Amicus Curiae Brief — Directv, Inc. v. Imburgia, 135 S. Ct. 1547 (2015) (No. 14-462)

en

In the Supreme Court of the Anited States

oPAE Dito

DIRECTV, INC.,

Petitioner,

—y--

AMY IMBURGIA ET AL..,

Respondents.

On Writ of Certiorari to the

California Court of Appeal, Second District

BRIEF OF CALIFORNIA LAW PROFESSORS

AS AMICI CURIAE

IN SUPPORT OF RESPONDENTS

DAVID HORTON

HOLLY MCGREGOR MOSIER

UC DAVIS SCHOOL OF LAW COUNSEL OF RECORD

(KING HALL)

400 MRAK HALL DRIVE

DAVIS, CA 95616

(530) 752-4216

DOHORTON@UCDAVIS.EDU

GREGORY A. PATTON

LAW OFFICES OF

GREGORY PATTON

1303 BELLINGHAM, DRIVE

OCEANSIDE, CA 92057

(714) 206-6790

GPATTONLAW@AOL.COM

JULY 24, 2015

SANDERS PHILLIPS

GROSSMAN, LLC

2860 MICHELLE DR., SUITE 220

IRVINE, CA 92606

(877) 480-9142

HMOSIER@THESANDERSFIRM.COM

COUNSEL FOR AMICI CURIAE

SUPREME COURT PRESS ¢

(888) 958-5705 ¢ BOSTON, MASSACHUSETTS

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...............:ccccccccssseceseeeesees ii

INTEREST OF AMICI CURIAE.......0000...00....0.000000000 l

SUMMARY OF ARGUMENT .................:cc::ccccceseeeeeees l

I iiarhiiailtehtcet in, icine ditched 3

I. CALIFORNIA CouRTS ARE NoT HOSTILE TO

Fe tntvntreresnsnricnmenhnnantivintnniiinniinniti 3

A. California Courts Did Not Discriminate

Against Arbitration Before Concepcion... 4

B. California’s Recent FAA Jurisprudence

Has Also Been Faithful to this Court’s

ERTIES SOO Ee ine ee FRE g

ERR Me aS RCRD 15

APPENDIX

List of Amici Curiae California Law Professors...... 16

il

TABLE OF AUTHORITIES

Page

CASES

A&M Produce Co. v. FMC Corp.,

186 Cal. Rptr. 114 (Ct. App. 1982) 0.0.0.0... 18

American Express Co. v.

