Amicus Curiae Brief — Comcast Corporation, et al., Petitioners v. Charles E. Tillage, et al.

Nos. 19-1066 & 19-1078

IN THE

Supreme Court of the United States

___________

COMCAST CORPORATION, et al.,

Petitioners,

v.

CHARLES TILLAGE, et al.,

Respondents.

___________

AT&T MOBILITY LLC, et al.,

Petitioners,

v.

STEVEN MCARDLE,

___________

Respondent.

On Petitions for a Writ of Certiorari to the United

States Court of Appeals for the Ninth Circuit

___________

BRIEF OF WASHINGTON LEGAL FOUNDATION

AS AMICUS CURIAE IN SUPPORT OF PETITIONERS

___________

March 24, 2020

CORBIN K. BARTHOLD

Counsel of Record

CORY L. ANDREWS

WASHINGTON LEGAL

FOUNDATION

2009 Mass. Ave., NW

Washington, DC 20036

(202) 588-0302

cbarthold@wlf.org

QUESTION PRESENTED

Whether the Federal Arbitration Act preempts

California’s public policy, set forth in McGill v.

Citibank, N.A., 2 Cal. 5th 945 (2017), against

arbitration clauses that waive claims for “public

injunctive relief.”

iii

TABLE OF CONTENTS

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

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

SUMMARY OF ARGUMENT................................. 2

REASONS FOR GRANTING THE PETITION ..... 4

I.

MCGILL IS BIASED AGAINST ARBITRATION

IN PRINCIPLE...................................................... 4

II. MCGILL IS BIASED AGAINST ARBITRATION

IN PRACTICE ....................................................... 7

CONCLUSION ...................................................... 11

iv

TABLE OF AUTHORITIES

Page(s)

Cases:

Ajamian v. CantorCO2e, L.P.,

203 Cal. App. 4th 771 (2012) ............................... 9

Am. Express Co. v. Italian Colors Rest.,

570 U.S. 228 (2013) .......................................... 5, 6

Armendariz v. Found. Health Psychcare

Servs., Inc.,

24 Cal. 4th 83 (2000) ............................................ 9

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) ................................ 3, 7, 8, 10

Bickel v. Sunrise Assisted Living,

206 Cal. App. 4th 1 (2012) ................................... 9

DIRECTV, Inc. v. Imburgia,

136 S. Ct. 463 (2015) ............................................ 1

Epic Systems Corp. v. Lewis,

136 S. Ct. 1612 (2018) .......................................... 1

Iskanian v. CLS Transp. Los Angeles,

LLC,

59 Cal. 4th 348 (2014) .......................................... 9

Kindred Nursing Ctrs. Ltd. P’ship v.

Clark,

137 S. Ct. 1421 (2017) .......................................... 2

McGill v. Citibank, N.A.,

2 Cal. 5th 945 (2017) ................................... passim

McGovern v. U.S. Bank N.A.,

362 F. Supp. 3d 850 (S.D. Cal. 2019)................... 5

v

Page(s)

Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc.,

473 U.S. 614 (1985) .......................................... 5, 6

Nat’l Shooting Sports Found., Inc.

v. State,

5 Cal. 5th 428 (2018) ............................................ 5

Preston v. Ferrer,

552 U.S. 346 (2008) .............................................. 6

Samaniego v. Empire Today LLC,

205 Cal. App. 4th 1138 (2012) ............................. 9

Serafin v. Balco Properties Ltd., LLC,

235 Cal. App. 4th 165 (2015) ............................... 9

Shearson/Am. Exp. Inc. v. McMahon,

482 U.S. 220 (1987) .......................................... 1, 5

Sonic-Calabasas A, Inc. v. Moreno,

57 Cal. 4th 1109 (2013) .................................... 7, 9

Constitution and Statutes:

