No. 18-1437

In the

Supreme Court of the United States__________________

WINSTON & STRAWN, LLP,Petitioner,

v.

CONSTANCE RAMOS; THE SUPERIOR COURT OFSAN FRANCISCO COUNTY,

Respondents.__________________

On Petition for Writ of Certiorari to theCalifornia Court of Appeal

First Appellate District__________________

BRIEF OF AMICI CURIAE THE CIVILJUSTICE ASSOCIATION OF CALIFORNIA AND

THE ASSOCIATION OF SOUTHERNCALIFORNIA DEFENSE COUNSEL IN

SUPPORT OF PETITIONER__________________

Benjamin G. Shatz Manatt, Phelps & Phillips, LLP11355 W. Olympic Blvd.Los Angeles, CA 90064(310) 312-4383

Counsel for Amicus Curiae ASCDC

Fred J. Hiestand Counsel of Record3418 Third Avenue, Suite 1Sacramento, CA 95817(916) 448-5100 fred@fjh-law.com

Counsel for Amicus Curiae CJAC

June 17, 2019

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

QUESTION PRESENTED

Does this decision, dictated by the California SupremeCourt’s Armendariz opinion mandating specificconditions for the validity of employment arbitrationagreements, violate the FAA’s broad preemptiveproscription against treating arbitration contractsdifferently from other contracts?

ii

TABLE OF CONTENTS

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . i

TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . iii

INTEREST OF AMICI. . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . 5

REASONS TO GRANT THE WRIT . . . . . . . . . . . . . 7

I. THE DECISION OF THE CALIFORNIAAPPELLATE COURT CONFLICTS WITH THEFAA AS LIMNED BY CONCEPCION AND ITSPROGENY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A. The Decision’s Reliance on ArmendarizTreats Arbitration Agreements More Harshlythan Contracts Generally in Violation of theFAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1. Federal Courts Finding Armendariz inConflict with the FAA and Concepcion . . . 9

2. California Courts Finding Armendariz inConflict with the FAA and Concepcion . . 12

3. Law Reviews Finding Armendariz inConflict with the FAA and Concepcion . . 13

B. The Decision Improperly Incorporates andMisapplies this Court’s “EffectiveVindication” Principle to Void the ArbitrationAgreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

iii

TABLE OF AUTHORITIES

CASES

American Exp. Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013). . . . . . . . . . . . . . . . . . 8, 15, 16

Armendariz v. Foundation Health Psychcare Services, Inc., 6 P.3d 669 (Cal. 2000) . . . . . passim

AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). . . . . . . . . . . . . . . . . . . passim

Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (1996). . . . . . . . . . . . . . . . . . . . . . . . 9

Elijahjuan v. Superior Court, 210 Cal.App.4th 15 (2012) . . . . . . . . . . . . . . . . . 13

Flannery v. Law Offices of Burch & Couldston, LLP,2016 WL 7494876 (Cal. Ct. of Appeal) . . . . . . . . 13

Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000). . . . . . . . . . . . . . . . . . . . . . . . 17

Hudson v. Louisiana, 450 U.S. 40 (1981). . . . . . . . . . . . . . . . . . . . . . . . . 7

James v. Conceptus, Inc., 851 F.Supp.2d 1020 (S.D. Tex. 2012) . . . . . . 10, 11

Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421 (2017). . . . . . . . . . . . . . . . . . . . . . 7

Kolovrat v. Oregon, 366 U.S. 187 (1961). . . . . . . . . . . . . . . . . . . . . . . . 7

iv

Lucas v. Hertz Corp., 875 F.Supp.2d 991 (N.D. Cal. 2012). . . . . . . . 9, 10

MHN Government Services, Inc v. Zaborowski, 136 S. Ct. 1539 (2016). . . . . . . . . . . . . . . . . . . . . 12

Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995). . . . . . . . . . . . . . . . . . . . . . . . 16

Mercado v. Doctors Medical Center of Modesto, Inc., 2013 WL 3892990 (Cal. Ct. App. July 26, 2013) . . . . . . . . . . . . . . . 12

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985). . . . . . . . . . . . . . 14

Ramos v. Superior Court, 28 Cal.App.5th 1042 (2018) . . . . . . . . . . . . passim