Italian Colors Restaurant,

es Ce CI cittrccecteceiitiicibecinae passim

Armendariz v. Foundation Health Psychcare

Services, Inc., 6 P.3d 669 (Cal. 2000) ... 10, 11, 12

AT&T Mobility LLC v. Concepcion,

131 S.Ct. 1740 (2011) ..............cccccccccsceseeeee passim

Berent v. CMH Homes, Inc.,

__S.W.3d__, No. E201301214SCRI11CV,

2015 WL 3526984 (Tenn. June 5, 2015)........... 13

Booker v. Robert Half Int'l, Inc.,

413 F.3d 77 (D.C. Cir. 2005) ...............c:ccccceeeeeee. 6

Brewer v. Missouri Title Loans,

364 S.W.3d 486 (Mo. 2012) .0.......ccccceeeeee 10, 16

Broughton v. Cigna Healthplans of Cal,

988 P.2d 67 (Cal. 1999) .0.......cceccececeeeeeeeeeeees 4,5

Chavarria v. Ralphs Grocery Co.,

733 F.3d 916 (9th Cir. 2013) oo..ccccccccecccceeeeeee 15

Cheek v. United Healthcare of Mid-Atlantic,

Inc., 835 A.2d 656 (Md. 2003) ............00ccccccceeeee. 11

Circuit City Stores, Inc. v. Adams,

FERRER SETA oa Oe a 6

Coady v. Cross Country Bank, Inc.,

729 N.W.2d 732 (Wis. App. 2007) ...........c00000- 10

TABLE OF AUTHORITIES—Continued

Page

Coleman v. Prudential Bache Sec., Inc.,

802 F.2d 1350 (11th Cir. 1986)... ce. 15

Cooper v. QC Financial Services, Inc.,

503 F. Supp. 2d 1266 (D. Ariz. 2007).................. 4

Credit Bureau, Inc. v. Cingular Wireless LLC,

379 F.3d 159 (5th Cir. 2004) ooo... eee 12

D.R. Horton Inc. v. Cuda,

357 NLRB No. 184, 2012 WL 36274 (2012) ..... 19

Dale v. Comcast Corp.,

498 F.3d 1216 (11th Cir. 2007) ....00.... eee. 10

Dan Ryan Builders, Inc. v. Nelson,

737 S.E.2d 550 (W. Va. 2012) wo... ccccccececceeeeseee 12

Discover Bank v. Superior Court,

113 P.3d 1100 (Cal. 2005) «0.0.00... cccccecceeeeeeee 9,19

Doctor’s Associates, Inc. v. Casarotto,

517 U.S. 681 (1996) ...........cc eee eeeeeeeees sie

Dunlap v. Berger,

567 S.E.2d 265 (W. Va. 2002) ...........cccccceeeeeees 10

E.E.O.C. v. Waffle House, Inc.,

ESO ene eR eee 6

Feeney v. Dell Inc.,

908 N.E.2d 753 (Mass. 2009) ...0.0........cceeeee 8, 10

Figueroa v. THI of New Mexico at

Casa Arena Blanca, LLC,

306 P.3d 480 (N.M. Ct. App. 2012) ............-0 17

Fiser v. Dell Computer Corp.,

188 P.3d 1215 (N.M. 2008)..............ccccecceeeeeeeeeee 10

iv

TABLE OF AUTHORITIES—Continued

Page

Gentry v. Superior Court,

165 P.3d 556 (Cal. 2007) .......000cccccccecceeeeee 18, 19

Gibson v. Neighborhood Health Clinics, Inc.,

121 F.3d 1126 (7th Cir. 1997) .............ccceeceeeeees 11

Gilmer v. Interstate/Johnson Lane Corp.,

RETR PR en ROOT 6

Guidotti v. Legal Helpers Debt Resolution,

LL.C., __¥. Supp. 3d___ No. CIV.A. 11-

1219 JBS, 2014 WL 6863183

a ssetumainntadioubaais 16

Herron v. Century BMW,

693 S.E.2d 394 (S.C. 2010) ........cccccccecccceeceeeees 10

Hill v. Garda CL Nw., Inc.,

308 P.3d 635 (Wash. 2013)............ccccccceeseeeeeeeees 17

Hull v. Norcom, Inc.,

750 F.2d 1547 (11th Cir. 1985) ..........0000... eee. 12

In re Checking Account Overdraft Litig.,

__F. Supp. 3d__, No. 1:09-MD-02036,

2015 WL 464266 (S.D. Fla. Feb. 3, 2015)......... 16

In re Poly-Am., L.P.,

Ee TINE: GID cccrnccccssticnsntesinscnistnssie 8

Independence Cnty. v. City of Clarksville,

386 S.W.3d 395 (Ark. 2012) .0........ccccceeeeseeeees 11

Iskanian v. CLS Transp. Los Angeles, LLC,

S37 P.3d 129, (Cal. BO14) ........cecscscscssrersscesseseees 19

TABLE OF AUTHORITIES—Continued

Page

Jimenez v. Cintas Corp.,

__S.W.3d__, No. ED 101015, 2015 WI.

160451 (Mo. Ct. App. Jan. 13, 2015) ........00...... 11

Kelker v. Geneva-Roth Ventures, Inc.,

303 P.3d 777 (Mont. 2013) oo... ccccccccceceeeseeeeeee 16

Kinkel v. Cingular Wireless LLC,

857 N.E.2d 250 (Ill. 2006) 2.0.00... ccccceeeeeeeees 10

Kristian v. Comcast Corp.,

446 F.3d 25 (1st Cir. 2006)............cccccccceeeeeeeeeeeee 6

Lazado v. Dale Baker Oldsmobile, Inc.,

91 F.Supp.2d 1087 (W.D. Mich. 2000).............. 10

Leonard v. Terminix Int7 Co., L.P.,

854 So. 2d 529 (Ala. 2002).............ccccecceceeeeeeeeeees 4

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985) .0.0.......cc0... 5

Muhammad v. County Bank of Rehoboth

Beach, Delaware, 912 A.2d 88 (N.J. 2006)......... )

Noohi v. Toll Bros., Inc.,

708 F.3d 599 (4th Cir. 2013) oo... ccccecseeeeeees 11

Picardi v. Eighth Judicial District,

SE Be Pete I BSD csscccecieecsceseccccessesnseescone s

Pinnacle Museum Tower Assn. v. Pinnacle

Mkt. Dev. (US), LLC,

282 P.3d 1217 (Cal. 2012) ......c.ccccccecceeeees 19, 20

Powertel v. Bexley,

743 So. 2d 570 (Fla. Ct. App. 1999) ..........0000...0. cs)

TABLE OF AUTHORITIES—Continued

Page

Rembert v. Ryan’s Family Steak Houses, Inc.,

596 N.W.2d 208 (Mich. 1999).............cccccccceeeeeeee 7

Rodriguez de Quijas v. Shearson/Am. Exp.,

Inc., 490 U.S. 477 (1989) .......ccccccccccceceeecseceeeeeeeees 6

Schnuerle v. Insight Comm, Co., L.P.,

376 S.W.3d 561 (Ky. 2012) ..........cccccccsseessseeseeees 16

Scott v. Cingular Wireless,

161 P.3d 1000 (Wash. 2007)...........cccccccceeseseeeeeees i)

Sec. Serv. Fed. Credit Union v. Sanders,

264 S.W.3d 292 (Tex. App. 2008)............cccccee. 7

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

ee IE pecsnitncestcinsnesintiticrodacsiitiacicieanaate 5, 6

Siopes v. Kaiser Found. Health Plan, Inc.,

312 P.3d 869 (Haw. 2013) 20... ccccccccceeeceeeeeeeees 16

Smith v. Jem Grp., Inc.,

737 F.3d 636 (9th Cir. 2013) ...........cccccccecceeeseeeee 16

Sonic Calabasas A, Inc. v. Moreno,

311 P.3d 184 (Cal. 2013) .0.......cceeceeseeeeeeees 17, 18

Stevens ceinweber/Sullens, Inc. v.

