. See

Zaborowski v. MHN Gov’t Servs., Inc.,, cert.

granted, 136 S. Ct. 27 (2015). That appeal

was mooted by settlement before oral

argument, depriving the Court of the

opportunity to address the issue.. See 136 S.

Ct. 1539 (2016).

This Court has found it necessary to

repeat that “lower courts must follow this

Court’s holding in Concepcion.” See DirecTV,

Inc. v. Imburgia, 136 S. Ct. 463, 468 (2015).

California’s

Armendariz

Rule

for

arbitration is at odds with the FAA. The

California courts continue to invalidate an

arbitration agreements in light of the

pre-Concepcion opinion

It is quite clear the California courts

need a stern reminder that state law that

7

circumvents the supremacy of federal law will

not stand.

8

ARGUMENT

I. FEDERAL LAW REQUIRES

THAT

ARBITRATION

AGREEMENTS BE TREATED

ON AN EQUAL FOOTING

W IT H

A L L

O T H E R

CONTRACTS.

T h e “fu n d a m e n ta l p r in c ip le” th a t

“arbitration is a matter of contract” has been

repeatedly affirmed by this Court in

numerous recent cases. See AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 131 S. Ct.

1740 (2011) (quoting Rent-A-Center, West, Inc.

v. Jackson, 561 U.S. 63, 67 (2010)); see also

Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp.,

559 U.S. 662, 681 (2010); Volt Information

Sciences, Inc. v. Board of Trs. of Leland

Stanford Jr. Univ., 489 U.S. 468, 479 (1989).

This Court has likewise held that “courts

m u s t ‘rig orou sly e n fo r c e ’ a r b it r a t io n

agreements according to their terms...” Volt,

489 U.S. at 478; Stolt-Nielsen, 559 U.S. at

682; Concepcion, 131 S. Ct. at 1748.

The FAA was enacted to “reverse the

longstanding judicial hostility to arbitration

agreements.” Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 111 S. Ct. 1647

(1991). The FAA reflects “a liberal federal

policy favoring arbitration.” Concepcion, 563

9

U.S. at 339 (internal quotation marks and

citation omitted).

FAA § 2, the “primary substantive

provision of the Act,” Moses H. Cone Mem’l

Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24

(1983), provides that arbitration agreements

are “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. “That provision creates substantive

federal law regarding the enforceability of

arbitration agreements,” requiring courts “to

place such agreements upon the same footing

as other contracts.” Arthur Andersen LLP v.

Carlisle, 556 U.S. 624, 630 (2009) (internal

quotations omitted); see also Preston v.

Ferrer, 552 U.S. 346, 349 (2008). The last

clause of section 2 (the “savings clause”)

preserves the ability of states to apply

“‘generally applicable contract defenses, such

as fraud, duress, or unconscionability,’” to the

enforcement of arbitration agreements, but it

precludes application of any state law

defenses “that apply only to arbitration or

that derive their meaning from the fact that

an agreement to arbitrate is at issue.”

Concepcion, 131 S. Ct. at 1746 (quoting

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S.

681, 687 (1996)).

10

FAA §§3 and 4 implement the substantive

pro-arbitration policy of §2. Section 3 requires

courts to stay litigation of arbitrable claims so

that arbitration may proceed “in accordance

w ith the term s of the [arbitration]

agreement.” 9 U.S.C. §§3 and 4 provide that

“the court shall make an order directing the

parties to proceed to arbitration in accordance

with the terms of the agreement” unless “the

making of the agreement for arbitration or

the failure to comply therewith” are called

into question. Id. §4.

9 U.S.C. §2. embodies a “liberal federal

policy favoring arbitration,” Moses H.

Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 24 (1983), and requires that both

federal and state courts place arbitration

agreements on an equal footing with other

contracts and enforce arbitration agreements

according to their terms. See Concepcion, 563

U.S. at 339; Buckeye Check Cashing, Inc.

v. Cardegna, 546 U.S. 440, 443 (2006); Volt

Info. Scis., Inc., 489 U.S. 468, 478 (1989). This

Court has interpreted the savings clause of §

2 of the FAA to exempt from preemption

generally applicable contract defenses under

state law, as long as they are not “defenses

that apply only to arbitration or that derive

their meaning from the fact that an

agreem ent to arbitrate is at issue.”

Concepcion, 563 U.S. at 339; see Doctor’s

11

Assocs., Inc. v. Casarotto, supra at 6876);

Perry v. Thomas, 482 U.S. 483, 492-93 n.9

(1987). Thus, FAA preemption applies not

just “[w]hen state law prohibits outright the

arbitration of a particular type of claim,”

Concepcion, 563 U.S. at 341, but also “when a

doctrine normally thought to be generally

applicable … is alleged to have been applied

in a fashion that disfavors arbitration.” Id.

12

II.

CALIFORNIA

LAW

TREATS

ARBITRATION

AGR E E M E N TS (IN

THE

EMPLOYMENT CONTEXT)

M UCH LESS FAVORABLY

THAN OTHER CONTRACTS.

The law of California laid out by the court

in Armendariz v. Found. Health Psychcare

Servs., Inc., 6 P.3d 669 (Cal. 2000) and the

decision of the California Court of Appeal’s

below frustrates federal public policy

principles and this Court’s teaching that the

FAA “embodies . . . [a] national policy

favoring arbitration.” Buckeye Check Cashing

Inc. v. Cardegna, 546 U.S. 440, 443 (2006);

see also, Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24 (1983).

Armendariz is the principal authority relied

upon by California state trial and appellate

courts to vitiate or nullify arbitration

agreements.

The California Suprem e Court in

A r m en d a riz h eld th a t a m a n d a t o r y

a r b it ration a greem en t w it h m u lt ip le

provisions that were unconscionable violated

public policy; since the agreement could not

be reformed and offending provisions could

not be severed; thus the whole agreement was

unenforceable. Armendariz outlines several

factors that can render an arbitration

13

agreem ent either procedurally

or

substantively “un con scionable.” See

Armendariz, 6 P.3d at 682).

Typically, procedural unconscionability

arises because the employee was required to

sign the agreement as a condition of

employment or the employee had no power in

negotiating the agreement before signing. See

A rm en d a riz, 6 P .3 d 6 6 9,682 (2000 ).

Substantive unconscionability refers to the

unconscionability in the terms of a contract

and means that the terms are unfair.

Substantive unconscionability results when

contract terms are excessively oppressive or

harsh. The doctrine of unconscionability

permits the court to refuse to enforce a

contract simply when it feels the contract to

be unfair.

Relying on Armendariz, the California

courts treat the enforcement of these

arbitration agreements in a different manner

than other contracts. Under Armendariz, an

arbitration agreement is valid only if the

a g r e e m e n t (1 ) p r o v id e s fo r n e u t r a l

arbitrators, (2) provides for more than

minimal discovery, (3) requires a written

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

that would otherwise be available in court,

and (5) does not require employees to pay

either unreasonable costs or any arbitrators’

14

fees or expenses as a condition of access to the

arbitration forum. See Armendariz, 6 P.3d at

682. Factors that neglect any of the five

aspects above are considered unconscionable.

The court in Armendariz began this

subversion by laying out ways in which they

can invalidate an arbitration agreement.

First, agreements are not arbitrable unless

“the arbitration permits an employee to

vindicate his or her “statutory rights” under

state law. 6 P.3d. at 674. Second, the

Armendariz court crafted special rules for

assessing whether provisions of employment

arbitration agreements are unconscionable.