Ruhe v. Masimo Corp., 2011 WL 4442790 (C.D. Cal. Sept.16, 2011) . . . 10

Southland Corp. v. Keating, 465 U.S. 1 (1984). . . . . . . . . . . . . . . . . . . . . . . . 8, 9

Zaborowski v. MHN Government Services, Inc., 601 Fed.Appx. 461 (9th Cir. 2014) . . . . . . . . . . . 11

STATUTES

9 U.S.C. § 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

v

OTHER AUTHORITIES

Stephen A. Broome, An Unconscionable Applicableof the Unconscionability Doctrine: How theCalifornia Courts Are Circumventing the FederalArbitration Act, 3 HASTINGS BUS. L.J. 39 (2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Alexander J.S. Colvin, Economic Policy Institute(Sept. 27, 2017), available at https://www.epi.org/publication/the-growing-use-of-mandatory-arbitration/ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

E. Gary Spitko, Federal Arbitration Act Preemptionof State Public-policy-based EmploymentArbitration Doctrine: an Autopsy and anArgument for Federal Agency Oversight, 20HARV. NEGOT. L. REV. 1 (2015). . . . . . . . . . . . . . 14

Arpan A. Sura &, Robert A. DeRise,Conceptualizing Concepcion: the ContinuingViability of Arbitration Regulations, 62 U. KAN.L. REV. 403 (2013) . . . . . . . . . . . . . . . . . . . . . . . . 14

Imre Stephen Szalai, More than Class ActionKillers: the Impact of Concepcion and AmericanExpress on Employment Arbitration, 35BERKELEY J. EMP. & LAB. L. 31 (2014) . . . . . 13, 15

1

INTEREST OF AMICI1

The Civil Justice Association of California (“CJAC”)is a 40-year-old nonprofit organization whose membersare businesses, professional associations and financialinstitutions. CJAC’s principal purpose is to educate thepublic and its governing bodies on ways to make lawsfor determining who gets paid, how much, and bywhom when the conduct of some occasions harm toothers more fair, certain, and economical. Toward thisend, CJAC regularly participates in the courts and thelegislature to promote and protect voluntaryarbitration as an alternative to judicial mechanisms forresolving liability disputes.

CJAC’s members collectively employ manythousands of people in California and hundreds ofthousands nationally to produce various products andservices. Most of CJAC’s members have elected, ashave many employers throughout the country,2 toresolve disputes with their employees over employmentmatters through binding arbitration.

1 Counsel of record for the parties received timely notice of theintent to file this brief and have consented to the filing. No counselfor any party in this case authored this brief in whole or in part.No person or entity aside from Amici, their members, or theirrespective counsel made a monetary contribution to thepreparation or submission of this brief.

2 According to one study, approximately 55 percent of theworkforce, or 60 million employees, are covered by employmentarbitration agreements. Alexander J.S. Colvin, Economic PolicyInstitute (Sept. 27, 2017), available at https://www.epi.org/publication/the-growing-use-of-mandatory-arbitration/.

2

The Association of Southern California DefenseCounsel (“ASCDC”) is the nation’s largest regionalorganization of lawyers who specialize in defendingcivil actions. ASCDC counts as members over 1,000attorneys in Southern and Central California, and isactively involved in assisting courts on issues ofinterest to its members. It has appeared as amicuscuriae in numerous cases, including those that concernthe scope and application of the FAA. ASDC and CJACindependently urged the California Supreme Court toreview the decision in this case.

CJAC and ASCDC welcomed AT&T Mobility LLC v.Concepcion, 563 U.S. 333 (2011) (“Concepcion”) andkindred Court opinions believing they would at longlast assure that agreements to decide disputes byarbitration would be placed on an “equal footing” withother contracts and enforced accordingly. But ourinitial enthusiasm has been dampened by hostilejudicial end-runs around the FAA by Armendariz v.Foundation Health Psychcare Services, Inc., 6 P.3d 669(Cal. 2000) (“Armendariz”) and similar decisionsextrapolating the “unconscionability” doctrine to placeendless obstacles in the way of contractual arbitration.3

The decision in this case is a major roadblock toarbitration that deserves Court review.

3 “California’s courts have been more likely to hold contracts toarbitrate unconscionable than other contracts.” Concepcion, 563U.S. at 342 (citing Stephen A. Broome, An UnconscionableApplicable of the Unconscionability Doctrine: How the CaliforniaCourts Are Circumventing the Federal Arbitration Act, 3 HASTINGS

BUS. L.J. 39, 54, 66 (2006)).