Holm Dev. & Management, Inc.,

795 P.2d 1308 (Az. Ct. App. 1990)............000000. 11

THI of N. M. at Hobbs Ctr., LLC v. Patton,

741 F.3d 1162 (10th Cir. 2014) .0........cccceeeeees 15

Thibodeau v. Comcast Corp.,

912 A.2d 874 (Pa. Super. Ct. 2006)................0.. 10

Tillman v. Commercial Credit Loans, Inc.,

655 S.E.2d 362 (N.C. 2008) ........... ccc cceccceeeeeeeeees 12

TABLE OF AUTHORITIES—Continued

Page

Trist v. Child,

SET 7

Vasquez-Lopez v. Beneficial Oregon, Inc.,

152 P.3d 940 (Or. App. 2007) ..........ccccccccecceeeeees 10

Volt Info. Sciences, Inc. v. Bd. of Trustees of

Leland Stanford Junior Univ.,

489 U.S. 468 (1989) oo... cccecceccesscssessceeceseeeceneees 2

Williams v. Walker-Thomas Furniture Co.,

350 F.2d 445 (D.C. Cir. 1965) 200.0... 18

STATUTES

Federal Arbitration Act

ES passim

OTHER AUTHORITIES

David Horton,

Federal Arbitration Act Preemption,

Purposivism, and State Public Policy,

ae 6

G. Richard Shell,

Contracts in the Modern Supreme Court,

81 CAL. L. REV. 433 (1993) ..........ccccccccceccseeeeeeeees 6

Hiro N. Aragaki,

Equal Opportunity for Arbitration,

58 UCLA L. REV. 1189 (2011)...........cccccccceceseereees 4

semaanes sc ). |) —ceemeee

INTEREST OF AMICI CURIAE

Amici curiae are law professors from the State of

California.! Amici have years of experience teaching

and publishing in arbitration, contracts, civil procedure,

and related fields. Amuci write to improve this

Court’s understanding of how California judges have

interpreted the Federal Arbitration Act (“FAA”).

le? oe

SUMMARY OF ARGUMENT

The relief that Petitioner seeks is extraordinary.

Petitioner’s adhesive Customer Agreement prohibits

arbitration if the law of a customer's state would

invalidate its class arbitration waiver. The California

Court of Appeal enforced this provision as written

and held that because Petitioner’s class arbitration

waiver is invalid under California law, there is no

agreement to arbitrate. Dissatisfied with the conse-

quences of its own draftsmanship, Petitioner urges

this Court to overturn the state panel's interpretation.

But “the interpretation of private contracts is

ordinarily a question of state law, which this Court

does not sit to review.” Volt Info. Sciences, Inc. v. Bd.

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

and no such counsel of party made a monetary contribution

intended to fund the preparation or submission of this brief. No

person other than the amici curiae, or their counsel, made a

monetary contribution to its preparation or submission. The

parties have issued blanket consents to the filing of amicus

briefs.

of Trustees of Leland Stanford Junior Univ., 489 U.S.

468, 474 (1989).

Accordingly, Petitioner and its amici seek to

transform this case into a referendum on the California

judiciary’s alleged “hostility to arbitration.” Brief for

Petitioner at 2; see also generally Brief of Amicus

Curiae DRI—The Voice of the Defense Bar In

Support of Petitioner DIRECTV, Inc. (“DRI Brief”).2

By detailing the California Supreme Court’s alleged

“attempts to evade the FAA’s mandate,” id. at 5, they

hope to convince this Court of the need for heavy-

handed intervention.

These gloomy atmospherics are a smokescreen.

Petitioner's amici DRI, which leads the charge on

this issue, devotes most of its brief to highlighting

cases in which the California Supreme Court refused

to enforce one-sided arbitration clauses that made it

harder for plaintiffs to prosecute state statutory

causes of action. See id. at 5-11. But DRI does not

mention that most other jurisdictions take similar

steps to ensure that substantive rights survive their

transplant from the judicial to arbitral forum.

2 See also Brief of Chamber of Commerce of the United States

of America, National Association of Manufacturers, and Retail

Litigation Center, Inc., as Amici Curiae in Support of Petitioner

(“Chamber Brief”) at 4, 6-12 (arguing that the California Court

of Appeal’s opinion “impermissiblly] discriminatles] against

arbitration”); Brief Amicus Curiae of Pacific Legal Foundation

in Support of Petitioner (“Pacific Legal Brief”) at 19-21 (“The

decision below continues a collision course upon which

California courts have embarked with this Court’s decisions

regarding FAA preemption.”).