The court was concerned that “ordinary

principles of unconscionability may manifest

them selves in form s peculiar to the

arbitration context.” The court applied these

special rules they created to strike provisions

they found “unfairly one-sided” and “lack[ing]

mutuality.” Id. at 692-93. Additionally, the

Armendariz court decided whether the

arbitration agreement could be enforced

without the offending provisions. It held that

the terms were not severable. Thus the

A rm e n d a r iz cou rt v oid ed th e w h ole

arbitration agreement simply because it

“contain[ed] m ore than one unlaw ful

provision,” and the court discerned a

“systematic effort to impose arbitration on an

15

employee not simply as an alternative to

litigation, but as an inferior forum that works

to the employer’s advantage.” Id. at 697.

The majority in Armendariz took an

approach that places arbitration on a lower

footing than other contracts. This approach

mandates that when an employer “imposes”

mandatory arbitration and the employee

asserts a statutory claim, the employer must

bear

all

costs

“unique

to

arbitration.”Armendariz, 6 P.3d at 689.

Judge Chin, in his dissent in Armendariz

explained that the possible imposition of

arbitration forum costs autom atically

undermines an employee's statutory rights.

Id. at 700, but he saw no reason to adopt the

majority's approach and felt that the issue of

apportionment was better left to the

arbitrator, and that any problems with the

arbitrator's decision should be resolved at the

judicial review stage. Id. at 700.

If the Court of Appeal had applied

California’s general contract severability

rules in this case, it would have severed the

offending provisions but enforced the

agreement to arbitrate, as did the Superior

Court. The trial court had no problem crafting

an order striking down the provisions it found

to be unconscionable and ordering the parties

16

to proceed to arbitration without the

“offending” terms. App. 47a. But because the

Court of Appeal instead applied California’s

arbitration-specific Armendariz severability

rule, the arbitration provision was voided

entirely, because it “contain[ed] four

unconscionable terms.” App. 42a-46a.

California courts appear to be unusually

hostile toward arbitration agreements. See,

e.g., Preston v. Ferrer, 552 U.S. 346 (2008)

(reversing the California Court of Appeal and

holding that the FAA preempts a state law

displacing arbitration as the appropriate

forum when the parties have contracted to

settle all disputes in arbitration); Perry v.

Thomas, 482 U.S. 483 (1987) (reversing the

California Court of Appeal and holding that

the FAA preempted a state law requirement

that an action for wage collection is

maintained despite a private arbitration

agreement); and Concepcion, 563 U.S. at

333 (holding that a California Court of Appeal

rule regarding the unconscionability of class

arbitration waiver is preempted by the FAA).

Indeed, California’s non-enforcement of

the FAA has acarids often that even a trial

judge from California’s has stated "Trial

courts continue to receive very inconsistent

direction from the U.S. Supreme Court, the

17

California appellate courts and the National

Labor Relations Board regarding the proper

interpretation and application of the Federal

Arbitration Act, 9 U.S.C. § 1 et seq., to state

trial court cases. Because the arbitration

alternative has so much impact on case value

and because it is also intimately tied up with

whether or not a case can proceed on a class

or ’representative‘ basis, this is a highly

important topic." See William F. Highberger,

Compelling Arbitration: Who Knows the Rules

to Apply? (Dec. 6, 2012), available at

http://apps.americanbar.org/

Basle/committees/CL150000pub/newsletters/2

0 1 2 0 8 / c o m p e llin g _ a r b it r a t io n .p d f. (la s t

accessed June 14, 2019).

California’s failure to place arbitration

agreements “on equal footing with all other

contracts,” Kindred Nursing Ctrs, supra, is

evident from the California Supreme Court’s

objective applying the unconscionability

doctrine. A rm endariz itself treated

arbitration agreements much less favorably

than other contracts, declaring that “ordinary

principles of unconscionability may manifest

them selves in form s peculiar to the

arbitration context.” Armendariz, 6 P.3d at

693 (emphasis added

18

This case provides an excellent vehicle to

address the severability issue in the context

of a n a rb itration a g reem en t in a n

employment contract. The record is well

developed. )2

III. THIS COURT SHOULD

ONCE AGAIN REMIND THE

CALIFORNIA

STATE

C O U R T S

T H A T

ARBITRATION IS A MATTER

OF FEDERAL LAW AND THE

SUPREMACY

CLAUSE

APPLIES.