3

INTRODUCTION

The California Supreme Court held in Armendarizthat an agreement to resolve future disputes betweenan employer and employee by arbitration must satisfyfive specific requirements. These requirements, whichsupposedly stem from the employee’s right to “vindicatehis or her statutory rights” 6 P.3d at 674, include thefollowing “minimum fairness” factors an arbitrationagreement must provide for: (1) neutral arbitrators,(2) more than minimal discovery, (3) a written award,(4) all relief available in court, and (5) costs, fees, orexpenses for arbitration that are reasonable foremployees. Id. at 682. Moreover, if more than one suchrequirement is absent from the arbitration agreement,it may be deemed unsalvageable under a uniquearbitration specific anti-severability rule.

But a decade after Armendariz, Concepcionsubstantially undercut its authority by holding that theFederal Arbitration Act (“FAA”) requires state courtsto place arbitration agreements on an “equal footing”with other contracts and enforce them according totheir terms. Id. at 339. Although Concepcion involvedthe validity of a class action waiver, the Courtinterpreted the FAA as casting a broad preemptivesweep that trumped a state statute providing for anonwaivable remedy. According to the Court, the FAApreempts “state-law rules that stand as an obstacle tothe accomplishment of the FAA’s objectives” or that“interfere[] with fundamental attributes of arbitration.”Id. at 343.

4

The decision in this case, which involves anarbitration clause in a law firm partnership agreement,is the latest example of California flouting the FAA andthis Court’s opinions applying it by resort toArmendariz’s formulaic “fairness factors.” Rather thancomply with Concepcion and other pertinent opinionsof this Court, the state court decision downplayed theseauthorities, trumpeting instead that “[s]inceConcepcion was decided, the California Supreme Courthas reaffirmed the validity of Armendariz multipletimes,” an observation it sought to buttress by severalaccompanying citations. Ramos v. Superior Court, 28Cal.App.5th 1042, 1055 (2018).

On this basis the state court reversed the trial courtand ruled the arbitration agreement unconscionablebecause it violated Armendariz’s “statutoryvindication” rule and ensuing “minimal fairness”factors in three ways: it (1) impermissibly waivedplaintiff’s assertion of statutory employment rights andremedies under the state’s Fair Employment andHousing Act (FEHA); (2) required each party to pay itsown attorneys’ fees while the FEHA entitles theprevailing party to an award of attorneys’ fees; and(3) required the parties to share costs equally whileArmendariz requires the employer to pay all costsunique to arbitration. In essence, the arbitrationagreement was deemed void by that appellate decisionbecause it “unconscionably” prevented the “effectivevindication” of state law, undermining “unwaivable[state statutory] rights” and was thus unenforceable.

This decision presents a clear conflict between thesupremacy of the FAA and a state law – Armendariz –

5

that imposes special requirements for arbitrationagreements other than those that “exist at law or inequity for the revocation of any contract.” 9 U.S.C. § 2.Review by the Court is warranted to provide clarityand certainty about an issue of paramount importanceto the public interest, namely — Can states, consistentwith the FAA, require that employment arbitrationcontracts comply with specific requirements that donot apply to contracts generally and are contrary to thedefining features of arbitration?

SUMMARY OF ARGUMENT

Ramos significantly interferes with and disfavorsprivate contractual arbitration. Ramos is based onArmendariz, but conflicts with Concepcion and itsprogeny. The decision violates the FAA and this Court’sopinions emphasizing that law’s broad preemptivesweep to prevent states from impeding the enforcementof arbitration agreements according to their terms,from treating arbitration contracts differently from, ormore hostilely than, contracts generally.

Ramos holds the employment arbitration contracthere void because it runs afoul of Armendariz’s“statutory vindication” rule by not providing plaintiffall relief that would be available in court, requires herto pay half the costs of arbitration and to pay her ownattorney fees. According to Ramos, these threeprovisions cannot be severed, rendering the entireagreement “unconscionable” and unenforceable, beyondthe FAA’s preemptive safety net.