DRI also contends that the California Supreme

Court has given short shrift to this Court’s opinions

in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740

(2011) and American Express Co. v. Italian Colors

Restaurant, 133 S.Ct. 2304 (2013). See DRI Brief at

15-21. However, DRI condemns the state justices for

not sharing DA/s own, highly-idiosyncratic view that

these cases preclude any “assessment of whether an

arbitration agreement is sufficiently fair.” Jd. at 18.

Moreover, DRI omits recent cases in which California

judges have broadened the FAA’s scope.

a

ARGUMENT

I. CALIFORNIA COURTS ARE NOT HOSTILE TO

ARBITRATION

Petitioner's amici go to great lengths to try to get

this Court to micromanage California’s common law

of contracts. For instance, DRI devotes nearly its

entire brief to arguing that the California Supreme

Court has “thwartled] the FAA.” DRI Brief at 4.3

That is simply not true. This section sets the record

straight about California’s FAA jurisprudence.

3 The California Supreme Court’s only involvement in this

matter was to deny discretionary review of the Court of

Appeal’s opinion. Moreover, even if it were possible to

demonstrate that a constantly-evolving, multi-member court

was capable of harboring continuing, collective animus toward

arbitration, DRI does not explain how such a showing should

inform the Court’s preemption analysis.

A. California Courts Did Not Discriminate

Against Arbitration Before Concepcion

DRI argues that the California Supreme Court

routinely ignored the FAA’s preemptive force during

the period before this Court decided Concepcion. See

DRI Brief at 3, 5-11. But on issue after issue, DRI

faults the state high court for adopting majority or

comparatively moderate positions.

First, citing cases such as Broughton v. Cigna

Healthplans of Cal., 988 P.2d 67 (Cal. 1999), DRI objects

that the California justices invalidated arbitration

clauses when necessary to “ensure that plaintiffs

could vindicate state statutory rights.” Jd at 3.4

However, before Concepcion, this was not some wild-

haired, deviant approach. To the contrary, it was a

bedrock principle of federal arbitration law. As this

Court repeatedly acknowledged, the choice between

arbitration and litigation should not affect the outcome

of a dispute:

4In Broughton, the California Supreme Court compelled

arbitration of a damages claim brought by a mother and her son

against a health insurer. See Broughton , 988 P.2d at 71-72, 80.

However, the state high court also held that it would be cost-

prohibitive for the plaintiffs to arbitrate their request for a

public injunction. See id at 77-78. As the justices explained,

because arbitral jurisdiction expires shortly after the award,

and arbitrators’ rulings do not have collateral estoppel effect,

the plaintiffs would need to endure the cost, hassle, and

uncertainty of filing a new arbitration whenever they needed to

enforce or modify the decree. /d. at 77: see also Hiro N. Aragaki,

Equal Opportunity for Arbitration, 58 UCLA L. REV. 1189, 1252

(2011) (“Broughton was predicated on a particularized

determination that there are real and unavoidable

discontinuities between arbitration and litigation”).

By agreeing to arbitrate a statutory claim, a

party does not forgo the substantive rights

afforded by the statute; it only submits to

their resolution in an arbitral, rather than a

judicial, forum. It trades the procedures and

opportunity for review of the courtroom for

the simplicity, informality, and expedition

of arbitration.

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 628 (1985); Shearson/Am. Exp., Inc.

v. McMahon, 482 U.S. 220, 229 (1987); Rodriguez de

Quijas v. Shearson/Am. Exp., Inc., 490 U.S. 477, 481

(1989); Gilmer v. Interstate/Johnson Lane Corp., 500

U.S. 20, 26 (1991); Circuit City Stores, Inc. v. Adams,

532 U.S. 105, 123 (2001); EE.O.C. v. Waffle House,

Inc., 534 U.S. 279, 296 n.10 (2002).

Although these cases involved federal statutory

causes of action, the FAA’s guarantee of outcome-

neutrality extended to state-created rights as well. As

then-Judge John Roberts explained in a case

involving alleged violations of District of Columbia

anti-discrimination legislation, “[s]tatutory claims

may be subject to agreements to arbitrate, so long as

the agreement does not require the claimant to forgo

substantive rights afforded under the statute.”

Booker v. Robert Half Int’, Inc., 413 F.3d 77, 79

(D.C. Cir. 2005); see also Kristian v. Comcast Corp.,

446 F.3d 25, 29 (1st Cir. 2006) (noting that an

arbitration clause cannot “prevent the vindication of

statutory rights under state = law”).5

5 Accord, Rembert v. Ryan’s Family Steak Houses, Inc., 596

N.W.2d 208, 226 (Mich. 1999) (ordering state employment

discrimination claim to arbitration on the condition that the

Putting a different rhetorical gloss on the same

argument, DRI repeatedly accuses California courts

of discriminating against arbitration by invoking the

state’s “public policy against exculpatory contracts.”