Const. art. VI, cl. 2 ................................................... 5

9 U.S.C. § 2 ....................................................... 1, 3, 5

Cal. Civ. Code § 3513 ......................................passim

Cal. Civ. Code § 3515 ............................................... 4

Cal. Civ. Code § 3538 .............................................. 4

Cal. Civ. Code § 3545 ............................................... 4

Cal. Civ. Code § 3546 ........................................... 4, 5

vi

Page(s)

Miscellaneous:

Jeffrey S. Klein, A Few Clauses to Help

Lawyers Along, L.A. Times, www.lat.ms

/2HyLNXK (Sept. 14, 1989) .................................. 4

Victor E. Schwartz & Christopher

E. Appel, Setting the Record Straight

About the Benefits of Pre-Dispute

Arbitration, WLF Legal Backgrounder,

www.bit.ly/2Z6rKqg (June 7, 2019) ...................... 1

1

INTEREST OF AMICUS CURIAE*

Washington Legal Foundation is a nonprofit,

public-interest law firm and policy center with

supporters nationwide. WLF promotes free

enterprise, individual rights, limited government,

and the rule of law. It appears often as amicus

curiae in important Federal Arbitration Act cases.

See, e.g., Epic Systems Corp. v. Lewis, 136 S. Ct.

1612 (2018); DIRECTV, Inc. v. Imburgia, 136 S. Ct.

463 (2015). It has also published many articles on

arbitration by outside experts. See, e.g., Victor E.

Schwartz & Christopher E. Appel, Setting the Record

Straight About the Benefits of Pre-Dispute Arbitration, WLF Legal Backgrounder, www.bit.ly/2Z6rKqg

(June 7, 2019).

The FAA “establishes a federal policy favoring

arbitration.” Shearson/Am. Exp. Inc. v. McMahon,

482 U.S. 220, 226 (1987). An arbitration clause in a

contract involving commerce, the FAA says, is valid

and enforceable. 9 U.S.C. § 2. True, the FAA

contains a saving clause, but it says merely that an

arbitration clause may be invalidated based on any

ground “for revocation of any contract”—based, that

is, on a generally applicable contract defense. Id. If

the federal policy favoring arbitration is to be

No party’s counsel authored any part of this brief. No

person or entity, other than Washington Legal Foundation and

its counsel, helped pay for the brief’s preparation or

submission. At least ten days before the brief was due, WLF

notified each party’s counsel of record of WLF’s intent to file

the brief. Each party’s counsel of record has consented in

writing to the brief’s being filed.

*

2

upheld, the saving clause must be taken to mean no

more than what it says.

In the decision below, the Ninth Circuit,

applying a rule created by the California Supreme

Court, expanded the meaning of the saving clause

far beyond what its words can bear. The

decision enables a party to use a free-floating state

public policy—rather than a contract defense—to

attack a duly executed arbitration clause. The

decision also “covertly” (and improperly) lets a

supposedly general rule be used as a precision tool

for “disfavoring contracts that (oh so coincidentally)

have the defining features of arbitration

agreements.” Kindred Nursing Ctrs. Ltd. P’ship v.

Clark, 137 S. Ct. 1421, 1426 (2017).

The California Supreme Court and the Ninth

Circuit have struggled to apply this Court’s FAA

decisions. (See AT&T Pet. 30.) These petitions give

the Court a chance to address both those lower

courts at once, reminding each of them that the FAA

trumps contrary state law. WLF urges the Court to

grant review.

SUMMARY OF ARGUMENT

McGill v. Citibank, N.A., 2 Cal. 5th 945 (2017),

says that an arbitration clause may not extinguish a

party’s right to seek injunctive relief for the public at

large. In the decision below, the Ninth Circuit held

that this “McGill rule” is not preempted by the

Federal Arbitration Act. Under the FAA’s saving

clause, an arbitration agreement that is otherwise

enforceable under federal law remains subject to any

generally applicable state-law contract defense. 9

3

U.S.C. § 2. The McGill rule, the Ninth Circuit

concluded, is such a defense.