6

But Ramos is mistaken and in conflict with thisCourt’s teachings on the scope and application of theFAA. A number of federal and California courts, as wellas legal scholars, have commented that Armendariz,the bedrock decision dictating Ramos, is “doomed,”“condemned” and “preempted” by Concepcion. Thatopinion and others of the Court make clear arbitrationpermits parties to waive remedies that might otherwisebe available to them in court. Indeed, the “fundamentalattributes” of arbitration – speed, informality,efficiency and reduced costs – are achieved by agreeingto arbitrate according to specific rules that waiveconventional litigation remedies and procedures orprovide for alternate ones. Parties to arbitration canstipulate, for instance, to restrict or waive class actionremedies, the amount or kind of recoverable damages,and define the scope of discovery, equitable relief andreasonable allocation of attorney fees and costs.

There cannot be, contrary to Ramos andArmendariz, an “effective vindication” rule entitling aparty to all state statutory remedies available in courtabsent consent of the parties to the arbitrationcontract, express or implied. The FAA is only concernedwith the “effective vindication” of federal, not state law;and it is state law that Ramos, following Armendariz,elevates over the FAA to impede the enforcement ofarbitration agreements on their terms. This is anupside-down decision damaging to contractualarbitration and deserving of the Court’s correctiveguidance.

7

REASONS TO GRANT THE WRIT

I. THE DECISION OF THE CALIFORNIAAPPELLATE COURT CONFLICTS WITH THEFAA AS LIMNED BY CONCEPCION AND ITSPROGENY.

A conflict between a decision of the highest statecourt and that of this Court on a matter of federal lawis a strong reason to grant certiorari. See, e.g., Hudsonv. Louisiana, 450 U.S. 40, 42 (1981). State courtdecisions involving the construction and application offederal statutes may also be reviewed on certiorariwhen the question presented is sufficiently important.E.g., Kolovrat v. Oregon, 366 U.S. 187, 191 (1961). Bothcriteria are met by this case.

While the decision challenged here is by anintermediate state appellate court, it is predicatedupon Armendariz. Accordingly, certiorari is appropriateto resolve conflicts between the decision, dictated byArmendariz,4 and the FAA as interpreted and appliedby Concepcion and related opinions of the Court.

“The FAA preempts any state rule discriminatingon its face against arbitration . . . , and also displacesany rule that covertly accomplishes the same objectiveby disfavoring contracts that (oh so coincidentally) havethe defining features of arbitration agreements.”Kindred Nursing Centers Ltd. Partnership v. Clark, 137S. Ct. 1421, 1427 (2017) (per curiam).

4 “Because Armendariz remains controlling law, we are bound byit. . . Armendariz governs our analysis.” Ramos, supra, 28Cal.App.5th at 1055.

8

The “defining features” or “fundamental attributes”of arbitration include “informality, efficiency, reducedcosts and speed,” (American Exp. Co. v. Italian ColorsRestaurant, 570 U.S. 228, 238 (2013) (“Amex”)) all ofwhich can be achieved by contractual stipulations“limiting . . . issues subject to arbitration,” agreeing to“arbitrate according to specific rules and to limit withwhom a party will arbitrate its disputes.” Concepcion,563 U.S. at 343.

After Concepcion, lower courts cannot “rely on theuniqueness of an agreement to arbitrate” as a groundto invalidate it for “unconscionability;” and the FAAcan preempt a state rule of general applicability thathas a “disproportionate impact” on arbitration or“disfavors” it. Id. at 341.

A. The Decision’s Reliance on ArmendarizTreats Arbitration Agreements MoreHarshly than Contracts Generally inViolation of the FAA.

Concepcion holds that states may not enforce rulesthat place burdens on arbitration agreements differentfrom or more hostile to those imposed on other types ofcontracts. 563 U.S. at 352. The decision here, however,does just that — it endorses a rule requiring privateemployment arbitration agreements to meet a higherstandard for enforceability than that applicable toother private contracts, in direct contravention of theFAA. This Court has held that such a state law,whether statutorily or judicially created, isincompatible with, and therefore preempted by, theFAA. See, e.g., Southland Corp. v. Keating, 465 U.S. 1

9

(1984); Doctor’s Associates, Inc. v. Casarotto, 517 U.S.681 (1996).

1. Federal Courts Finding Armendariz inConflict with the FAA and Concepcion.

A federal court explained the basic conflict betweenArmendariz and the FAA soon after Concepcion wasdecided. Lucas v. Hertz Corp., 875 F.Supp.2d 991 (N.D.Cal. 2012) describes how, before Concepcion, courts “atboth the state and federal level” invalidated arbitrationagreements because they contained “limited discovery”provisions. After presenting several examples ofappellate opinions invalidating arbitration agreementsbecause they did not provide for minimal discovery,Lucas opined that “Concepcion . . . suggests thatlimitations on arbitral discovery no longer support afinding of substantive unconscionability.” Id. at 1007.