DRI Brief at 8-10. But that approach is entirely

consistent with the FAA’s text. Section 2, the statute’s

centerpiece, instructs courts to annul arbitration

clauses under “generally applicable contract defenses.”

Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681,

686-87 (1996). The defense of violation of public

policy has long been “a rule of the common law of

universal application.” Jrist v. Child, 88 U.S. (21

Wall.) 441, 448 (1874).6 Courts from across the

country have observed that “the tenet that a contract

may be invalidated on grounds that it violates public

policy is a principle of [s]tate contract law that ‘arose

to govern issues concerning the validity, revocability,

and enforceability of contracts generally.” Feeney v.

Dell Inc., 908 N.E.2d 753, 768 (Mass. 2009) (quotation

“procedures are fair so that the employee may effectively

vindicate his statutory rights”); Sec. Serv. Fed. Credit Union v.

Sanders, 264 S.W.3d 292, 300 (Tex. App. 2008) (striking down

arbitration clause that impaired the plaintiffs’ exercise of their

Texas Deceptive Trade Practices Act rights).

6 See also David Horton, Federal Arbitration Act Preemption,

Purposivism, and State Public Policy, 101 GEO. L.J. 1217, 1224,

1255-56 (2013) (“Congress debated and passed the statute

during the golden age of the public policy doctrine—a time

when courts held that a contract violated state public policy

more frequently than they invoked garden-variety rules such as

mistake, duress, lack of consideration, or the statute of frauds”);

G. Richard Shell, Contracts in the Modern Supreme Court, 81

CAL. L. REV. 433, 529 n.82 (1993) (observing that “the public

policy [defense] had surprising vitality in many jurisdictions

during the Lochner era”).

omitted); Picardi v. Eighth Judicial District, 251 P.3d

723, 726 (Nev. 2011) (“courts may refuse to enforce

[an arbitration clause) that contravenes the

state’s public policy”); In Re Poly-Am., L.P., 262

S.W.3d 337, 347 (Tex. 2008) (rejecting the argument

that “the FAA preempts all state public-policy

grounds for finding the agreement to arbitrate

unenforceable” because the statute “requirel[s] only

that agreements to arbitrate be placed ‘upon the

same footing as other contracts”) (quoting Doctor's

Assocs., 517 U.S. at 687)).

Consider Discover Bank v. Superior Court, 113

P.3d 1100 (Cal. 2005), which Concepcion abrogated.

From DRI’s brief, one might think that California

stood alone by invalidating class arbitration waivers

that exonerated defendants from numerous low-

value claims. See DRI Brief at 9-10. But Discover

Bank was the leading approach. Indeed, courts

routinely nullified class arbitration waivers for

serving as “exculpatory clause[s],” Muhammad v.

County Bank of Rehoboth Beach, Delaware, 912 A.2d

88, 99 (N.J. 2006), and giving drafters carte blanche

to engage in “a broad range of wrongful conduct.”

Scott v. Cingular Wireless, 161 P.3d 1000, 1009

(Wash. 2007).7

7 See also Leonard v. Terminix Int? Co., L.P., 854 So. 2d 529,

535-36 (Ala. 2002); Cooper v. QC Financial Services, Inc., 503 F.

Supp. 2d 1266, 1279-80 (D. Ariz. 2007); Powertel v. Bexley, 743

So. 2d 570, 576 (Fla. Ct. App. 1999); Dale v. Comcast Corp., 498

F.3d 1216, 1224 (11th Cir. 2007) (applying Georgia law); Kinke/

v. Cingular Wireless LLC, 857 N.E.2d 250, 274 (Ill. 2006);

Lazado v. Dale Baker Oldsmobile, Inc., 91 F .Supp.2d 1087, 1105

(W.D. Mich. 2000); Feeney, 908 N.E.2d at 762-68; Brewer v.

Missouri Title Loans, Inc., 323 S.W.3d 18, 24 (Mo. 2010); Fiser

Likewise, DRI argues that Armendariz v.

Foundation Health Psychcare Services, Inc., 6 P.3d

669 (Cal. 2000) “invented” a rule “mandating a

‘modicum of bilaterality’ in arbitration—ce., that an

arbitration clause required as a condition of

employment must apply to both claims more likely to

be brought by an employer and claims more likely to

be brought by an employee.” DRI Brief at 8. But

Armendariz drew on a venerable line of cases from

other jurisdictions that prohibit non-mutual arbitration

clauses in al/ contexts by holding that they lack

consideration. See Stevens/Leinweber/Sullens, Inc. v.

Holm Dev. & Management, Inc., 795 P.2d 1308, 1313

(Az. Ct. App. 1990).8 According to these courts,

because the FAA’s separability doctrine treats

arbitration clauses as independent contracts within

broader “container” contracts, “the consideration

exchanged for one party’s promise to arbitrate must

be the other party’s promise to arbitrate.” Aull v.

