Motion — Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Jr. U.

, ao —-

Supreme Cour, Ws.

(>) | rLLED

1988

No. 87-1318

In The

Supreme Court of the United States

October Term, 1987

fy.

Vv

VOLT INFORMATION SCIENCES, INC.,

Appellant,

Vs.

THE BOARD OF TRUSTEES OF THE LELAND

STANFORD JUNIOR UNIVERSITY, a body

having corporate powers,

Appellee.

ray

VU

ON APPEAL FROM THE COURT OF APPEAL

OF THE STATE OF CALIFORNIA,

SIXTH APPELLATE DISTRICT

fy.

Vv

MOTION TO DISMISS OR AFFIRM APPEAL

ra’

Vv

McCutcuen, Dorie, Brown

& ENERSEN

Davin M. HerLsaron

(Counsel of Record)

Lynn H. Pasanow

StepHen L. Gopcnavx

Three Embarcadero Center

San Francisco, CA 94111

Telephone: (415) 393-2000

Counsel for Appellee

The Board of Trustees of the

Leland Stanford Junior

University

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call cullect (402) 342-2831

a

QUESTIONS PRESENTED

A state court interpreted a choice of law clause in a

private agreement, and enforced the parties’ agreement

to arbitrate in accordance with the terms to which the

court found they had agreed.

1. Does a state court interpretation of a choice of

law clause in a private agreement present a substantial

federal question?

2. Does a state court’s enforcement of an agreement

to arbitrate in accordance with its terms present a sub-

stantial federal question?

ii iil

TABLE OF CONTENTS

LIST OF RELATED COMPANIES REQUIRED BY Page

UNITED STATES SUPREME COURT RULE 28.1 oe

QUESTIONS PRESENTED i

Pursuant to Supreme Court Rule 28.1, Appellee The MOTION TO DISMISS OR AFFIRM ...iss—.CiYDd

Board of Trustees of the Leland Stanford Junior Univer- Sa ta ji an we

sity lists the following non-wholly owned subsidiary and | CONSTI PUTIONAL PROVISIONS

affiliate: | PURPORTEDLY INVOLVED Sa a eT)

Stanford University Hospital STATEMENT OF THE CASE 1

ARGUMENT : 6

REVIEW BY THIS COURT WOULD BE

UNWARRANTED

A. Introductory Summary

B. Volt’s ‘*Principal’? Argument Is Wrong

1, The Court’s Decision Was Compelled By

The Most Basie Principles Of Arbitra-

TINIE - ‘sciiecmmudueiintinieininatinnaiinnees

2. Volt’s Construction Of The Choice Of

Law Provision Is Wrong, And Presents

No Question Appropriate For Review In

This Court eiaaleaieaiiletadataeaceeeediaaiiaanasaitetaansiies a

C. The Court of Appeal’s Decision Has No

Precedential Effect 15

CONCL* SION ) aueememeapeniont:.. al

iv

TABLE OF AUTHORITIES

Cases

Cal. Retail Liquor Dealers Assn. v. Midcal Alum..,

Chan v. Drexel Burnham Lambert. Inc.. 178 Cal.

App. 3d 632 (1986) AR ee

Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3

a ecueacaanis aaaiall ;

Dean Witter Reynolds, Inc. rv. Burd, 470 U.S, 213

DEE: <ciisimnnesnnnesenninisindeeatait tm. ilciateneentiA

Delta Lines, Inc. v. International Brotherhood of

Teamsters, 66 Cal. Apn. 3d 960 (1977)

Edelman v. Jordan, 415 U.S. 651 (1974)

Eric A. Carlstrom Constr. Co. v. Independent

School Dist. No. 77, 256 N.W.2d 479 (Minn.

SUSUIIE issiicesslendbeeicaiseancinaniniieamamammeicbaatnadeiadeeaner }

Fidelity Fed. 8S. & L. Assn. v. de la Cuesta, 458

Page

US. 141 (1982) nt |

Garden Grove Community Church v. Pittsburgh-

Des Moines Steel Co., 140 Cal. App. 3d 251 (1983)

Lane-Tahoe, Inc. v. Kindred Constr. Co., 526

P.2d 491 (Nev. 1975) PEL ee se

Main v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 67 Cal. App. 3d 19 (1977)

Mandel v. Bradley, 432 U.S. 173 (1977)...