Lucas quoted extensively from Concepcion insupport of the proposition that a doctrine such as“unconscionability” cannot be “applied in a fashion thatdisfavors arbitration”:

In Perry v. Thomas, 482 U.S. 483 (1987) [holdingFAA preempts state law requirement thatlitigants be provided a judicial forum for wagedisputes] . . . we noted that the FAA’spreemptive effect might extend even to groundstraditionally thought to exist “at law or in equityfor the revocation of any contract.” Id. at 492, n.9 . . . We said that a court may not “rely on theuniqueness of an agreement to arbitrate as abasis for a state-law holding that enforcementwould be unconscionable, for this would enable

10

the court to effect what . . . the state legislaturecannot.”

Lucas, 875 F. Supp.2d at 1007.

Moreover, Lucas listed examples Concepcion gavefor various “ <devices and formulas’ declaringarbitration against public policy” contrary to the FAA.These disapproved contrivances for what arbitrationagreements must include to achieve “fairness” rangedfrom “judicially monitored discovery,” to compliancewith the “Federal Rules of Evidence,” and “dispositionby a jury.” All of these illustrative features were not“fanciful” and could be rationalized, Concepcionexplains, by the “exculpatory” nature of theagreements, i.e., the fact that their absence is “ofgreater benefit to the company than the consumer,” orthe employer than the employee. 875 F. Supp.2d at1008. Lucas followed Concepcion and upheld thevalidity of the challenged arbitration agreement eventhough it barred any pre-arbitration discovery, statingthat to do otherwise and comply with the Armendarizrule for “minimal discovery” “would have adisproportionate impact on arbitration agreements.” Id. See also Ruhe v. Masimo Corp., 2011 WL 4442790, at*2 (C.D. Cal. Sept. 16, 2011) (“Although the NorthernDistrict of California has indicated that some portion ofArmendariz has been abrogated by Concepcion, it didnot clarify what portion of Armendariz wasabrogated.”).

James v. Conceptus, Inc., 851 F.Supp.2d 1020 (S.D.Tex. 2012), a whistleblower-retaliation lawsuit underthe federal False Claims Act against a formeremployer, agreed with Lucas that the Armendariz

11

fairness factor approach was “in serious doubtfollowing Concepcion.” Id. at 1033. According toConceptus,

Armendariz sets categorical, per se requirementsspecific to arbitration clauses. The[se] . . .requirements, though couched in terms ofunconscionability, cannot be described asgrounds that “exist at law or in equity for therevocation of any contract,” 9 U.S.C. § 2, becausethey “apply only to arbitration [and] derive theirmeaning from the fact that an agreement toarbitrate is at issue.” Concepcion, 131 S.Ct. at1746; see also Kilgore, 673 F.3d at 963-64. “[T]hepolicy arguments justifying the [Armendariz]rule, however worthy they may be, can no longerinvalidate an otherwise enforceable arbitrationagreement.”

Id. at 1023.

Conceptus holds that Concepcion bars courts fromapplying Armendariz to “categorically” strike downcost-splitting fee provisions in arbitration agreements. And though it found the forum selection clause in theagreement to not be “unconsicionable,” clarified that“[t]o the extent . . . California law on such provisionstreats them differently in contracts calling forarbitration than in other contracts and is applied to‘disfavor’ arbitration, that law is preempted under § 2of the FAA.” Id. at 1038. See also the dissentingopinion in Zaborowski v. MHN Government Services,Inc., 601 Fed.Appx. 461, 464 (9th Cir. 2014) stating“[t]he reasoning in Armendariz that multipleunconscionable provisions will render an arbitration

12

agreement’s purpose unlawful has ‘a disproportionateimpact on arbitration agreements’ and should havebeen preempted by the FAA.” This Court grantedcertiorari in that case on this very issue but it settledand was dismissed. MHN Government Services, Inc v.Zaborowski, 136 S. Ct. 1539 (2016).