Norcom, Inc., 750 F.2d 1547, 1550 (11th Cir. 19885).

v. Dell Computer Corp., 188 P.3d 1215, 1222 (N.M. 2008);

Tillman v. Commercial Credit Loans, Inc., 655 S.E.2d 362, 373

(N.C. 2008); Vasquez-Lopez v. Beneficial Oregon, Inc., 152 P.3d

940, 944 (Or. App. 2007); Thibodeau v. Comcast Corp., 912 A.2d

874, 886 (Pa. Super. Ct. 2006); Coady v. Cross Country Bank,

Inc., 729 N.W.2d 732, 746 (Wis. App. 2007); Herron vy. Century

BMW, 693 S.E.2d 394, 399 (S.C. 2010); State ex rel. Dunlap v.

Berger, 567 S.E.2d 265, 272 n.3 (W. Va. 2002).

8 See also Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d

1126, 1131 (7th Cir. 1997); Noohi v. Toll Bros., Inc., 708 F.3d

599, 611-12 (4th Cir. 2013); Independence Cnty. v. City of

Clarksville, 386 S.W.3d 395, 399 (Ark. 2012); Cheek v. United

Healthcare of Mid-Atlantic, Inc., 835 A.2d 656, 669 (Md. 2003);

Jimenez v. Cintas Corp., __S.W.3d__, No. ED 101015, 2015

WL 160461, at *8 (Mo. Ct. App. Jan. 13, 2015).

Armendariz does not sweep nearly so far. It only

governs adhesive employment agreements, not all

contracts. Moreover, it merely factors an arbitration

clause’s imbalance into the unconscionability analysis,

instead of deeming it to be a fatal lack of consideration.

In fact, many states follow similar rules. See, e.z.,

Tillman v. Commercial Credit Loans, Inc., 655 S.E.2d

362, 372 (N.C. 2008) (“[tlhe one-sidedness of the

clause. contributes to our overall conclusion that it

is unconscionable”); Dan Ryan Builders, Inc. v. Nelson,

737 S.E.2d 550, 560 (W. Va. 2012) (“in assessing

whether a contract provision is substantively

unconscionable, a court may consider whether the

provision lacks mutuality of obligation”).9

In sum, DRI fails to prove that “California in

particular has a history of aggressively refusing to

enforce arbitration agreements.” DRI Brief at 5.

Before Concepcion, California was just one of many

jurisdictions that exercised its prerogative under

section 2 to police arbitration clauses for fairness.

B. California’s Recent FAA Jurisprudence Has

Also Been Faithful to this Court’s Precedents

DRI also contends that California courts “have

continued to resist the FAA’s preemptive mandate”

after Concepcion Italian Colors. DRI Brief at 15-20.

9 See also Iberia Credit Bureau, Inc. v. Cingular Wireless LLC,

379 F.3d 159, 170 (5th Cir. 2004) (“[t]helse] cases do not

necessarily express the impermissible view that arbitration is

inferior to litigation, for a choice of remedies is better than

being limited to one forum”) (applying Louisiana law); Berent v.

CMH Homes, Inc., __S.W.3d__, No. E201301214SCR11CV,

2015 WL 3526984, at *10 (Tenn. June 5, 2015) (rejecting the

argument that Concepcion preempts these decisions).

10

But DRI criticizes the state judiciary for failing to

conform to DR/8 unique reading of those opinions. In

addition, DRI overlooks recent California decisions

that have expanded the scope of the FAA.

According to DRI, Concepcion and Italian Colors

require courts to robotically enforce arbitration

clauses “even when this leads to a result at odds with

state public policy, state unconscionability doctrine,

or other principles of state law.” DRI Brief at 30.

This is a dramatic overstatement. Rather than

immunizing flagrantly one-sided arbitration clauses

from state law—a result that would write section 2

out of the statute—Concepcion and Italian Colors

rejected the argument that the class action device

was necessary for plaintiffs to vindicate “negative

value” causes of action. Indeed, Concepcion's core

reasoning—that class arbitration “interferes with

fundamental attributes of arbitration” because it is

“slower, more costly, and more likely to generate

procedural morass than final judgment”—does not

extend beyond the class setting. Concepcion, 131

S.Ct. at 1748-51 10

Likewise, Jtalian Colors relied heavily on the

fact that waiving the right to aggregate a claim does

10 In fact, Concepcion had no quarrel with the idea that both

unconscionanility and violation of public policy are “generally

applicable contract defenses” within the meaning of section 2.

See Concepcion, 131 S.Ct. at 1746-47. Instead, Concepcion

warned that these rules would be preempted if used in a way

that is incompatible with the FAA’s “purposes and objectives.”

See id. at 1747 (providing as an example “a case finding

unconscionable or unenforceable as against public policy

consumer arbitration agreements that fail to provide for

judicially monitored discovery”).

11

not mean surrendering “the right to pursue’ the

claim. Jtalian Colors, 133 S.Ct. at 2310-11 (“The

class-action waiver no more eliminates thle]

parties’ right to pursue their statutory remedy than

did federal law before its adoption of the class action

for legal relief in 1938.”). This context-specific logic

does not suggest that the FAA precludes states from

determining that an arbitration clause eviscerates a

particular plaintiffs substantive rights.