Moses H. Cone Mem. ~— al v. Mercury Constr.

Corp., 460 U.S. 1 (1983) | ae

O'Malley v. Wilshire Oil Co., 59 Cal. 2d 482 (1962)

Pas-Ebs v. Group Health, Inc., 442 F. wind O37

aS ae ineiennnasnanataies

16

Vv

TABLE OF AUTHORITIES—Continued

Page

Perry v. Thomas, — U.S. —, 107 8. Ct. 2520 (1987) __8, 10

Prima Paint tarsi v. Flood & Conklin, 388 U.S.

395 (1967) . seigetipiinniaiadal 9

Smith v. Alhoright, : 321 U.S. 649 9 (1944) . ena ane

Southland Corp. v. Keating, 465 U.S. 1 (1984) 8,10

Standard Co. v. Elliott Constr. Co.. 363 So. 2d

671 (La. 1978) ...... en ae. Se nC 13

Vespe Contracting Co. v. Anvan Corporation, 399

Fy. Supp 536 (E.D.Pa. 1975) SS tC~SYiYS

CONSTITUTION

United States Constitution, Article VI, el. 2... 1

STATUTES anp CopeEs

Federal Arbitration Act

8 A) Fe ee 1,8

California Code of Civil Procedure

OO

Rvu_Les

Rules of the Supreme Court

8 EE eR eee

a ah a — 16

California Rules of Court

gt a a aneeenidy 16

MOTION TO DISMISS OR AFFIRM

Pursuant to Rule 16 of the Rules of the Supreme

Court, appellee The Board of Trustees of the Leland Stan-

ford Junior University moves to dismiss this appeal or to

affirm the judgment of the California Court of Appeal,

Sixth Appellate District, in this case. The motion is based

on the grounds that:

1. The appeal fails to raise a substantial federal

question and the judgment rests on adequate non-federal

bases (Rule 16.1(b)); and

2. The purported federal question is so insubstan-

tial that no further argument is warranted. (Rale 16.1(b),

(d))

CONSTITUTIONAL PROVISIONS

PURPORTEDLY INVOLVED

The constitutional and statutory provisions involved

in this case are the Supremacy Clause of the United States

Constitution (U.S. Const., art. VI, el. 2), sections 1-4 of

the Federal Arbitration Act (9 U.S.C. $§ 1-4), and section

1281.2(c¢) of the California Code of Civil Procedure. These

provisions are set forth in Appendix H of the Appendices

To Jurisdictional Statement of Appellant (‘‘ App. —’’).

STATEMENT OF THE CASE

The underlying dispute arises out of a construction

project at the Stanford University campus adjoining Palo

1

Alto, California. Pursuant to a written contract with

appellee The Board of Trustees of the Leland Stanford

Junior University (‘‘Stanford’’), appellant Volt Infor-

mation Sciences, Ine. (**Volt’’) was the construction con-

tractor for the project. (JA 3,17-117)' During the course

of the construction Stanford terminated the Volt con-

tract because-of Velt’s material breaches of it. (JA 3, 11s-

119) Volt then requested reinstatement, and after various

negotiations, Stanford and Volt signed a reinstatement

agreement. (JA 3, 4, 120-21) In the reinstatement agree-

ment Volt agreed it would not seek any additional com-

pensation for work it performed in order to remedy its

earlier breaches of the construction contract. (JA 3,

120-21)

On August 27, 1986, Volt presented Stanford with a

demand for arbitration of a claim that seeks additional

compensation for the work Volt performed to remedy its

own breaches of the construction contract and for which

it agreed it would not seek additional compensation. (JA

4, 185-206) Thus Volt violated the reinstatement agree-

ment and ignored its promise to be responsible for the

necessary corrective work. Now Volt claims that the cor-

rective work was necessary because construction drawings

and project management provided to Stanford by defen-

dants Brian-Kangas-Foulk & Associates (‘“‘BKF&A’’) and

Telecommunications International, Ine. (**TII’’) were in-

adequate or improper, and for other reasons. (JA 183,

187-58) Volt seeks to hold Stanford, as the owner of the

. The Parties’ Joint Appendix filed in the California Court

of Appeal is cited here as “JA —.”’

