California Mediation and Arbitration

Arbitration, Service: 9th Circuit Accepts Service On Foreign Party By Mail -- Under The Circumstances

District Court Was Right, But For The Wrong Reasons.

        The Court of Appeals decided three issues in Voltage Pictures, LLC v. Gussi, S.A., No. 23-55123 (9th Cir. 2/5/24) (M. Smith, Lee, Vandyke): subject matter jurisdiction, service, and comity. The underlying dispute, concerning rights under a Distribution and License Agreement, resulted in an arbitration award in favor of Voltage Pictures, which the district court had confirmed.

        The district court held that it had jurisdiction to confirm the arbitration award because there was diversity between US-based Voltage Pictures and Gussi. While the Federal Arbitration Act enables federal courts to confirm arbitration awards, there must still be an independent basis for jurisdiction, and the Court of Appeals, doubtful that complete diversity had been established, rejected diversity as the district court's basis for accepting jurisdiction. However, 9 U.S.C. 203 "vests federal district courts with subject matter jurisdiction over motions seeking to confirm non-domestic arbitral awards." Gussi was a non-domestic party, and that provide the independent basis for jurisdiction.

        Second, the district court erred in finding that California law provided the basis for service for mail on the foreign entity. However, Judge Smith found another way find that service by mail on Gussi's attorney was sufficient under the circumstances. Gussi did not reside in the Central District of California, and was not available for service in any other federal district in the US. Therefore, the FAA provisions, 9 USC § 9, governing service of residents of the district or elsewhere in the US, simply did not apply to the serving someone unavailable in the US. Relying on 9 USC § 6¹, Judge Smith explained that a summons was not required to confirm an arbitration award, only an application, and that notice of an application could be accomplished by the same means as providing notice of a motion: service on the party's attorney.

        Third, the district court did not abuse authority by refusing to extend comity to an order from a Mexican court to enjoin the confirmation of the arbitration award. Gussi failed to properly authenticate the foreign order.

        COMMENT. As Judge Smith observed, "We may affirm a district court’s decision 'on any ground supported by the record even if not explicitly relied upon by the district court.' Johnson v. Barr, 79 F.4th 996, 1003 (9th Cir. 2023)." And that's what happened here.

¹"Any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise herein expressly provided."

 

 

 

Health Care, FAA: Second District Div. 8 Holds That Health Net And County Arbitration Provisions Failed To Comply With Statutory Requirements

Health And Safety Code Section 1363.1 Is The Relevant Provision.

        Section 1361.1 provides that "[a]ny health care service plan that includes terms that require binding arbitration to settle disputes and that restrict, or provide for a waiver of, the right to a jury trial shall include, in clear and understandable language, a disclosure that meets" certain conditions. Among other things, there must be a clear statement as to whether the plan requires binding arbitration and the "contract or enrollment agreement for a health care service plan, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative of the group contracting with a health care service plan and immediately before the signature line provided for the individual enrolling in the health care service plan."

        The requirements of § 1363.1 were at issue in Baglione v. Health Net of California, Inc., B319659 (2/8 filed 11/27 pub. 12/6/23) (Stratton, Grimes, Viramontes). The court holds that the requirements must be satisfied in the employee's enrollment form as well as in the contract between Health Net and the County of Santa Clara; that the requirement is for the benefit of the employee in the contract with the contract with the County, so that the employee has standing to sue if Health Net's agreement with the County did not meet the requirements; and that § 1363.1 will be strictly interpreted. Here, the statutory requirements were not satisfied.

        The court also rejected the argument that the FAA preempted the application of the California statute. The court explained: "'The McCarran-Ferguson Act deprives Congress of the power to invalidate state law “regulating the business of insurance.' (15 U.S.C. § 1012(b).) Section 1363.1 'does regulate the business of insurance within the meaning of McCarranFerguson'."

        Thus, there is no preemption, and the trial court's order denying the request to arbitrate is affirmed.