2. California Courts Finding Armendariz inConflict with the FAA and Concepcion.

California appellate courts have also found that theArmendariz fairness requirements for arbitrationagreements do not square with the FAA andConcepcion, though their views about the abrogation ofArmendariz unsurprisingly resulted in these opinionsbeing depublished. For instance, Mercado v. DoctorsMedical Center of Modesto, Inc., 2013 WL 3892990(Cal. Ct. App. July 26, 2013) reversed the challenge toan employment arbitration agreement the trial courtruled was unconscionable and unenforceable underArmendariz because, similar to the agreement here, it“provided the employee was entitled to legalrepresentation at her own expense, contrary to thestatutory provision for an award of attorney fees to asuccessful employee under the FEHA.” Id. at *6.

Mercado recognized that Concepcion and otheropinions of this Court “cast doubt on the continuedvalidity of Armendariz.” Id. at *7. Mercado explainedthat, under Concepcion, a court cannot “rely on theuniqueness of an agreement to arbitrate” to invalidatean agreement as unconscionable, describingArmendariz’s special minimum requirements forarbitration agreements “to be the type of state ruleConcepcion condemned.” Id.

13

Other California appellate courts haveacknowledged the uncertainty and confusion posited byArmendariz when measured against Concepcion’sholding and reasoning. See also dissenting opinion inElijahjuan v. Superior Court, 210 Cal.App.4th 15, 33(2012) (“There have been inconsistent appellateopinions in California about the scope of Concepcion asit may affect the unconscionability defense toenforcement of arbitration . . ..”); and Flannery v. LawOffices of Burch & Couldston, LLP, 2016 WL 7494876(Cal. Ct. of Appeal) *7 (after observing that “one of theprimary advantages of arbitration . . . is that it canresolve disputes faster and cheaper than judicialproceedings,” cites Armendariz followed by “overruledon other grounds by” Concepcion.).

3. Law Reviews Finding Armendariz in Conflictwith the FAA and Concepcion.

Scholarly legal commentaries concur with federaland state court opinions underscoring the fundamentalcontradiction between the Armendariz “fairnessfactors” essential for the validity of arbitrationagreements and Concepcion’s broad preemptive sweepfavoring arbitration: “State-specific standardsdeveloped specifically for arbitration agreements – likethe Discover Bank rule in Concepcion and theArmendariz fairness factors for employment arbitration– seem doomed under Concepcion’s broad preemptionanalysis.” Imre Stephen Szalai, More than Class ActionKillers: the Impact of Concepcion and American Expresson Employment Arbitration, 35 BERKELEY J. EMP. &LAB. L. 31, 48 (2014).

14

“Armendariz increases the costs of employmentarbitration by requiring a certain level of discovery anda reasoned opinion by the arbitrator. Armendariz thenmandates that the employer bear any of these costsand any other costs that an employee incurs inarbitration that she would not have incurred had shelitigated her claim against the employer in court. Thus,together and separately, each of these Armendarizrequirements disadvantages arbitration.” E. GarySpitko, Federal Arbitration Act Preemption of StatePublic-policy-based Employment Arbitration Doctrine:an Autopsy and an Argument for Federal AgencyOversight, 20 HARV. NEGOT. L. REV. 1, 24 (2015).

“[A]spects of the per se rule in Armendariz likely donot stand up to Concepcion’s underlying reasoning . . ..”Arpan A. Sura &, Robert A. DeRise, ConceptualizingConcepcion: the Continuing Viability of ArbitrationRegulations, 62 U. KAN. L. REV. 403, 450 (2013).

B. The Decision Improperly Incorporates andMisapplies this Court’s “EffectiveVindication” Principle to Void theArbitration Agreement.

According to Armendariz, for an arbitration clauseto be valid it must permit “an employee to vindicate hisor her statutory rights.” 24 Cal.4th at 90, 98-103; italicsadded. Armendariz borrowed and applied to theassertion of California’s FEHA claim the “effectivevindication” rationale from dicta in Mitsubishi MotorsCorp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 637n.19 (1985) concerning the arbitrability of a federalSherman Act claim. The appellate opinion here heldthat because “effective vindication” of plaintiff’s state

15

FEHA could not, due to Armendariz, occur under thearbitration agreement, it was void forunconscionability. But Amex teaches that a class-actionwaiver is enforceable even though it violates an“unconscionability” rule based on a “vindicationrationale” originating in state policy. 570 U.S. at 235-239. “Amex . . . explained that the effective vindicationdoctrine was mere dictum, and the Armendarizfairness factors arose out of this effective vindicationdoctrine. Thus, Amex undermines the foundation ofArmendariz.” Szalai, supra, 35 BERKELEY J. EMP. &LAB. L at 47.