property on which the project was constructed, liable for

the claimed errors of TIl and BK F&A,

The contract between Stanford and Volt provides that

it shall be governed by the law of *‘the place where the

Project is located,’ California. (JA 49) Subject to the

provisions of the governing law and the rules of the Amer-

ican Arbitration Association, the parties also agreed to

arbitrate disputes ‘‘relating to this contract or the breach

thereof.’’ (JA 61) The contracts between Stanford and

TIL and Stanford and BKE&A contain no arbitration pro-

vision. (JA 126-154, 135-143, 144-150)

Volt goes into some detail as to the presumed intent

of the parties to this construction project (Jurisdictional

Statement [‘‘Jur. St.’’], pp.54-57). Volt complains that

Stanford could have avoided the problem of duplicative

litigation by ‘inserting a proviso excusing it from its duty

to arbitrate... .’’ (Jur. St., p.55). Volt has an odd view

as to how agreements are made. One party does not just

‘‘insert’’ provisions in them; both parties to them nego-

tiate terms, and agree to some but not others, Stanford,

TH and BKF&A did not agree to arbitrate. That is the

fact that matters here.

On August 27, 1986, Stanford and Volt concluded set-

thement discussions seeking to resolve their dispute, That

is the same day on which Volt filed its arbitration demand.

(JA 183, 185-206) One week later, on September 4, 1986,

Stanford filed its complaint in the Superior Court, naming

as defendants Volt, BKF&A and TIL (JA 1-150) The

complaint states claims against Volt based upon, among

other things, fraud, estoppel, breach of contract, and bad

faith denial of the existence of a contract. It also asks

for a judgment declaring that, if Stanford is held liable

to Volt on account of TL or BKF&A’s errors, then TI

and BKEF&A are required to indemnify Stanford for any

amounts it must pay Volt.

Stanford could not arbitrate its indemnity claims

against TIL and BKEF&A, because it had no arbitration

agreement with either of them. If Stanford were forced

to arbitrate Volt’s claims alone before an arbitrator, the

arbitration could result in a determination that TLI’s and

BKF&A’s drawings or TII’s project management were in-

adequate, and an award for Volt. If Stanford then were

forced separately to litigate its indemnity claims against

TIL and BKE&A in court, TH and BKRE&A might not be

bound by the arbitrator’s award. A court or jury could

find that their drawings and management were adequate,

and deny indemnity.

Stanford filed its lawsuit in Superior Court to avoid

the danger of those conflicting results and to resolve all

these disputes at the same time and place. A court inali-

fornia was the only forum in which Volt’s claims against

Stanford and Stanford’s claims against Volt, Vll and

BKF&A all could be resolved at the same time and place.

Volt moved to stay the Superior Court proceeding while

the arbitration went forward, and Stanford sought an

order under CCP § 1281.2(c¢) staying the arbitration while

the litigation went forward.

Volt argued that the clause in the parties’ agreement

providing that the agreement shall be governed by the

‘‘law of the place where the Project is located’? did not

mean California law, where the Project is located. Rather,

Volt said, the agreement was in interstate commerce; the

Federal Arbitration Act accordingly applied to it, absent

the choice of law clause; and the choice of law clause

changed nothing, since it meant (somehow) that the Fed-

eral Arbitration Act, not the California Act, governed.

The Federal Act contains no counterpart provision to

CCP § 1281.2(¢). Accordingly, Volt’s argument concluded,

§ 1281.2(¢) did not apply here.

Volt r'so claimed that if California law and thus CCP

<1281.2(¢) did apply, the Superior Court ought not exer-

cise its discretion to issue a stay under it.

