Amicus Curiae Brief — Coinbase, Inc., et al., Petitioners v. Darren Kramer, et al.

No. 24-1230

IN THE

Supreme Court of the United States

_________

COINBASE, INC. AND COINBASE GLOBAL, INC.,

Petitioners,

v.

DARREN KRAMER, MANISH AGGARWAL, ET AL.,

Respondents.

_________

On Petition for a Writ of Certiorari to the

California Court of Appeal, First Appellate District

_________

BRIEF FOR AMICUS CURIAE

RETAIL LITIGATION CENTER INC.

IN SUPPORT OF PETITIONERS

_________

DEBORAH R. WHITE

LARISSA M. WHITTINGHAM

RETAIL LITIGATION

CENTER, INC.

99 M St., S.E., Suite 700

Washington, D.C. 20003

NEAL KUMAR KATYAL

WILLIAM E. HAVEMANN

Counsel of Record

NATHANIEL A.G. ZELINSKY

MILBANK LLP

1850 K Street, NW

Suite 1100

(202)-835-7500

whavemann@milbank.com

Counsel for Amicus Curiae

TABLE OF CONTENTS

Page

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

INTERESTS OF AMICUS CURIAE .......................... 1

INTRODUCTION AND SUMMARY OF

ARGUMENT ............................................................... 2

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

I. The McGill Rule Undermines The Benefits Of

Arbitration. ....................................................... 6

II. California Courts Have A Long History Of

Evading The FAA. .......................................... 14

CONCLUSION .......................................................... 17

(i)

(ii)

TABLE OF AUTHORITIES

Page(s)

Cases

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) ............ 2, 3, 6, 9, 10, 11, 13, 14

Broughton v. Cigna Healthplans of

California,

21 Cal. 4th 1066 (1999) .............................. 9, 10, 11

Coinbase, Inc. v. Bielski,

599 U.S. 736 (2023) ................................................ 6

Cruz v. PacifiCare Health Sys., Inc.,

30 Cal. 4th 303 (2003) .......................................... 10

DIRECTV, Inc. v. Imburgia,

577 U.S. 47 (2015) ............................................ 3, 14

Epic Sys. Corp. v. Lewis,

584 U.S. 497 (2018) ............................................ 2, 6

Ferguson v. Corinthian Colleges, Inc.,

733 F.3d 928 (9th Cir. 2013) ................................ 10

Hodges v. Comcast Cable Commc’ns,

LLC,

21 F.4th 535 (9th Cir. 2021) .................. 5, 9, 11, 16

Jack v. Ring LLC,

91 Cal. App. 5th 1186 (2023) ............................... 15

Kirtsaeng v. John Wiley & Sons, Inc.,

568 U.S. 519 (2013) ................................................ 1

Lamps Plus, Inc. v. Varela,

587 U.S. 176 (2019) ...................................... 3, 8, 14

(iii)

McGill v. Citibank, N.A.,

2 Cal. 5th 945 (2017) .................. 3, 4, 10, 11, 12, 13

Perry v. Thomas,

482 U.S. 483 (1987) .............................................. 14

Preston v. Ferrer,

552 U.S. 346 (2008) ........................................ 14, 15

Ramsey v. Comcast Cable Commc’ns,

LLC,

317 Cal. Rptr. 3d 561 (Ct. App. 2023) ............. 5, 16

South Dakota v. Wayfair,

585 U.S. 162 (2018) ................................................ 1

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

Corp.,

559 U.S. 662 (2010) .................................. 3, 6, 8, 13

Taylor v. Sturgell,

553 U.S. 880 (2008) .............................................. 12

Viking River Cruises, Inc. v. Moriana,

596 U.S. 639 (2022) ............................ 3, 6, 8, 13, 14

Statutes

28 U.S.C. § 1332(d) .................................................... 12

28 U.S.C. §1453(b) ..................................................... 12

Cal. Civ. Code § 1780(e) ............................................ 12

Other Authorities

Andrea Cann Chandrasekher & David

Horton, Arbitration Nation: Data

from Four Providers, 107 Cal. L.