 

Legislation, Stays: Stays Of Appeals Of Orders Denying Motions To Compel Arbitration Are Now Discretionary

Governor Newsom Signed SB 365 On October 10, So Now There Are No Automatic Stays Pending Appeal When Trial Court Denies Motion To Compel Arbitration.

        Ordinarily, "the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby . . ." Therefore, California courts have stayed proceedings in trial courts when the order appealed from is an order denying a motion to compel arbitration. The stay protects the jurisdiction of the arbitrator if the court of appeal ultimately decides that the case should be arbitrated.

        Prior to the United States Supreme Court Coinbase case, which we blogged about on 7/3/23, federal and California law were out of synch. Federal law provided that litigation continued in the district court pending an interlocutory appeal, but a party could try to convince the district court (and if necessary, the circuit court) to exercise discretion and stay proceedings pending appeal. Coinbase changed the law, making a stay automatic when a party sought review of the order denying its petition to compel arbitration. So for a fleeting moment, California law and federal law aligned. Now the stay pending appeal of an order denying arbitration was automatic in both state and federal court. 

        Along came the California Legislature, which enacted SB 365. The Legislative Counsel's Digest explains: "Existing law authorizes a party to appeal, among other things, an order dismissing or denying a petition to compel arbitration. Existing law generally stays proceedings in the trial court on the judgment or order appealed from when the appeal is perfected, subject to specified exceptions. This bill would provide that, notwithstanding the general rule described above, trial court proceedings would not be automatically stayed during the pendency of an appeal of an order dismissing or denying a petition to compel arbitration." (italics added). Once again, California law and federal law are out of joint. The stay pending appellate review of the order denying a petition to compel arbitration is automatic in federal court, but discretionary in state court, much as a stay in federal court pending appeal of an interlocutory order had once been discretionary.

        Consider the political perspective. The conservative United States Supreme Court is very friendly to mandatory arbitration. In disputes brought by employees or consumers, it will usually be the defendant company that seeks to arbitrate. If defendant's motion to compel arbitration is denied, the employer will want to avoid unnecessarily litigating in district court and the court of appeals, and will want to preserve the jurisdiction of the arbitrator. It makes sense, therefore, that the SCOTUS majority would stray from the general rule that stays pending appeal are discretionary and instead make them automatic in the arbitration example. We note that Justice Katanji Brown Jackson filed a dissent in Coinbase, in which Justices Sotomayor and Kagan joined in full, supporting our Legal Realist view that there is a political slant to the issues. (Justice Thomas, sometimes an outlier in arbitration cases, partially joined the dissenters).

        In our Blue state, the California courts, Democratic legislature, and labor unions are less supportive of mandatory arbitration than is SCOTUS, or at least, than is the conservative SCOTUS majority. It is therefore unsurprising that Governor Newsom signed SB 365.

        Does the new California rule making the stay discretionary really help employees and consumers? That remains to be seen. Because the stay is now discretionary, it may not make much difference -- superior courts can still grant a stay pending an appeal. However, if the courts take advantage of the new rule to deny a stay, it could add a layer of complexity, expense, and delay to a case. This could turn out to be an example of "be careful what you ask for." The optics, however, certainly favor employees and consumers. At least on paper, they are no longer subject to an automatic stay when a corporation pursues arbitration in a court of appeal.

        For an objective and elegant discussion of the "do-si-do re stays" see appellate specialist Ben Shatz's post in the Southern California Appellate News. Ben even included a cute sketch of "the dance".

        Finally, I asked arbitrator and mediator Paul Dubow, his opinion as to whether SB 365 will raise preemption issues. As always, Paul provided a thoughtful in-depth response. With his permission, I repeat it in full:

        "The enactment of SB 365 does not change the conflict between Section 16 of the FAA and CCP Section 1294. It just flips the situation.

 

        Prior to the enactment of SB 365 and issuance of the Coinbase decision, there was a conflict between California and federal law with respect to appeals from the denial of a motion to compel arbitration. The trial was not stayed under Section 16 and was stayed under Section 1294. Now the situation is reversed, albeit only with respect to appeals where the underlying arbitration agreement is a condition of employment.