The Superior Court held that § 1281.2(¢) did apply,

exercised its discretion, and stayed the arbitration under

it. Volt appealed to the Sixth Appellate District. (JA

255) The Court of Appeal enforced the parties’ choice

of law provision; held that the parties had agreed by it to

arbitrate only in accordance with California law and thus

CCP § 1281.2(¢) applied under it; held that the Superior

Court’s stay order was within its discretion under CCP

1Zs1.2(¢); and affirmed that order.

Volt filed a petition for review in the California Su-

preme Court (App. G). On December 17, 1987, the Su-

preme Court issued its order denying Volt’s petition for

review (App. B). By the saine order, the court directed

that the court of appeal’s opinion should not be published

in the permanent edition of the official! California Appel-

late Reports (id.), and, accordingly, under California law

the decision is not precedent in any respect as to any mat-

ter. California Rule of Court 977(a). Volt filed its notice

of appeal to this Court on January 14, 1988 (App. D).

°

ARGUMENT

I. REVIEW BY THIS COURT WOULD BE

UNWARRANTED

A. Introductory Summary.

This case presents no substantial federal question for

review by this Court. The California Court of Appeal

simply followed the settled federal and state rule that ar-

bitration is a matter of agreement, and that parties can-

not be forced to arbitrate a dispute they have not agreed

to arbitrate. Accordingly, the Court enforced the parties’

agreement, including its choice of law clause, according to

its terms.

Appellant Volt suggests that there is a Supremacy

Clause issue here, but there really is not, and Volt ulti-

mately identifies none. Thus Volt does not dispute that

settled and supreme federal/state rule of law, or argue

that the Court of Appeal did not follow it. Instead, Volt

contends that the Court’s reading of the choice of law

¢lause was ‘‘unsound;”’ the ‘‘principal issue’’ presented

by this case, Volt argued to the California Supreme Court,

was whether the court misread that clause. (App. G, p.1)

But the Court’s reading was clearly right and Volt’s

clearly wrong. Moreover, right or wrong, a state court’s

reading under state law of a choice of law clause in a pri-

vate agreement does not present a question for review by

this Court.

Volt asserted a ‘‘secondary issue’’ to the California

Supreme Court with respect to the interpretation of See-

tion 1281.2(c) of the California Code of Civil Procedure.

(App. G, p.1) That provision grants the superior courts

discretion to stay arbitration when one party to an arbi-

tration agreement is also a party to related litigation with

third persons who have not agreed to arbitrate, and who

therefore cannot be brought into the arbitration. Volt con-

tended that § 1281.2(¢) dees not apply when the party **re-

sisting arbitration has himself initiated the litigation with

such third persons’’ after the demand for arbitration is

filed. (App. G, p.2)

There was nothing to that contention; the California

statuie itself answered it. The statute provides that it

applies whether the party ‘‘resisting arbitration’’ initiates

the litigation after the demand is filed or before. The

Superior Court applied the statute in accordance with its

terms, and stayed the arbitration. ‘That stay order was

well within the Court’s discretion. It certainly presents

no substantial federal question for review by this Court,

and Volt does not raise the issue here.

Moreover, these non-existent questions are presented

by a decision which in essence does not exist. The Cali-

fornia Supreme Court directed that the Court of Appeal’s

opinion should not be published in the permanent edition

of the official California Appellate Reports. The decision

therefore has no precedential value in any matter. Non-

existent issues presented by a non-existent decision ought

not occupy this Court’s time.

B. Volt’s ‘‘Principal’’ Argument Is Wrong.

The Court of Appeal interpreted the parties’ agree-

ment under state law, and determined under it that the

parties agreed that the ‘‘laws of California, of which see-

tion 1281.2 is certainly a part, are to govern their con-

tract.”’. (App. A, p.4) The Court then enforced that

agreement in accordance with its terms. That was exactly

what the law, state and federal, required the Court to do.

1. The Court’s Decision Was Compelled By

The Most Basic Principles Of Abitra-

tion Law.

A court order enforcing the parties’ agreement in ac-

cordance with its terms in no way conflicts with the Fed-

eral Arbitration Act (‘*‘FAA’’), the Supremacy Clause or

any other provision of federal law.2 To the contrary,

courts are compelled to honor the parties’ agreement by

the most basic principles of arbitration law, federal and

state.