Rev. 1 (2019)........................................................... 7

(iv)

Nam D. Pham & Mary Donovan, Fairer,

Faster, Better III: An Empirical

Assessment of Consumer and

Employment Arbitration (March

2022), available at

https://perma.cc/2N22-DU6R................................. 7

Stephen A. Broome, An Unconscionable

Application of the Unconscionability

Doctrine: How the California Courts

Are Circumventing the Federal Arbitration Act, 3 Hastings Bus. L.J. 39

(2006) .................................................................... 14

INTERESTS OF AMICUS CURIAE1

The Retail Litigation Center, Inc. (RLC) represents

national and regional retailers, including many of the

country’s largest and most innovative retailers, across

a breadth of retail verticals. The RLC’s members

employ millions of people throughout the United

States, provide goods and services to tens of millions

more, and account for tens of billions of dollars in

annual sales. The RLC offers courts retail-industry

perspectives on important legal issues and highlights

the industry-wide consequences of significant cases.

Since its founding in 2010, the RLC has filed more

than 250 amicus briefs on issues of importance to the

retail industry, some of which have been relied on by

this Court. See South Dakota v. Wayfair, 585 U.S.

162, 184 (2018) (citing the RLC’s brief); Kirtsaeng v.

John Wiley & Sons, Inc., 568 U.S. 519, 542 (2013)

(same).

The RLC has a particular interest in this Petition

because many of the association’s members use

arbitration to resolve disputes with employees and

customers on an individual basis. The RLC’s members know from firsthand experience that arbitration’s streamlined procedures contrast sharply with

1 Pursuant to Rule 37.6, no counsel for any party authored this

brief in whole or in part, and no such counsel or party made a

monetary contribution intended to fund the preparation or

submission of this brief. While employed at a different law firm,

counsel for amicus curiae briefly represented Petitioners in the

lower courts, but counsel no longer represents Petitioners in this

matter. No person other than amicus curiae or its counsel made

a monetary contribution to the preparation or submission of this

brief. Pursuant to Supreme Court Rule 37.2, counsel of record

for all parties have received timely notice of amicus curiae’s intent to file a brief in support of the Petition.

(1)

2

complex class actions, which can last for years and result in enormous legal fees that benefit no one but

plaintiffs’ counsel.

This Court has repeatedly confirmed that the

Federal Arbitration Act (FAA) secures the right to

contract for individual arbitration. In the case below

and others like it, however, California courts have

sought to circumvent this Court’s precedent and

undermine the federal arbitration framework that

Congress enacted. The RLC’s members—many of

whom operate in California—bear the brunt of those

efforts, and the RLC urges this Court to grant the Petition.

INTRODUCTION AND SUMMARY OF

ARGUMENT

Congress enacted the FAA in 1925 to combat “widespread judicial hostility to arbitration.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). The

FAA requires courts to enforce arbitration agreements according to their terms. The Act reflects the

legislature’s judgment that arbitration offers considerable advantages over traditional litigation. Arbitration’s informal procedures facilitate efficient and inexpensive dispute resolution, which research shows benefits plaintiffs and defendants alike.

But as the decision below demonstrates, the judicial

hostility to arbitration that prompted Congress to enact the FAA in 1925 remains alive and well a century

later. In the last two decades, this Court has confronted and rejected multiple state laws and procedures “that target arbitration either by name or by

more subtle methods.” Epic Sys. Corp. v. Lewis, 584

U.S. 497, 508 (2018) (quotation marks omitted). The

Court has been especially attentive to state laws that

3

permit plaintiffs who agreed to arbitrate claims on an

individual basis to nevertheless aggregate and litigate

claims other than their own. Because it increases the

stakes and complexity of the dispute resolution process, claim aggregation “interferes with” the “fundamental attributes of arbitration,” “creates a scheme

inconsistent with the FAA,” and is thus preempted by

federal law. Concepcion, 563 U.S. at 344.

One state in particular—California—is a repeat offender: On multiple occasions, this Court has invalidated rules that permitted California plaintiffs to aggregate claims or otherwise attempt to bring classwide proceedings. See Viking River Cruises, Inc. v.

Moriana, 596 U.S. 639 (2022); Lamps Plus, Inc. v.

Varela, 587 U.S. 176 (2019); DIRECTV, Inc. v. Imburgia, 577 U.S. 47, 52 (2015); Concepcion, 563 U.S.

at 339; Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp.,

559 U.S. 662, 685 (2010). This Petition presents the

latest iteration of the problem, and this Court’s intervention is urgently needed.

Petitioners seek review of the McGill rule. Named

for the decision in which it was announced—McGill v.