 

        The FAA does not preempt state procedural rules. See Swissmex Rapid S.A. de CV v. SP Systems LLC, 212 Cal. App. 4th 539 (2012). In that case, Swissmex sought to confirm an arbitration award in state court. The underlying transactions were clearly in interstate commerce (although, as far as I can discern, the arbitration agreement did not clearly state whether the FAA applied) and so SP opposed the motion on the ground that Section 9 of the FAA, which did not permit the judicial confirmation of an award without the written agreement of the parties, applied. There was no such limitation under California law. The trial court granted the motion and the Court of Appeal affirmed, holding that federal procedural rules do not preempt state procedural rules.

 

        However, take a look at Judge v. Niijar Realty, Inc., 232 Cal.App. 4th 619, which happens to involve the conflict between Section 16 and Section 1294. In that case, the appeal would not have been permissible under Section 16 and the appellee sought to dismiss it. The Court of Appeal denied the request but did state that if the parties incorporated federal procedural rules into their agreement, the outcome would have been different.

 

        Employers may take a different tack than the Section 16 conflict to argue that SB 365 is preempted. They might argue that preemption exists because the new law singles out arbitration. However, in Gallo v. Wood Ranch, Inc. USA, 81 Cal. App. 5th 621 (2022), the Court of Appeal, in ruling that new CCP Sections 1281.97 and 1281.98 (which allow claimants to nullify arbitration agreements if the respondent does not timely pay arbitration fees) were not preempted, stated that the fact that a law is arbitration specific does not by itself warrant preemption. The law must "commit the additional sin of outright prohibiting arbitration or more subtly discouraging arbitration". And so I think this argument will fail. But who knows?"

 

Hat Tips to Paul Dubow and Ben Shatz. 

 

 

 

 

 

FAA, Appealability, Discovery: 9th Circuit Holds That Non-Reviewable Order Does Not Become Reviewable When Combined With Reviewable Order Denying Arbitration

Two Orders Combined In One Document Did Not Metamorphose Into Single Appealable Order.

 

Metamorphosis of butterfly. Wikipedia article "Metamorphosis".

        The district court denied a motion to compel arbitration brought by the defendant and denied a motion to dismiss for lack of jurisdiction brought by the defendant based, in part on defendant's claim of Section 230 immunity, part of the Communications Decency Act. Both orders were included in a single document labeled as a single "Order". Defendant PeopleConnect, Inc. appealed. John Boshears v. People Connect, Inc. (9th Cir.  8/3/22) (Bea, Bennett, Thomas).

        On appeal, PeopleConnect argued that because the district court issued a single Order, and because an order denying a motion to compel arbitration is immediately reviewable under 9 U.S.C. § 16(a), the district court's order denying the motion to grant immunity and dismiss the case was also reviewable. As Judge Bea explains, this conflates order with document. Yes, there was one document labeled "Order", but it contained two orders. As Judge Bea says, "This all seems fairly commonsensical." If there are two orders here, the conclusion is obvious: the order denying immunity under § 230 is not reviewable at this stage, given the general principle that the federal court of appeal only reviews final judgments. However, the order denying the motion to compel arbitration is reviewable under 9 U.S.C. 16(a). 

        If the legal principles are obvious, why do we have a published opinion? Apparently the panel could not find a case on point, that spotted calf, deciding whether there was jurisdiction in the Court of Appeal to consider the denial of immunity when there was jurisdiction to review the order denying the motion to compel arbitration. The answer is that jurisdiction to consider the order to deny arbitration did not confer jurisdiction to consider the order denying immunity.

        For now, PeopleConnect does not get the immunity that would result in dismissal of the case. However, in a concurrent unpublished Memorandum, the panel holds that the district court abused discretion by denying the motion to compel arbitration without allowing some arbitration-related discovery first. Thus, PeopleConnect gets another bite of the apple. Depending on the results of discovery, the parties could still end up in arbitration. 