2 Volt claims that but for the parties’ agreement, “there is

no question that” federal law would govern the disposition of

this case. (Jur. St., pp.23-24) The Court of Appeal assumed

that to be true (App. A, pp.3-4), but there is substantial ques-

tion in respect to it. Southland Corp. v. Keating, infra, 465 U.S.

1, 16 n.10 (1984), expressly did not “hold that §§ 3 and 4 of

the [federal] Arbitration Act [the procedural provisions of the

Act] apply to proceedings in state courts.’’ No Supreme Court

case so holds. Moreover, §§3 and 4 by their terms do not

refer to state courts; they refer to “Courts of the United States”

and “United States District Court.” And indeed, it would be

extraordinary for Congress to intend federal procedural rules

to apply in state court; in particular it would be extraordinary

for Congress to require a state to entertain piecemeal litigation

when its legislature has said, through California Code Civ. Proc.

§ 1281.2(c) here, that it disapproves of it.

Volt claims that Perry v. Thomas, infra, — U.S. —, 107

S. Ct. 2520 (1987), resolves this issue (Jur. St., p.26 n.), but it

does not mention it, much less purport to resolve it. In fact,

Perry's holding was based on § 2, the substantive provision of

the Act, not §§ 3 and 4. Id. at 2525-26.

We agree that this Court need not reach the issue, because

the appeal lacks merit without regard to it.

Arbitration is a matter of agreement. A court cannot

force parties to arbitrate a dispute they have not agreed

to arbitrate. They can agree to arbitrate in any way they

want; thus they can agree to arbitrate some disputes and

not all, or in some circumstances and not all, or not at all.

Nothing in the FAA changes any of that or takes those

rights away. Again, the contrary is so. The FAA is

meant to enforce the parties’ agreement, whatever it is,

no less and no more than it is. Thus the FAA prohibits

a state from refusing to enforce an arbitration agreement

subject to the FAA in accordance with the agreement’s

terms. The FAA does not mandate a state to disregard

the parties’ agreement, much less compel them to arbi-

trate a dispute they have not agreed to arbitrate or in a

way they have not agreed to arbitrate. Volt’s own authori-

ties make that clear. See Dean Witter Reynolds, Inc. v.

Byrd, 470 U.S. 218, 219 (1985) (emphasis added) :

“The legislative history of the Act establishes

that the purpose behind its passage was to ensure

judicial enforcement of privately made agreements

to arbitrate. We therefore reject the suggestion that

the overriding goal of the Arbitration Act was to pro-

mote the expeditious resolution of claims. The Act,

after all, does not mandate the arbitration of all

claims, but merely the enforcement—upon the motion

of one of the parties—of privately negotiated arbitra-

tion agreements.’’

Accord, Prima Paint Corp. v. Flood & Conklin, 388 US.

395, 402, 406 (1967) (claims for fraudulent inducement are

for the arbitrator, not the Court, ‘‘except where the par-

ties otherwise intend’’; no one even claimed that parties

are ‘‘not entirely free’’ to otherwise intend and **so con-

10

tract’’); Moses H. Cone Mem. Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 20 (1983) (federal court should compel

arbitration even if that causes piecemeal litigation ‘*where

necessary to give effect to the arbitration agreement’’);

Southland Corp. v. Keating, 465 U.S. 1, 16 n.11 (1984)

(state cannot refuse to arbitrate Franchise Act claims

where parties ‘‘agreed”’ to arbitrate them) ; Perry v. Thom-

as, — U.S. —, 107 S.Ct. 2520, 2526 (1987) (state cannot

refuse to arbitrate broker’s wage claim where parties

agreed to arbitrate it; the purpose of the federal Act ** was

to enforce private agreements into which parties had en-

tered’).

California law is exactly the same. See, e.g., Main

v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 67 Cal.

App. 3d 19, 32 (1977):

‘‘Arbitration is a matter of contract and a party can-

not be required to submit to arbitration any dispute

which he has not agreed so to submit.’’