Citibank, N.A., 2 Cal. 5th 945 (2017)—the McGill rule

provides that, as a matter of California law, parties

may not waive via contract their right to seek “public

injunctive relief.” See id. at 956. Public injunctive relief is essentially class-wide equitable relief—but even

broader. When a plaintiff seeks public injunctive relief, she does not seek injunctive relief as a representative of a class of similarly situated plaintiffs; she instead seeks injunctive relief, at least nominally, on behalf of “the general public” at large. McGill, 2 Cal. 5th

at 633 (quotation marks omitted).

At its core, public injunctive relief presents the same

4

concerns as other forbidden aggregation devices. Because it is inconsistent with the fundamental attributes of arbitration, public injunctive relief is therefore

preempted by the FAA. When litigating a public injunction, a plaintiff advances not only her own individual claim, but also seeks sweeping relief beyond

the scope of the dispute between the parties. This

massively transforms the stakes and the complexity

of the proceedings, making them an impossible fit

with arbitration.

The McGill rule facilitates gamesmanship by plaintiffs, who can seek to leverage their public injunctive

relief claim—which can pose a tremendous risk to

business even with a low chance of success—to force

companies to settle otherwise unmeritorious individual claims. Moreover, because public injunctive relief,

as defined by California courts, does not technically

count as the “pursuit of representative * * * relief,”

McGill, 2 Cal. 5th at 959, companies cannot even rely

on claim preclusion to stem the tide of successive suits

by similar plaintiffs. Instead, plaintiffs’ lawyers—

who stand to receive considerable fees if they prevail—can repeatedly bring public injunctive relief

claims until they secure a favorable ruling or a company settles.

The California Court of Appeal and the Ninth Circuit are split over whether the FAA preempts the

McGill rule. See Pet. 14-18. California courts have

interpreted the McGill rule broadly to encompass virtually any claim for equitable relief in garden-variety

consumer suits. The California Court of Appeal has

consistently held that this broad application of the

McGill rule is not preempted by the FAA, and the California Supreme Court has refused to intervene and

5

enforce the FAA. See, e.g., Ramsey v. Comcast Cable

Commc’ns, LLC, 317 Cal. Rptr. 3d 561, 573 (Ct. App.

2023), review denied (May 1, 2024), cert. denied, 145

S. Ct. 1050 (2025).

In contrast, the Ninth Circuit has explained that

“the broader version of the McGill rule” “is preempted

by the FAA.” Hodges v. Comcast Cable Commc’ns,

LLC, 21 F.4th 535, 547 (9th Cir. 2021) (emphasis

added). According to the Ninth Circuit, the FAA

preempts the McGill rule if an injunction seeks to benefit “a particular class of persons,” and if an injunction

requires “consider[ing] the individual claims of any

non-party.” Id. at 542.

This sharp split between these two courts that routinely apply the FAA to California law is deeply problematic. In cases like this one, whether the FAA

preempts California law—and thus whether parties

can vindicate their right to arbitrate—turns on

whether the suit is brought in state or federal court.

The proceedings below underscore how creative plaintiffs exploit the split to evade the FAA. The plaintiffs

originally filed suit in federal district court and included a claim for injunctive relief. The federal court

enforced the FAA and compelled arbitration pursuant

to a binding arbitration agreement. Pet. 10. While

still litigating the first case, the plaintiffs separately

filed suit in California state court, but now purported

to seek public injunctive relief. After Petitioner removed that action to federal court, the plaintiffs dismissed the second suit. Pet. 11. Then the plaintiffs

refiled a third lawsuit, this time the state court complaint joined an additional California plaintiff to prevent removal. Id. In contrast to the federal court, the

California courts refused to compel arbitration.

6

This Court should take this case and reject California’s latest anti-arbitration ploy. The split is clear,

acknowledged, and persistent. Pet. 22. Meanwhile,

the deeply troubling facts of this case—in which a federal court compelled arbitration and plaintiffs successfully resisted arbitration by refiling in state

court—make this Petition an ideal vehicle. The Court

should not permit the split to fester any longer. It

should grant review and reverse.

ARGUMENT

I. THE MCGILL RULE UNDERMINES

BENEFITS OF ARBITRATION.

THE

A. “The FAA was enacted in response to judicial hostility to arbitration.” Viking River Cruises, Inc., 596

U.S. at 649. The Act established a “liberal” policy favoring arbitration that requires arbitration agreements to be enforced “according to their terms” and

placed on equal footing with other contracts. Epic Sys.

Corp., 584 U.S. at 505-506 (quotation marks omitted).