 

 

 

FAA, Transportation Workers: Domino's Pizza Drivers Involved In "Last-Leg" Of Interstate Commerce Are Exempt From Arbitration

Ninth Circuit Explains Drivers Inside California May Be Engaged In Interstate Commerce.

        The ingredients for Domino's pizzas are delivered from out-of-state to warehouses in California where they are weighed, redistributed, packaged, and delivered by truck drivers in California to Domino's Pizza franchisees located in California. Do the California drivers qualify as a class of transportation workers exempt from the Federal Arbitration Act under 9 USC § 1? That is the question addressed in Edmond Carmona, et al. v. Domino's Pizza, LLC, 21-55009 (9th Cir.  7/21/23) (Hurwitz, Wardlaw, Parker, Jr.).

        Yes, answers Judge Andrew D. Hurwitz, who authored the panel's opinion. So long as the so-called "last-leg" driver is engaged in an unbroken stream of interstate commerce, the driver qualifies as a transportation worker exempt from the coverage of the FAA. It doesn't matter here that the pizza ingredients are repackaged in the California warehouse and ordered by the California franchisees, because the ingredients are unaltered and travel through a continuous stream of interstate commerce. Judge Hurwitz relies on Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020), which he does not find to be incompatible with the Supreme Court's opinion in Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022). In Saxon, the Supreme Court, focusing on the actual work performed by the class of workers, exempted from the FAA “workers who physically load and unload cargo on and off airplanes.”

Stays: Supreme Court Overrules 9th Circuit And Orders Trial Court Proceedings Must Be Stayed Pending Appeal Over Arbitrability

The Supreme Court Created A New Rule For Staying Cases Pending Interlocutory Appeal Of Order Denying Motion To Compel Arbitration.

        Prof. Ronald Mann provides an excellent review in ScotusBlog of the Supreme Court's decision in Coinbase v. Bielski, No. 22-105 (S.Ct. 6/23/23). The majority opinion, authored by Justice Brett Kavanaugh, holds that a district court must stay its proceedings while an interlocutory appeal on the question of arbitrability is ongoing.

        In federal court, the general rule is that an interlocutory review of a trial court order leaves the rest of the case intact in the trial court. However, a party that wants to stay the case pending the review can seek a particularized determination from the trial court as to whether its proceedings should be stayed. As the dissent summarizes in Coinbase, the determination will hinge on consideration of "likelihood of success on the merits, irreparable harm, favorable balance of equities, and alignment with the public interest."

        However, in Coinbase, the Supreme Court considered whether there should be a blanket stay rule, rather than a particularized determination, in the context of 9 USC § 16(a). This section of the Federal Arbitration Act allows a party to immediately appeal from an order denying a petition to order arbitration. 

        Justice Kavanaugh acknowledged that § 16 does not state whether proceedings should be stayed pending appeal. However, he believed a stay would prevent a detrimental result if the matter could be entirely litigated without a stay, only to find out that it should have been arbitrated.

        COMMENTS. Justice Ketanji Brown Jackson dissented, joined by Justices Elena Kagan and Sonia Sotomayor and mostly by Justice Clarence Thomas. Aside from the legal arguments, it is pretty easy to understand why the liberal justices dissented. The majority created a bespoke rule for defendants who oppose arbitration -- in this case, for a cryptocurrency company seeking to avoid class action litigation. This ability to stay is not symmetrical, because under § 16(b), an interlocutory appeal may not be taken from an order requiring arbitration. Therefore, employees and consumers bringing class action litigation will not be able to appeal from orders requiring them to arbitrate, and thus will not be able to stay arbitration. Why Justice Thomas joined with his liberal brethren is less easy to explain. Perhaps he agreed with their reasoning?

        Ronald Mann notes that this case concerning arbitration may have much broader impact, if its ruling is extended to other federal cases where interlocutory appeals are available. If there is an across-the-board rule that in such cases, there should be a stay to prevent further proceedings below, then the rule requiring particularized examination of the justification for a stay will no longer apply.