Accord, O'Malley v. Wilshire Ou Co., 59 Cal. 2d 482, 496

(1963); Chan v. Drexel Burnham Lambert, Inc., 178 Cal.

App. 3d 652, 640, 645 (1986); App. A, p.10.

The Court of Appeal simply followed those basie prin-

ciples of arbitration law, and enforced the parties’ agree-

ment in accordance with its terms. It held ‘‘that the par-

ties are at liberty to choose the terms under which they

will arbitrate, and such a choice will not run afoul of the

FAA.’’ App. A, pp.10-11. It concluded that the Court

would violate those basic principles of arbitration law

were it not to enforce the parties’ agreement, including

its choice of law clause, in accordance with its terms. App.

A, pp.11-12.

11

‘‘Were the federal rules to be imposed in this

case to override the parties’ choice of law, the effect

would be to force the parties to arbitrate where they

agreed not to arbitrate. This result is not only inimi-

cal to the policies underlying state and federal arbi-

tration law,... it also violates basic principles of con-

tract law.”’

Accord, Chan v. Drexel Burnham Lambert, Inc., above,

178 Cal. App. 3d at 640, 645:

‘‘Arbitration is recognized as a matter of con-

tract, and a party cannot be forced to arbitrate some-

thing in the absence of an agreement to do so.”’

(Vespe Contracting Co. v. Anvan Corporation (E.D.

Pa. 1975) (399 F. Supp. 516, 520.) The [federal]

Act ** ‘does not dictate that we should disregard par-

ties’ contractual agreements . . . outlining the boun-

daries of the areas intended to be arbitrable.’ ’’ (Pas-

Ebs v. Group Health, Inc. (S.D.N.Y. 1977) 442 F.

Supp. 937, 940), and there is no policy compelling per-

sons to accept arbitration of controversies which they

have not agreed to arbitrate. (Delta Lines, Inc. v.

International Brotherhood of Teamsters (A977) 66

Cal. App. 3d 960, 966 [136 Cal. Rptr. 345)).

-Volt does not dispute those basic principles, or con-

tend that they do not apply here. Indeed, Volt says that

notwithstanding the FAA, Stanford could have dealt witu

‘*the possibility of potentially duplicative proceedings re-

sulting from disputes with other participants in the proj-

ect’’ with whom it had no agreements to arbitrate; all

Stanford need have done, Volt states, is to insert ‘ta pro-

viso excusing it from its duty to arbitrate’’ to deal with the

‘*problem of duplicative litigation.’’ (Jur. St., p.55) The

Court of Appeal held that that is exactly what Stanford

and Volt in effeet agreed to do.

12

‘Tf the parties here had expressly stated in their

agreement that they wished to arbitrate only those

disputes between themselves which did not involve

third parties not bound by the arbitration agreement,

this provision would presumably be enforceable. In

our view they accomplished the same thing by choos-

ing to be governed by California law, thus mcorporat-

ing the California rules of civil procedure governing

arbitration agreements.”’ (App. A, p11.) (Emphasis

added)

2. Volt’s Construction Of The Choice Of

Law Provision Is Wrong, And Presents

No Question Appropriate For Review In

This Court.

Thus Volt does not attack the settled and controlling

principles on which the Court of Appeal’s decision is based.

Instead, it complains that the Court of Appeal coneluded

under state law that the parties consciously chose to be

’

governed by ‘*California law’? and not otherwise appli-

cable federal law, and that ‘‘the Court’s interpretation of

this contractual language is plainly unsound... .’’ **[AJn

examination of the probable intent of the parties with re-

spect to the laws that would govern their agreement,’’

Volt goes on, ‘‘supports the conclusion that federal law

should govern this controversy.”’ (Jur. St., pp.54-57)

Volt is way off base. The agreement provided that

it ‘‘shall be governed by the law of the place where the

Project is loeated.’’ The place the project was located

was California. There is no place called federal. There-

fore the contract clearly means that California law, the

place of the project, governs. The Court of Appeal had

‘‘no doubt”’ about that (App. A, p.5), and, besides the fact

that the clause clearly means that, the parties, who con-

tracted in California, must be taken to have known it;

13

the year before their ‘‘agreement was forged,’’ the Cali-

fornia Court of Appeal so held. Garden Grove Commu-

nity Church v. Pittshurgh-Des Moines Steel Co., 140 Cal.