And indeed, the other cases that DRI cites do not

support its breathtaking assertion that “[t]he FAA

imposes a binding value judgment about the merits

of enforcing arbitration agreements as written”

without regard to the consequences. DRI Brief at 19.

These decisions merely explain that state law cannot

deem the bare existence of an arbitration clause to

constitute a waiver of substantive rights. See id. at

18-20 (citing Mcivahon, 482 U.S. at 232; Coleman v.

Prudential Bache Sec., Inc., 802 F.2d 1350, 1352

(11th Cir. 1986); Ex parte McNaughton, 728 So. 2d

592, 597 (Ala. 1998); THT of N.M. at Hobbs Ctr., LLC

v. Patton, 741 F.3d 1162, 1169 (10th Cir. 2014)).

They do not speak to the discrete and more granular

issue of whether state law can nullify particular one-

sided terms within arbitration provisions.

For these reasons, nearly every court to consider

the issue has recognized that Concepcion and Italian

Colors “cannot be read to immunize all arbitration

agreements from invalidation no matter how uncon-

scionable they may be.” Chavarria v. Ralphs Grocery

Co., 733 F.3d 916, 927 (9th Cir. 2013); Jn re Checking

Account Overdraft Litig. MDL No. 2036, 685 F.3d

1269, 1277 (11th Cir. 2012) (“[T]here are instances

12

wherein a state law may invalidate an arbitration

agreement without being preempted by the FAA.

Indeed, the phrase ‘save upon such grounds as exist

at law or in equity for the revocation of any contract’

in § 2 must have meaning.” (quoting 9 U.S.C. § 2)).11

Against this backdrop, DRI’s critique evaporates.

For example, DRI cites Sonic Calabasas A, Inc. v.

Moreno, 311 P.3d 184 (Cal. 2013) (“Sonic I7”) as

proof of the California Supreme Court’s purported

defiance of Concepcion and Italian Colors. DRI Brief

at 16-20. In Sonic JJ, an arbitration clause waived an

employee's entitlement to a “Berman hearing”: an

informal administrative proceeding designed to help

employees bring wage claims. See Sonic JJ, 311 P.3d

at 190-91. The state high court held that the FAA

preempts a previous opinion that held that arbitration

clauses can never eliminate an employee’s Berman

rights. See id. at 199-200. Yet the state justices also

reasoned that because Berman hearings boast

11 See also Smith v. Jem Grp., Inc., 737 F.3d 636, 641 (9th Cir.

2013) (applying Washington law); Jn Re Checking Account

Overdraft Litig., __F. Supp. 3d__, No. 1:09-MD-02036, 2015

WL 464266, at *5 (S.D. Fla. Feb. 3, 2015); Guidotti v. Legal

Helpers Debt Resolution, L.L.C., __F. Supp. 3d___ No. CIV.A.

11-1219 JBS, 2014 WL 6863183, at *13 (D.N.J. Dec. 3, 2014);

Siopes v. Kaiser Found. Health Plan, Inc., 312 P.3d 869, 896

n.13 (Haw. 2013); Schnuerle v. Insight Comm, Co., L.P., 376

S.W.3d 561, 578 (Ky. 2012); Brewer v. Missouri Title Loans, 364

S.W.3d 486, 493 (Mo. 2012); Kelker v. Geneva-Roth Ventures,

Inc., 303 P.3d 777, 784 (Mont. 2013); Figueroa v. THI of New

Mexico at Casa Arena Blanca, LLC, 306 P.3d 480, 486 (N.M. Ct.

App. 2012); Hill v. Garda CL Nw., Inc., 308 P.3d 635, 640

(Wash. 2013).

13:

special pro-employee features,!2 the relinquishment

of these rights, like any other factor, can inform the

unconscionability calculus:

Waiver of these protections does not

necessarily render an arbitration agreement

unenforceable, nor does it render an arbit-

ration agreement unconscionable per se.

But waiver of these protections in the context

of an agreement that does not provide an

employee with an accessible and affordable

arbitral forum for resolving wage disputes

may support a finding of unconscionability.

Id. at 203. Although DRI complains that Sonic I

“flout[s] Concepcion” by asking whether arbitration

clauses are tainted by “unfairness,” DRI Brief at 18,

that very inquiry—whether an adhesive term is

“overly harsh”—is the lynchpin of the unconscion-

ability doctrine. A&M Produce Co. v. FMC Corp., 186

Cal. Rptr. 114, 122 (Ct. App. 1982); Williams v.

Walker-Thomas Furniture Co., 350 F.2d 445, 449

(D.C. Cir. 1965). The true target of DRI’s ire is not

the California judiciary, but section 2, which makes

arbitration clauses susceptible to black-letter contract

defenses.

Finally, DRI’s speculation about the state justices’

dark motives is impossible to square with the fact

12 Berman hearings include “procedural informality, assistance

of a translator,...an expert adjudicator who is authorized to

help the parties by questioning witnesses and explaining issues

and terms, and provisions on fee shifting, mandatory undertaking,

and assistance of the Labor Commissioner as counsel to help

employees defend and enforce any award on appeal.” Sonic J],

311 P.3d at 203.

14

that they have recently enlarged the FAA’s ambit.