        We note that the result in Coinbase v. Bielski is likely the same result that would have occurred if the case had been brought in California state court (we only say "likely", because California state courts are more likely to push back against mandatory arbitration). In California, an order denying a motion to compel arbitration is appealable, and the appeal will stay proceedings below. But an order granting a motion to compel arbitration is not appealable. In some circumstances, it may be challenged by writ. Zembesch v. Superior Court, 146 Cal.App.4th 153 (2006).

 

Stay: Despite Plain Language Of The FAA, Ninth Circuit Holds That Judge Has Discretion To Dismiss Case Rather Than Stay It, Once All Claims Are Subject To Arbitration

Holding Is Consistent With Ninth Circuit Precedent But Not The Language Of The Federal Arbitration Act.

        "The sole question before us is whether the Federal Arbitration Act (“FAA”) requires a district court to stay a lawsuit pending arbitration, or whether a district court has discretion to dismiss when all claims are subject to arbitration. Although the plain text of the FAA appears to mandate a stay pending arbitration upon application of a party, binding precedent establishes that district courts may dismiss suits when, as here, all claims are subject to arbitration. Thus, we affirm." William F. Forrest, et al v. Keith Spirrizzi et al, No. 22-16051 (9th Cir.  3/21/23) (Bennett, Graber, Desai).

        Judges Graber and Desai, fully concurring in the majority opinion, nevertheless urged that the Ninth Circuit consider the matter en banc to issue an opinion consistent with the language of the FAA, and that the Supreme Court take up the issue. As Judge Graber points out, "When a party requests a stay pending arbitration of “any issue referable to arbitration under an agreement in writing,” the court “shall . . . stay the trial of the action” until the arbitration concludes or unless the requesting party is “in default in proceeding with such arbitration.” 9 U.S.C. § 3 (emphases added)." Squaring the language of the FAA with not staying the trial of the action when any issue is referred to arbitration is a bit like squaring the circle.

COMMENT: “When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master – – that’s all.” -- Alice's Adventures in Wonderland.

PAGA, FAA Preemption: Fourth District, Div. 3 Holds Arbitration Of Individual PAGA Claims Can Be Compelled, But Not Representative Claims

 

 

 

 

 

 

 

 

Texas Longhorn.        

Clinton & Charles Robertson from Del Rio, Texas & San Marcos. Wikipedia.                                       Between Scylla and Charybdis. Wikipedia.

Between Horns Of A Dilemma And Between Scylla And Charybdis.

        In a PAGA case, the Court of Appeal, employing mixed salad metaphors, explains that it is between the horns of a dilemma and between Scylla and Charybdis.  Tom Piplack v. In-N-Out Burgers, G061098 (4/3  3/7/23) (Sanchez, Bedsworth, Delaney). This is a PAGA case in which the Court of Appeal held that plaintiff Piplack's individual PAGA claims could be arbitrated and plaintiff Sherrod's individual PAGA claims had to be sent back to the trial court for consideration of Sherrod's argument that Sherrod had been underage when he agreed to arbitrate. However, the Court of Appeal held that the plaintiffs' representative claims could be litigated.

        Returning to horns, dilemmas, Scylla and Charybdis, quandaries, plights, puzzles, and predicaments, Justice Sanchez explains that the court must follow SCOTUS's ruling in Viking River Cruises, Inc. v. Moriana, ___ U.S. ___ [142 S.Ct. 1906] (2022) (Viking), holding that Iskanian's ruling that PAGA claims could not be forced into arbitration was preempted by the Federal Arbitration Act. But Viking only requires this result as to individual PAGA claims. Viking did not preempt the portion of Iskanian prohibiting waiver of the right to pursue representative PAGA actions. Yet Viking apparently concluded that if the individual PAGA claim was arbitrated, then no one was left with standing under California law to bring the representative claim, even if the right to litigate the representative claim was not preempted.