App. 3d 251 (1983) (App. A, pp.5-6).3

Sut, Volt goes on, the choice of law clause really

means that California-law-plus-federal-law-thut-would-he-

applicable-but-for-the-clause governs. (Jur. St., pp.51-59)

The clause, however, does not say that, and the clause ex-

ists; there is no reason to interpret the clause but for the

clause. Still, Volt continues, citing to the dissenting opin-

ion, federal law and in particular the FAA are part of

California law by ‘‘the fundamental constitutional prin-

ciple that federal law is the ‘supreme law of the land’.’’

(Jur. St. p.57) But that argument is cireular and as-

sumes the premise it is meant to prove. The Supremacy

Clause does not mandate that the FAA apply where, as

’ Volt asserts that the parties would not have been aware

of Calif. Code Civ. Proc. § 1281.2(c) because those who ‘‘pre-

pared” the contract were not lawyers, citing to JA 22. (Jur. St.,

pp.54-55) JA 22 is simply the signature page of the contract.

There is no evidence to support Volt’s assertion, and it is in

fact false.

The Court of Appeal pointed out that “courts in other

states faced with identical language have reached the same

result we do here.” (App. A, pp.5-6) Volt agrees that one of

those cases so held, Standard Co. v. Elliott Constr. Co., 363

So. 2d 671 (La. 1978), but objects that the others, Fric A. Carl-

strom Constr. Co. v. Independent School Dist. No. 77, 256

N.W. 2d 479 (Minn. 1977) and Lane-Tahoe, Inc. v. Kindred

Constr. Co., 536 P. 2d 491 (Nev. 1975) have no “bearing”; ‘‘the

possible application of federal law” was not at issue there,

Volt says. (lur. St., p.34 n.) Volt misses the point. Carlstrom

and Lane-Tahoe both hold that a clause identical to the one

at issue here means that arbitration is to proceed in accord-

ance with the laws of the state in which the project is located.

256 N.W. 2d at 479; 536 P. 2d at 493. That is the point.

14

here, the parties agree otherwise. The Supreme federal

law mandates that agreements to arbitrate be enfored ae-

cording to their terms. The parties agreed that California

law applies. The Court of Appeal enforeed that agree-

ment as the supreme federal law—and state law—com-

pelled it to. (Subpart 1, above)

Thus Volt’s interpretation of the contract is plainly

wrong. Even if it were not, whether the Court of Appeal

properly interpreted the ‘probable intent of the parties”’

obviously presents a fact question. A fact question is not

a substantial federal question for review by this Court.

See Cal. Retail Liquor Dealers Assn. v. Midcal Alum., 445

U.S. 97, 111-12 (1980). That is particularly so here be-

cause the fact question relates to a simple matter of con-

tractual interpretation of a choice of law clause in a pri-

vate commercial contract, a matter governed exclusively

by state law. See Day & Zimmermann, Inc. v. Challoner,

425 U.S. 3, 4 (1975) (conflict-of-laws rules to be applied

in federal court must conform to those prevailing in state

courts.)* Indeed, Volt agrees that this case *‘depend[s]

S Volt places great reliance on the fact that this Court held

that a choice of law clause containing the phrase “law of the

jurisdiction” includes federal law. Fidelity Fed. S. & L. Assn. v.

de la Cuesta, 458 U.S. 141, 157 n. 12 (1982).

First of all, Volt ignores the fact that the choice of law

clause in the present case is different from the one in de /a

Cuesta. This clause specifies the laws of a physical place, the

“place where the project is located.’ The de la Cuesta clause

spoke to the law of a “jurisdiction” in the abstract. That se-

mantic difference, however, is the beginning, not the end. The

end is that Volt is asking this Court to review a simple matter

of contractual interpretation in an area (choice of law) gov-

erned exclusively by state law. See Day & Zimmermann, Inc. v.