In Congress’s view, arbitration had “more to offer”

than critics of the process realized—from “quicker,

more informal, and often cheaper resolutions for everyone involved,” id. at 505, to “less intrusive discovery,” Coinbase, Inc. v. Bielski, 599 U.S. 736, 743

(2023), and confidential proceedings, Stolt-Nielsen,

559 U.S. at 686. The Act’s “overarching purpose” is to

honor the terms of parties’ arbitration agreements

and “facilitate streamlined proceedings.” Concepcion,

563 U.S. at 344.

Real world evidence demonstrates that arbitration

benefits both plaintiffs and defendants alike. In the

typical class or aggregate action, plaintiffs may wait

“months, if not years” for proceedings to run their

7

course, only to claim “a few dollars” at the end—after

plaintiffs’ lawyers take a hefty fee. Id. at 352 (quotation marks omitted). By contrast, arbitrations are efficient and informal, meaning plaintiffs can even represent themselves if they choose.

One study found that consumer plaintiffs who initiate cases were more likely to prevail in arbitration

(41.7%) than in litigation (29.3%). See Nam D. Pham

& Mary Donovan, Fairer, Faster, Better III: An Em-

pirical Assessment of Consumer and Employment Arbitration

4

(March

2022),

available

at

https://perma.cc/2N22-DU6R. The same study found

that the timeline of proceedings in those arbitrations

was more than 100 days shorter on average than in

litigation, and awards were $8,000 larger. Id.

Similarly, employees who arbitrate with their employers fare better than employees who sue in court.

Those who proceed in arbitration prevail more frequently, win larger awards, and receive their awards

more quickly compared to employees who litigate. Id.;

see also Andrea Cann Chandrasekher & David Horton, Arbitration Nation: Data from Four Providers,

107 Cal. L. Rev. 1, 51 (2019) (noting that in “sharp

contrast” to employment litigation, which can last

two-to-three years on average, compared to arbitrations which took fewer than eleven months).

Defendants receive myriad benefits, too. Individualized arbitration reduces the need for expansive discovery and decreases costs for all involved. Arbitration also provides predictability in timing, location,

experience of the adjudicator, and claim administration. The lower stakes similarly reduce the cost of potential error, which allows parties to “forgo the

8

procedural rigor and appellate review of the courts.”

Stolt-Nielsen, 559 U.S. at 685.

B. This Court has recognized that certain kinds of

procedures—such as class actions—are fundamentally incompatible with the informal nature of arbitration. In protecting the right to opt into arbitration,

the FAA protects the right to opt out of those procedures. As a result, over the past decade, this Court

has repeatedly held that “aggregation devices”—

chiefly, but not always, devices that force defendants

to enter into a class-wide proceeding—“cannot be imposed on a party to an arbitration agreement.” Viking

River, 596 U.S. at 664 (Barrett, J., concurring).

For example, this Court in Viking River struck down

a California judge-made rule prohibiting waiver of

representative Private Attorneys General Act claims.

Id. at 661-62. The rule, this Court explained, would

require either “judicial proceedings or an arbitral proceeding that exceed[ed] the scope jointly intended by

the parties.” Id. at 661. Similarly, Lamps Plus addressed a Ninth Circuit decision that applied California contract law principles and construed an ambiguous arbitration clause “against the drafter” and in favor of class arbitration. 587 U.S. at 180. This Court

explained that even general canons of contract interpretation could not “reshape traditional individualized arbitration” “without the parties’ consent.” Id. at

187.

C. The McGill rule is yet another state procedural

rule that seeks to aggregate claims and circumvent

the FAA’s protections for individualized arbitration.

From the standpoint of FAA preemption, the pursuit

of public injunctive relief is really no different than

the pursuit of a class action. At its core, a claim for

9

public injunctive relief is a claim for class-wide relief

and then some. The “class” is the public at large. Just

as the FAA protects the right of parties to opt into informal arbitration and out of complex class-actions,

see, e.g., Concepcion, 563 U.S. at 348, parties may optinto arbitration and must therefore be able to waive

the right to seek public injunctive relief.