As the Ninth Circuit acknowledged, however, the

McGill rule arises from California Civil Code § 3513,

a state “maxim of jurisprudence” that says: “a law

established for a public reason cannot be

contravened by private agreement.” California’s

maxims of jurisprudence are not contract defenses;

they are (at most) guiding principles for interpreting

statutes. A court that invalidates part or all of an

arbitration clause because it conflicts with one of

these maxims has not properly applied the FAA’s

saving clause; it has simply slighted the FAA and

flouted the Supremacy Clause.

In any event, we know from AT&T Mobility LLC

v. Concepcion, 563 U.S. 333 (2011), that a court may

not apply even a generally applicable contract

defense in a way that will “disproportionate[ly]

impact” arbitration agreements, id. at 342. The court

below cited five cases that apply the §3513 bar

outside the context of arbitration. Only one of them

is from this century; the oldest is 122 years old.

Contrast this with the heap of recent decisions that

have used §3513, or the principle underlying it, to

alter or erase an arbitration clause. The comparison

confirms that in California, both in state and in

federal court, §3513 is being used, quite improperly,

as a vehicle to disfavor arbitration.

This case presents an opportunity for the Court

to get both the Ninth Circuit and the California

courts out of the business of using state public policy

to discriminate against arbitration. In addition, it

gives the Court a chance to remind the lower courts

4

not to use a rigged version of a general contract

defense as a tool for striking down arbitration

clauses. The Court should grant review.

REASONS FOR GRANTING THE PETITION

I.

MCGILL IS BIASED AGAINST ARBITRATION IN

PRINCIPLE.

The McGill rule stands on California Civil Code

§ 3513, which says that although “any one may

waive the advantage of a law intended solely for his

benefit,” a “law established for a public reason

cannot be contravened by private agreement.”

Section 3513 is a California “maxim of

jurisprudence.” The maxims lie, “almost buried and

forgotten,” among California’s nineteenth-century

Field codes. Jeffrey S. Klein, A Few Clauses to Help

Lawyers Along, L.A. Times, www.lat.ms/2HyLNXK

(Sept. 14, 1989). They include such cosmic riddles as

“That is certain which can be made certain,” and

“Things happen according to the ordinary course of

nature and the ordinary habits of life.” Cal. Civ.

Code §§ 3538, 3546. As these examples suggest, the

maxims “can mean everything and nothing.” Klein,

supra. Some of them, in fact, seem to contradict both

§3513 and the notion that arbitration clauses should

be subjected to discrimination. “He who consents to

an act,” for example, “is not wronged by it.” Cal. Civ.

Code § 3515. “Private transactions,” after all, “are

fair and regular.” Id. at § 3545.

If it seems like §3513 makes no sense as a

contract defense, that’s because it isn’t one. The

maxims of jurisprudence are “interpretive canon[s]

5

for construing statutes.” McGovern v. U.S. Bank

N.A., 362 F. Supp. 3d 850, 860 (S.D. Cal. 2019)

(quoting Nat’l Shooting Sports Found., Inc. v. State,

5 Cal. 5th 428, 433 (2018)). The McGill rule is not a

contract defense that properly triggers the FAA’s

saving clause. See 9 U.S.C. § 2. It is, rather, a freefloating public policy.

A state court may not use state public policy to

undermine the FAA. If Congress says an arbitration

agreement not subject to a contract defense must be

enforced, a state court may not refuse to enforce the

agreement because it thinks arbitration isn’t part of

the “ordinary course of nature and the ordinary

habits of life.” Cal. Civ. Code § 3546. Federal law is

the supreme law of the land; it trumps contrary state

law. See U.S. Const. art. VI, cl. 2.