Challoner, above, and Cal. Retail Liquor Dealers Ass'n v. Midcal

Alum., 445 U.S. 97, 111 (1980).

15

upon the interpretation given by the court to the choice-cf-

law clause.’’ (Jur. St., p.45) Volt raises no issue worthy

of this Court’s review.

Volt argues last, that unless its contention is made

law any party ean ‘‘evade his contractual duty to arbitrate

by commencing litigation involving non-arbitrable ancil-

lary claims against third persons.’’ (Jur. St., p43) That

is nonsense. Stanford did not evade its ‘contractual

duty’’; Volt and Stanford agreed that California law, and

thus, Cal. Code Civ. Proe. § 1281.2(¢), applied. Stanford

asked the Court to enforce that agreement in accordance

with its terms, and the Court did. Volt tried to evade that

agreement. The Court did not permit it to.

The Superior Court enforeed tne parties’ agreement

and exercised its discretion under CCP § 1281.2(¢), sound-

ly. There was no abuse of discretion, and the Court of

Appeal so held. (App. A, p.18) Volt says nothing to sug-

vest that there was. This state court’s discretionary appli-

cation of a state statute to a private agreement in accor-

dance with the agreement’s terms presents no question to

this Court to review,

C. The Court of Appeal’s Decision Has No

Precedential Effect.

The California Supreme Court directed that the Court

of Appeal’s opinion should not be published in the per-

. Volt says § 1281.2(c) “afford{ed] [Stanford] a legal excuse

from compliance with the duty to arbitrate,”’ and that it is a

“procedural device.” (Jur. St., p.44) Volt is just name-calling.

Section 1281.2(c) is meant to avoid piecemeal litigation arising

out of the same transaction, and to avoid conflicting rulings

on common issues of law and fact. The California legislature

determined that those were worthy aims. Obviously they are.

16

manent edition of the official California Appellate Re-

ports. Accordingly, that decision has no precedential value:

[Unpublished opinions] An opinion that is not or-

dered published shall not be cited or relied on by a

court or a party in any other action or proceeding. ...

California Rule of Court 977(a).

In short, Volt asks this Court to review a decision which

creates no conflict in the case law, decides no important

federal question, presents no other ‘*special and impor-

tant’’ consideration (Rule 17.1) and in essence does not

exist. Indeed, the decision does not even determine these

parties’ rights on the merits; there has been no trial, and

the parties’ rights remain to be adjudicated. To sorrow

from Justice Roberts, this is a deeision which should be

treated like ‘ta restricted railroad ticket, good for this

day and train only.””) Smith v. Alheright, 321 U.S. 649,

669 (1944) (Roberts, J., dissenting). It is not a decision

with which this Court need oceupy its time.®

fy

Vv

° Volt urges this Court to avoid a summary disposition of

this case because it would amount to an “adjudication on the

merits that establishes a binding precedent for the adjudication

of all future cases raising the same issue.” The California Su-

preme Court's order makes that argument a non sequitur: one

cannot use as precedent what cannot be cited as precedent.

In any event, Volt has not accurately stated the law in this

regard. In Edelman v. Jordan, 415 U.S. 651, 671 (1974), the Court

observed that, while summary affirmances not discussing the

issues “obviously are of precedential value, . . . [e}qually ob-

viously they are not of the same precedential value as would

be an opinion of this Court treating the question on the mer-

its.’ Mandel v. Bradley, 432 U.S. 173, 176 (1977), makes clear

that ‘a summary affirmance is an affirmance of the judgment

only,” not necessarily of “the reasoning by which it was

reached.”

17

CONCLUSION

This appeal should be dismissed or the judgment be-

low should be summarily affirmed.

Dated: March 4, 1988,

Respectfully submitted,

McCvurcuen, Doyie, Brown

& ENersen

Davin M. Her.sron

(Counsel of Record)

Lyxn H. Pasanow

Srerpuen L. Gopcnavx

Three Embareadero Center

San Francisco, CA 94111

Telephone: (415) 393-2000

Counsel for Appellee

The Board of Trustees of the

Leland Stanford Junior

University