Just as with class actions, the complexity inherent

in public injunctive relief is incompatible with arbitration. Id. As the California Supreme Court has itself

recognized, administering a public injunction—which

governs the defendant’s conduct against the world, potentially perpetually into the future—entails a degree

of “complexity” far beyond “the resolution of private

disputes.” Broughton v. Cigna Healthplans of California, 21 Cal. 4th 1066, 1081 (1999). Just consider the

facts of this case. The plaintiffs seek a public injunction that would govern how Coinbase communicates

with all its current and future customers. Pet. 22. If

the plaintiffs prevail, an adjudicator would need to

scrutinize Coinbase’s communications with “innumerable persons” across countless different media, possibly for years to come. Hodges, 21 F.4th at 547. That

degree of complexity may lie within the competency of

some courts (although even that may be a stretch), but

it will certainly exceed what is expected of the typical

arbitration.

The McGill rule—which prevents plaintiffs from

ever agreeing to forgo public injunctive relief ex

ante—thus places defendants in an impossible bind.

Defendants must either forgo arbitration altogether.

Or defendants may pursue arbitration, but only with

the poison pill of public injunctive relief before an arbitrator ill-equipped to handle high stakes

10

proceedings. The FAA preempts states laws that force

defendants into that dilemma.

D. The history of the McGill rule underscores that

California courts crafted the rule to undermine arbitration.

Prior to McGill, California courts operated under

what was known as the Broughton-Cruz rule. The

Broughton-Cruz rule specifically targeted arbitration

agreements by name and stated that “[a]greements to

arbitrate [certain] claims for public injunctive relief”

were unenforceable because claims for public injunctive relief were fundamentally incompatible with arbitration. McGill, 2 Cal. 5th at 953; accord Broughton,

21 Cal. 4th at 1083; Cruz v. PacifiCare Health Sys.,

Inc., 30 Cal. 4th 303, 316 (2003) (noting the “inherent

conflict between arbitration and the underlying purpose of [the public] injunctive relief remedy” available

under certain consumer statutes (internal quotation

marks omitted)).

But Broughton-Cruz had an obvious flaw: It “prohibit[ed] outright the arbitration of a particular type

of claim,” and was therefore preempted by the FAA.

Ferguson v. Corinthian Colleges, Inc., 733 F.3d 928,

934 (9th Cir. 2013) (quoting Concepcion, 563 U.S. at

341). After the Ninth Circuit held that the FAA

preempted the Broughton-Cruz rule, the California

Supreme Court crafted a workaround in McGill by

dressing up the Broughton-Cruz rule in more neutral

language. McGill disavowed prior decisions of the

California Supreme Court that had found public injunctive relief “inherently conflicts” with arbitration

(although it clearly does, for the reasons outlined

above). See Broughton, 21 Cal. 4th at 1083; Cruz, 30

Cal. 4th at 313. And citing a long-dormant statutory

11

maxim, the California Supreme Court reframed

Broughton-Cruz as a rule against “waivers” of public

injunctive relief “in any forum” in predispute arbitration agreements. See McGill, 2 Cal. 5th at 953. In

other words, Broughton-Cruz had mandated that

claims for public injunctive relief proceed in court because they were incompatible with arbitration. After

McGill, parties nominally have a choice about

whether to litigate or arbitrate the claim for public injunctive relief. But given the fact that public injunctive relief remains incompatible with arbitration, see

supra p. 9, that is no real choice at all.

This Court should reject the California Supreme

Court’s effort to evade the FAA by disguising a rule

designed to undermine arbitration as a doctrine that

nominally applies to all contracts. Indeed, this Court

did just that in Concepcion when it rejected the California Supreme Court’s Discover Bank rule. Like the

McGill rule, the Discover Bank rule held that “class

action waivers” in any contract were unconscionable

and thus unenforceable. Concepcion, 563 U.S. at 338.

This Court rejected the notion that the rule’s supposed

“general[] applicabil[ity]” immunized it from scrutiny.

Id. at 344, 348. Instead, this Court explained that the

FAA preempts “state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives.”

Id. at 343. A rule that forces parties to arbitrate

claims in the aggregate conflicts with the Act regardless of its packaging.

E. Today, plaintiffs’ lawyers routinely wield McGill

as a tactic to undermine binding arbitration agreements. Indeed, because public injunctive relief should

benefit only the “diffuse” public at large, Hodges, 21

F.4th at 542, plaintiffs with garden-variety consumer

12

claims like Respondents here have no reason to bring

a public injunctive relief claim other than to circumvent arbitration.

Some plaintiffs tack on public injunctive relief

claims to discourage defendants from compelling arbitration altogether. Others assert claims in two fora,

using the threat of public injunctive relief in court to

cudgel business into settling claims in arbitration.