Moreover, as the dissent in Amex clarifies, theeffective vindication doctrine is confined to federal, notstate law, claims. The dissent stated that anarbitration agreement “may not thwart federal law,irrespective of exactly how it does so,” and highlightedthe importance of reconciling the effective vindicationprinciple with the FAA and “all the rest of federal law.”570 U.S. at 240. “Our effective-vindication rule comesinto play only when the FAA is alleged to conflict withanother federal law. . ..” Id. at 252; italics added. “Wehave no earthly interest (quite the contrary) invindicating [a state] law” that is inconsistent with theFAA, so the state law must “automatically bow” tofederal law; any effective-vindication exception thatmight possibly exist would “come[] into play only whenthe FAA is alleged to conflict with another federal law.”Ibid.

Nor does the “effective vindication” of a stateasserted claim under arbitration require that claimantmust be able to obtain all the relief available through

16

court litigation. The decision here finds “effectivevindication” lacking because the arbitration agreementprecludes “the arbitrators from providing remedies thatwould otherwise be available in a court of law,”including “punitive damages.” Ramos, 28 Cal.App.5that 1060. But a “fundamental attribute” of arbitrationcan and does include stipulations by the parties towaive certain remedies; it’s just that states may notprohibit arbitrators from imposing remedies likeinjunctive relief and punitive damages if the partiesagree arbitrators may do so. See Mastrobuono v.Shearson Lehman Hutton, Inc., 514 U.S. 52, 58 (1995)(New York rule prohibiting arbitrators from awardingpunitive damages was preempted under the FAA “inthe absence of an agreement that incorporated it.”).

Further, Amex’s rejection of the specific assertionmade by plaintiffs challenging the arbitrationagreement there gives no comfort to the decision’sclaim here that the arbitration clause violatesArmendariz because it does not require the lawfirm/employer to pay all costs of arbitration. Amexarose when merchants sued a credit card issuer on aclass action basis for antitrust violations. The claimwas brought as a class action because the maximumrecovery for each individual case was $38,549, whilethe cost of proving the case would be hundreds ofthousands or more. 570 U.S. at 231-32. Nevertheless,Amex enforced the class action waiver, reasoning that“the antitrust laws do not guarantee an affordableprocedural path to the vindication of every claim.” Id.at 233. Absent clear language in the statute to thateffect, class actions are not critical to the “vindicationof statutory rights.” Id. at 234. “[T]he fact that it is not

17

worth the expense involved in proving a statutoryremedy does not constitute the elimination of the rightto pursue that remedy.” Id. at 236.

Splitting the costs of arbitration between theparties, as the arbitration agreement at issue in thedecision here provides, does not eliminate the right topursue the FEHA remedy, and the plaintiff below andthe decision made no showing that it did. See alsoGreen Tree Financial Corp.-Alabama v. Randolph, 531U.S. 79 (2000), holding that “the party seeking to avoidarbitration on the ground that arbitration would beprohibitively expensive . . . bears the burden of showingthe likelihood of incurring such costs.” Id. at 92.

The Court’s resolution of conflicts between theRamos decision’s reliance on Armendariz as opposed tothe foregoing authorities from this Court, lower federaland state courts, and legal scholars, is sorely needed. Without it, lower courts and the public will continue tobe confused and confounded over what is permitted inarbitration agreements given the FAA and stateunconscionability law.

18

CONCLUSION

“States cannot require a procedure that isinconsistent with the FAA, even if it is desirable forunrelated reasons.” Concepcion, 563 U.S. 351. For thisand the aforementioned reasons, amici urge the Courtto grant the petition for a writ of certiorari.

Respectfully submitted,

Benjamin G. Shatz Manatt, Phelps & Phillips, LLP11355 W. Olympic Blvd.Los Angeles, CA 90064(310) 312-4383

Counsel for Amicus Curiae ASCDC

Fred J. Hiestand Counsel of Record3418 Third AvenueSuite 1Sacramento, CA 95817(916) 448-5100 fred@fjh-law.com

Counsel for Amicus Curiae CJAC