Consider their treatment of class arbitration waivers

in employment disputes. Previously, in Gentry v.

Superior Court, 165 P.3d 556, 563-68 (Cal. 2007), the

state supreme court had imported Discover Bank's

rule that certain class action bans are unconscionable

from the consumer to the employment sphere. Then,

after Concepcion, the National Labor Relations

Board (“NLRB”) held in D.R. Horton Inc. v. Cuda,

357 NLRB No. 184, 2012 WL 36274, *15-16 (2012),

that class arbitration waivers violate the National

Labor Relations Act. Nevertheless, in Jskanian v.

CLS Transp. Los Angeles, LLC, 327 P.3d 129, 135-

37, 141-42 (Cal. 2014), the California Supreme Court

determined that the FAA preempted Gentry and

rejected the NRLB’s conclusions in Horton. As the

justices explained, “Concepcion held that the FAA

prevent[s] states from mandating or promoting

procedures incompatible with arbitration.” Jd. at 137.

That is not the logic of a court so intent on “evad|ing]”

the FAA that it “requires this Court’s ongoing

supervision.” DRI Brief at 26.13

13 Similarly in Pinnacle Museum Tower Assn. v. Pinnacle Mkt.

Dev. (US), LLC, 282 P.3d 1217, 1224-41 (Cal. 2012)—which DRI

does not cite—the California Supreme Court became the first

court in the country to enforce an arbitration clause that

appeared in real property parcel’s declaration of covenants,

conditions, and restrictions (“CC&Rs”). The state high court

held that the provision was binding on a homeowner's

association even though its members “did not bargain .. . over

the terms of the [project CC&Rs or participate in their

drafting.” Jd. at 1224-31 (noting that “[aln arbitration clause

within a contract may be binding on a party even if the party

never actually read the clause”). In addition, the justices

15

——

CONCLUSION

This Court should affirm the California Court of

Appeal’s decision.

Respectfully submitted,

HOLLY MCGREGOR MOSIER

COUNSEL OF RECORD

SANDERS PHILLIPS

GROSSMAN, LLC

2860 MICHELLE DR., SUITE 220

IRVINE, CA 92606

(877) 480-9142

HMOSIER@THESANDERSFIRM.COM

DAVID HORTON

UC DAVIS SCHOOL OF LAW

(KING HALL)

400 MRAK HALL DRIVE

Davis, CA 95616

(530) 752-4216

DOHORTON@UCDAVIS.EDU

GREGORY A. PATTON

LAW OFFICES OF GREGORY

PATTON

1303 BELLINGHAM, DRIVE

OCEANSIDE, CA 92057

(714) 206-6790

GPATTONLAW@AOL.COM

COUNSEL FOR AMICI CURIAE

rejected the trial court’s finding that the arbitration provision

was unconscionable. See Id. at 1223-34.

16

APPENDIX

List of Amici Curiae California Law Professors

Andrew D. Bradt

Assistant Professor of Law

University of California, Berkeley, School of Law

Stephen M. Bund

Professor of Law Emeritus

University of California, Berkeley, School of Law

Joshua Paul Davis

Associate Dean and Professor of Law

University of San Francisco School of Law

William S. Dodge

Professor of Law

University of California, Davis, School of Law

Samuel F. Ernst

Assistant Professor of Law

Fowler School of Law at Chapman University

Danielle Kie Hart

Professor of Law

Southwestern Law School

John Patrick Hunt

Professor of Law

University of California, Davis, School of Law

Amalia D. Kessler

Lewis Talbot and Nadine Hearn Shelton

Professor of International Legal Studies

Stanford Law School

Nancy S. Kim

Professor of Law and ProFlowers Distinguished

Professor of Internet Studies

California Western School of Law

Charles L. Knapp

Joseph W. Cotchett Distinguished

Professor of Contract Law

University of California, Hastings, School of Law

17

Christopher R. Leslie

Chancellor’s Professor of Law

University of California, Irvine, School of Law

David Levine

Professor of Law Emeritus

University of California, Hastings, School of Law

Michael P. Malloy

Distinguished Professor and Scholar

University of the Pacific McGeorge School of Law

Rex R. Perschbacher

Professor of Law,

Daniel J. Dykstra Endowed Chair

University of California, Davis, School of Law

Harry G. Prince

Professor of Law

University of California, Hastings, School of Law

W. David Slawson

Torey H. Webb Professor of Law, Emeritus

University of Southern California

Gould School of Law

Shauhin Talesh

Assistant Professor of Law

Director, Law & Graduate Studies Program

University of California, Irvine, School of Law

Ben Templin

Professor of Law

Thomas Jefferson School of Law

Katherine W.V. Stone

jay and Frances Miller Distinguished Professor

UCLA School of Law

Christopher A. Whytock

Professor of Law and Political Science

University of California, Irvine, School of Law