Still other plaintiffs use public injunctive relief to

avoid removal to federal court under the Class Action

Fairness Act (CAFA). CAFA generally permits defendants to remove class-wide claims, which may include claims for injunctive relief, where the parties

are minimally diverse and the amount in controversy

exceeds $5 million. 28 U.S.C. §§ 1332(d), 1453(b). To

avoid CAFA, plaintiffs try to plead a single broad request for injunctive relief—essentially asserting the

same class-wide claim on a non-representative basis.

Plaintiffs’ lawyers stand to receive enormous attorneys’ fees if they secure a public injunction, regardless

of whether they prevail in securing damages for their

actual client. See Cal. Civ. Code § 1780(e). The stakes

for companies, meanwhile, are also extremely high.

Public injunctions can require defendants to fundamentally alter their business practices and can result

in relief that is even broader than the relief available

in a class action. See McGill, 2 Cal. 5th at 955.

Worse still, companies have no recourse to arrest the

flood of public injunctive relief suits. Class actions—

notwithstanding their burdensome procedures—are

regulated by established rules and at least offer the

possibility of a global resolution that binds all absent

parties. Taylor v. Sturgell, 553 U.S. 880, 894 (2008).

Claims for public injunctive relief are unlimited by

13

comparison. McGill held that those claims, despite

seeking relief for the general public, do not “constitute

the ‘pursuit’ of ‘representative claims or relief on behalf of others,’ ” meaning plaintiffs need not comply

with the rules or statutory limits on representative

suits. 2 Cal. 5th at 959-960 (cleaned up) (quoting Cal.

Bus. & Prof. Code, §§ 17203, 17535). Public injunctive

relief, in other words, is simply a pleading game unaffected by claim preclusion or any other typical limit on

representative relief.

***

In short, claims for public injunctive relief present

the same concerns that has led this Court to reject

other similar anti-arbitration devices. Arbitration is

“poorly suited to the higher stakes” of relief targeted

at the public as a whole. See Viking River, 596 U.S.

at 662 (quotation marks omitted). The “absence of

multilayered review” vastly increases the risk of error.

See Concepcion, 563 U.S. at 350. And the sweeping

scope of the relief raises the same specter of “in terrorem settlements” that the Court has cited repeatedly in rejecting rules that disfavor arbitration. See

id.; Viking River Cruises, Inc., 596 U.S. at 662 (same);

Bielski, 599 U.S. at 743 (explaining that the “potential

for coercion is especially pronounced” in aggregate

proceedings like class actions) cf. Stolt-Nielsen, 559

U.S. at 686 (noting the “commercial stakes” of aggregate arbitration proceedings). The McGill rule thus

coerces parties to forgo “the benefits of private dispute

resolution.” See Stolt-Nielsen, 559 U.S. at 685. The

Court should step in and put the McGill rule to rest,

just as it has policed against other similar anti-arbitration devices in the past.

14

II. CALIFORNIA COURTS HAVE

HISTORY OF EVADING THE FAA.

A

LONG

California has a long history of developing anti-arbitration jurisprudence designed to circumvent the

FAA. Over a decade ago in Concepcion, Justice Scalia

noted that California courts were far more likely to

invalidate an arbitration agreement than any other

type of contract. Concepcion, 564 U.S. at 342 (citing

Stephen A. Broome, An Unconscionable Application of

the Unconscionability Doctrine: How the California

Courts Are Circumventing the Federal Arbitration

Act, 3 Hastings Bus. L.J. 39, 54, 66 (2006); see also

Broome, supra, at 40 (“[U]nconscionability challenges

before the California appellate courts succeed with far

greater frequency when the contractual provision at

issue is an arbitration agreement.”).

It is thus no surprise that a disproportionate share

of this Court’s arbitration cases come from California

state courts or involve California law. See, e.g., Viking River Cruises, Inc., 596 U.S. 639 (overturning

the Iskanian rule); Lamps Plus, Inc. 587 U.S. at 188

(California doctrine construing contractual ambiguities to defeat arbitration); Concepcion, 563 U.S. at 339

(invalidating Discover Bank rule); Perry v. Thomas,

482 U.S. 483, 488 (1987) (California Labor Code provision displacing arbitration). These decisions include

not just novel legal doctrines, but efforts by California

courts to defy this Court’s precedent. Take DIRECTV,

Inc. v. Imburgia, 577 U.S. 47 (2015). There, on the

heels of Concepcion, the California Court of Appeal deployed a convoluted theory that a choice of law provision in a contract resurrected the very rule that this