The California courts gain nothing from their

frequent use, including in McGill itself, of the

“effective vindication” theory, under which an

arbitration clause is void if a litigant cannot

“vindicate its statutory cause of action in the arbitral

forum.” Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 637 (1985). This

exception applies only when the FAA runs into “a

contrary congressional command.” Shearson, 482

U.S. at 226 (emphasis added). A state law cannot be

“vindicated” at a federal law’s expense: only a federal

law can displace another federal law. See again U.S.

Const. art. VI, cl. 2.

The limited scope of the vindication theory was

confirmed in American Express Co. v. Italian Colors

Restaurant, 570 U.S. 228 (2013), in which all nine

justices treated the exception as one that governs

6

federal law. The five-justice majority described the

exception as addressing whether “federal statutory

claims are subject to arbitration.” Id. at 235 n.2

(emphasis added). And the four dissenters were even

more explicit. The effective-vindication rule, they

explained, ensures that “an arbitration clause may

not thwart federal law,” and that a plaintiff can

enforce “meritorious federal claims.” Id. at 240-41

(Kagan, J., dissenting) (emphasis added). “We have

no earthly interest (quite the contrary),” they

continued, “in vindicating [state] law.” Id. at 252.

The “effective-vindication rule comes into play,”

therefore, “only when the FAA is alleged to conflict

with another federal law.” Id.

To justify applying the vindication theory to

state law, McGill points to Preston v. Ferrer, 552

U.S. 346 (2008). Preston, it is true, notes that the

respondent before it would not, by proceeding to

arbitration, “forgo the substantive rights afforded by

the [state] statute” there at issue. Id. at 359 (quoting

Mitsubishi Motors Corp., 473 U.S. at 628). But

Preston never treats this fact as dispositive. The

absence of waiver in Preston appears merely to have

bolstered the Court’s conclusion that the dispute

belonged in arbitration. McGill seizes on this

ambiguous dicta—dicta from, ironically, one of the

many cases correcting a California court’s overly

narrow reading of the FAA—as cause to cast aside

the clear and direct mandates of Concepcion and

Italian Colors.

7

II.

MCGILL IS BIASED AGAINST ARBITRATION IN

PRACTICE.

Even if it stood on a real contract defense, the

McGill rule would still be preempted. The rule’s only

purpose is to serve as a tool for striking down

arbitration clauses.

As Concepcion confirms, the FAA bars a court

from applying a “generally applicable” state doctrine

“in a fashion that disfavors arbitration.” 563 U.S. at

341. Such use of a doctrine is not valid simply

because the doctrine also governs contracts outside

the context of arbitration clauses. Id. at 342. A

doctrine that stands on “the general principle of

unconscionability,” for example, nonetheless violates

the FAA if “in practice” it “would have a

disproportionate impact on arbitration agreements.”

Id.

The California Supreme Court has neglected this

principle. What matters, in that court’s view, is

merely

that

a rule

respects

arbitration’s

“fundamental attributes” and “applies equally to

arbitration and nonarbitration agreements.” SonicCalabasas A, Inc. v. Moreno, 57 Cal. 4th 1109, 1149

(2013). The California high court has even gone so

far as to stand the “disproportionate impact”

principle on its head. “A facially neutral state-law

rule,” the court has said, “is not preempted simply

because its evenhanded application ‘would have a

disproportionate impact on arbitration agreements.’”

Id. at 1130 (emphasis added) (quoting Concepcion,

563 U.S. at 342).

8

McGill relies heavily on this inversion of

Concepcion. In declaring that the FAA does not

preempt the §3513 no-waiver maxim, it says:

[The §3513] bar is not a defense that applies

only to arbitration or that derives its

meaning from the fact that an agreement to

arbitrate is at issue. . . . [A] provision in any

contract—even a contract that has no

arbitration provision—that purports to waive

. . . the statutory right to seek public

injunctive relief . . . is invalid and

unenforceable under California law.

2 Cal. 5th at 962. Under Concepcion, this is

insufficient. It is not enough that a rule apply “even

[to] a contract that has no arbitration provision.” Id.