Amicus urges this Court to review the

California Court of Appeal’s decision and to

end definitively the State of California’s use

of a singularly incompatible legal regime with

respect to arbitration, while confirming its

holdings in Concepcion, Stolt-Nielsen) and the

even more recently decided Epic Sys. Corp. v.

2

1

This Court has recently recognized that the severability

issue itself is significant, and “cert worthy, having granted

certiorari in MHN Gov’t Servvs., Inc. v Zaborowski, 136 Ct.

27 (2015)(No. 14-1458), 2015 WL 2637766. This Court

recognized this anomaly when it granted a petition for

certiorari directly addressing Armendariz’s -arbitration

specific severability rule. That appeal was mooted by

settlement before oral argument, depriving the Court of the

opportunity to address the issue.. See 136 S. Ct. 1539

(2016).

19

Lewis, 138 S.Ct. 162 (2018), and Henry

Schein, Inc. v. Archer & White Sales, Inc., 139

S.Ct. 524 (2019). These cases, and others,

recognize the overriding Congressional policy

favoring arbitration. This Court should make

clear that federal policy cannot be

circumvented by contorted readings of

contractual arbitration provisions.

The California Supreme Court has

repeatedly reaffirmed key aspects of the

Armendariz rule in the years since this Court

decided Concepcion. See, e.g., S onicCalabasas A, Inc. v. Moreno, 311 P.3d 184,

201 (Cal. 2013); Sanchez v. Valencia Holding

Co., 353 P.3d 741, 753 (Cal. 2015). Thus, the

California courts have come to conclude that

each feature of Armendariz remains “good

law.” App. 18a-19a

California’s Armendariz rule should never

have survived this Court’s decision in

Concepcion. Under these circumstances,

forceful invalidation of this reckless state

rule, which is a clear obstacle to the FAA, is

even more pressing for review than it was

four years ago. Not only have the California

courts refused to make such reforms, they

have reaffirm ed numerous aspects of

Armendariz in the cases since Concepcion was

decided. See, e.g., McGill v. Citibank, N.A.,

20

232 Cal. App. 4th 753, 181 Cal. Rptr. 3d 494

(2014)) confirm ing that in California

“Armendariz is Good Law” in every respect.

App. 18a-19a; see . Castillo v. CleanNet USA,

Inc., 358 F. Supp. 3d 912, 937 (N.D. Cal.

2018) (“In the wake of Concepcion, California

courts, including the California Supreme

Court, have found that Armendariz is still

good law ....”).

The California Supreme Court uniquely

has openly reaffirmed its pre-Concepcion

Armendariz decision. No other jurisdiction of

which we are aware has, after this Court’s

decision in Concepcion, mandated that its

pre-existing arbitration-specific rules survive

FAA preemption. Even the Ninth Circuit has

vocally

protested

Armendariz’s

arbitration-specific rules as being at odds

with this Court’ holding in Concepcion. See,

e.g., Mortensen v. Bresnan Commc’ns, LLC,

722 F.3d 1151, 1159 (9th Cir. 2013) These

protests have fallen on deaf ears in the

California appellate courts.

The California Supreme Court has had

ample time to correct its obdurate refusal

conform its laws to Concepcion, but has

refused to do so. This Court should send a

clear and direct message that open defiance of

the Supremacy Clauise will not be tolerated.

21

CONCLUSION

The petition for a writ of certiorari should

be granted and, on the merits, the judgment

of the California Court of Appeals should be

vacated.

Respectfully submitted,

Martin S. Kaufman

Atlantic Legal Foundation

500 Mamaroneck Avenue

Suite 320

Harrison, New York 10528

(914) 834-3322

mskaufman@atlanticlegal.org

Attorneys for Amicus Curiae

Atlantic Legal Foundation

June 17, 2019