Court invalidated in Concepcion. Id. at 51-52. Or consider Preston v. Ferrer, 552 U.S. 346 (2008), which

15

addressed the Court of Appeal’s declaration that this

Court’s decision in Buckeye was “inapposite” based on

spurious factual distinctions far afield from this

Court’s core holding. Id. at 351, 354. This Court’s decisions in Imburgia and Preston snuffed out those

gambits, but the fact that this Court has had to do so

repeatedly is cold comfort to parties regularly seeking

to enforce arbitration agreements before hostile California courts.

The McGill rule is the latest iteration in this long

line of California anti-arbitration devices. McGill

simply recast the explicitly anti-arbitration Broughton-Cruz rule as a general contract defense. See supra

pp. 10-11. But much like California courts’ application of the doctrine of unconscionability prior to Concepcion, the McGill rule operates to uniquely disfavor

arbitration.

Consider the fact-pattern of a typical case involving

the McGill rule. Pre-dispute, parties bargain for individualized arbitration and agree to standard language

waiving aggregate proceedings, tracking this Court’s

caselaw. See, e.g., Jack v. Ring LLC, 91 Cal. App. 5th

1186, 1204 (2023) (agreeing to arbitrate “on an individual basis and not in a class, representative or private attorney general action” with awards “on an individual basis” (quotation marks omitted)). A dispute

arises and plaintiffs refuse to arbitrate. California

courts then apply McGill to conclude that the language to which the parties agreed prohibits “awards

of public injunctive relief in arbitration” and is therefore unenforceable, even in cases involving garden-variety consumer claims. Id. at 1205. That is precisely

the kind of judicial hostility to arbitration that the

16

FAA was designed to prevent, and the kind of defiance

of this Court’s jurisprudence that warrants review.

It is imperative that the Court intervene. The California Supreme Court has declined to review the rule

despite being asked to do so many times, and the California Courts of Appeal have created an open split

with the Ninth Circuit regarding the scope of the

McGill rule and whether it is preempted by the FAA.

Compare Ramsey, 317 Cal. Rptr. 3d at 569 (“We thus

decline to follow Hodges.”), with Hodges, 21 F.4th at

544 (declining to follow California courts); see also

Pet. 16-18 (discussing Ramsey and Hodges). As a result, the same parties in California, with identical arbitration agreements will be able to have those agreements enforced in federal court but not in state

court—frustrating the FAA’s goal of consistently enforcing such agreements by their terms.

Indeed, this case is an especially good vehicle because its procedural history so clearly highlights the

concerning potential for gamesmanship. The plaintiffs initially sued in federal court, which compelled

arbitration. Pet. 10. In an effort to avoid federal

court, the plaintiffs also brought an action in California state court, but dismissed that case after Petitioners’ successful removal of the case to federal court. Id.

at 11. This Petition arises from the plaintiffs’ third

lawsuit, in which plaintiffs joined a California plaintiff to defeat removal and in which the state courts declined to compel arbitration. Id. The Petition is also

a good vehicle because the stakes and complexity of

public injunction relief that plaintiffs seek is clearly

incompatible with arbitration: If plaintiffs succeed,

they will receive an order that will govern Petitioners’

communications with all its current and future

17

customers. See Pet. 19-20. That is the stuff of litigation, not arbitration.

Finally, it bears emphasis: The California Supreme

Court denied review in this case—as it has consistently done whenever defendants seek to challenge the

McGill rule—making it clear that court will not enforce the FAA, and the problem will not be resolved

until this Court intervenes. Pet. 20. The Court should

not allow the split to fester any longer. It should grant

the Petition and reverse.

CONCLUSION

For the foregoing reasons and those in the Petition,

the Petition should be granted.

Respectfully submitted,

DEBORAH R. WHITE

LARISSA M. WHITTINGHAM

RETAIL LITIGATION

CENTER, INC.

99 M St., S.E., Suite 700

Washington, D.C. 20003

NEAL KUMAR KATYAL

WILLIAM E. HAVEMANN

Counsel of Record

NATHANIEL A.G. ZELINSKY

MILBANK LLP

1850 K Street, NW

Suite 1100

(202)-835-7500

whavemann@milbank.com

Counsel for Amicus Curiae

JUNE 2025