A rule also must not “in practice” have “a

disproportionate impact on arbitration agreements.”

Concepcion, 563 U.S. at 342.

Unlike the California Supreme Court, the panel

below seemed to grasp that a contract defense must

apply outside the context of arbitration not just in

principle but in reality. “California courts,” the panel

wrote, trying to bolster the McGill rule, “have

repeatedly invoked California Civil Code § 3513 to

invalidate waivers unrelated to arbitration.” 928

F.3d at 827. There follows a string cite with a case

from 2002, a case from 1977, a case from 1956, a

case from 1944, and a case from 1896.

But the court below did not address the fact that,

today, the California courts use §3513 specifically as

a cudgel for striking down arbitration agreements.

The California Reports are rife with recent cases

9

that use §3513 (or rely on a case that in turn uses it)

to disfavor arbitration. See, e.g., McGill, 2 Cal. 5th

at 962; Sonic-Calabasas A, 57 Cal. 4th at 1130;

Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.

4th 348, 382-83 (2014) (“[I]t is contrary to public

policy for an [arbitration] agreement to . . . require[e]

employees to waive the right to bring a PAGA

[representative] action.”); Armendariz v. Found.

Health Psychcare Servs., Inc., 24 Cal. 4th 83, 100-01

(2000) (“[A]n arbitration agreement cannot be made

to serve as a vehicle for the waiver of [state]

statutory rights created by the FEHA.”); Serafin v.

Balco Properties Ltd., LLC, 235 Cal. App. 4th 165,

183 (2015) (“[A]n arbitration agreement cannot be

made to serve as a vehicle for the waiver of [state]

statutory rights.”); Bickel v. Sunrise Assisted Living,

206 Cal. App. 4th 1, 8-9, 12 (2012) (“Where a

provision in an arbitration agreement seeks to waive

such [state statutory] rights, as was the case here,

the provision is contrary to public policy and may be

severed.”); Samaniego v. Empire Today LLC, 205

Cal. App. 4th 1138, 1147 (2012) (“Where, as in this

case, arbitration provisions undermine [state]

statutory protections, courts have readily found

unconscionability. . . . [A]n arbitration agreement

cannot be made to serve as a vehicle for the waiver

of [state] statutory rights.”); Ajamian v. CantorCO2e,

L.P., 203 Cal. App. 4th 771, 799 (2012) (“[T]he

arbitration provision . . . forces [the plaintiff] to

waive her unwaivable [state] statutory rights and

remedies.”).

In any case, §3513 is just a pillar on which the

McGill rule stands. The McGill rule itself was

created specifically for, and aims squarely at, and

10

has not been used on

arbitration agreements.

anything

other than,

It’s clear what’s really going on. California’s

courts have dusted off an ancient, rarely used

doctrine and repurposed it as a device for striking

down arbitration agreements. The McGill rule exists

precisely because it has “a disproportionate impact

on arbitration agreements.” Concepcion, 563 U.S. at

342. Whatever it might be in theory, in practice the

McGill rule is just another of the “great variety” of

“devices and formulas” that judges “hostil[e] towards

arbitration” use to “declar[e] arbitration against

public policy.” Id.

*

*

*

The California courts are using state public

policy—sometimes openly and defiantly; other times

surreptitiously, through the spurious application of a

purportedly general contract defense—to disfavor

arbitration. Making matters worse, the Ninth

Circuit is uncritically following the California courts’

lead. These petitions offer this Court an excellent

opportunity to direct both the Ninth Circuit and the

California courts to change course.

11

CONCLUSION

The petitions should be granted.

Respectfully submitted,

March 24, 2020

CORBIN K. BARTHOLD

Counsel of Record

CORY L. ANDREWS

WASHINGTON LEGAL

FOUNDATION

2009 Mass. Ave., NW

Washington, DC 20036

(202) 588-0302

cbarthold@wlf.org