        Standing to bring the representative claim is an issue of state law that Justice Sanchez explains was decided in Kim v. Reins International California, Inc., 9 Cal.5th 73 (Kim) (2020). Because Kim is a recent case decided by the California Supreme Court, and because SCOTUS does not decide state law, Justice Sanchez resolved the court's dilemma by following Kim on the issue of state law standing. Kim has only two requirements for a plaintiff to have standing to bring a representative action: “The plain language of [Labor Code] section 2699(c) has only two requirements for PAGA standing. The plaintiff must be an aggrieved employee, that is, someone ‘who was employed by the alleged violator’ and ‘against whom one or more of the alleged violations was committed.’” (quoting Kim).

        In short, the court followed "Viking on FAA preemption and Kim on PAGA standing." 

 

                                                                                                                                                                

PAGA: Fifth District Holds PAGA Claim Can Be Split Into Arbitrable Claims And Non-Arbitrable Representative Claims

A Typology Of PAGA Claims.

        Tricia Galarsa v. Dolgen California, LLC, F082040A (5th Dist. 2/24/23) (Franson, Pena, Snauffer), is an addition to the growing cottage industry of cases seeking to make sense of Viking River Cruises, Inc. v. Moriana, 596 U.S. ___ [142 S.Ct. 1906] (2022) (Viking River). The case reverses a trial court order rejecting arbitration of individual PAGA claims and affirms insofar as it also rejected arbitration of representative PAGA claims.

        The logic of Viking River is something like this: California case law rejected the splitting of PAGA claims into individual and representative claims. California law allowed representative claims to be litigated. The Federal Arbitration Act (FAA) and Supreme Court cases require individual PAGA claims subject to arbitration to be arbitrated. If representative claims cannot be arbitrated, individual claims must be arbitrated, and individual and representative claims can't be split, then the individual claims get to be arbitrated and severed from the representative claims, which must be dismissed, because no "aggrieved" individual will then have standing for the representative claims in litigation. 

        Galarsa develops a typology of PAGA claims. Type A claims are those seeking a civil penalty for violation of the Labor Code suffered by the plaintiff and covered by an arbitration agreement subject to the FAA. Type O claims are for those harms suffered by an employee other than plaintiff. Type A and Type O both apply to claims for which, before the enactment of PAGA, the civil penalties sought could only be enforced by the state's labor enforcement agencies. Type A and O claims exclude restitution of wages, and include only claims subject to civil penalties and the 75-25 % split of the penalties between the State and the plaintiff. 

        Galarsa concludes that under Viking River, waiver of litigation of the representative claims was invalid. Galarsa explains the federal court's interpretation of state law does not bind the state court, and in particular, Galarsa concludes that Type A and Type O claims can be split. If the waiver of litigation of Type O claims is invalid even under Viking River, and Type A and Type O claims can be split, then Type A claims can be sent to arbitration, the invalid waiver of the right to litigate Type O claims can be severed, and Type O claims will not get sent to arbitration.

        COMMENT: The creative argument in Galarsa is its prediction that the California Supreme Court would rule that Type A and Type O claims can be split. The argument is splitting of Type A and Type O claims is necessary to carry out effective enforcement of labor laws, by protecting Type O claims, and Type A and Type O claims do not involve the same primary right, with harms to the plaintiff and harms to others being different injuries. However logical this argument may be, it would seem to put Galarsa at odds with other California appellate cases insisting that PAGA claims cannot be split. A creative argument that has not yet been considered has not yet been decided.

 

Existence Of Agreement, Unconscionability: First District, Div. 4 Concludes Arbitration Agreement Was Signed, Not Unconscionable, And Reverses

Proof Of Handwritten Signature May Be Easier Than Proof Of Electronic Signature.

        The trial court found that the employer failed to prove employees had signed an arbitration agreement, that the agreement was unconscionable, and the court rejected the employer's efforts to compel arbitration. The Court of Appeal reversed. Leroye Iyere et al. v. Wise Auto Group, A163967 (1/4  1/19/23) (Pollak, Brown, Goldman).

        In the trial court, the employees provided declarations that they had been given many documents to hurriedly sign, that they had not read them, and that if they had read them, they would not have signed them, knowing that they were giving up rights by agreeing to arbitrate. But they did not squarely deny that handwritten signatures of their names were their signatures. While the trial court refused under those circumstances to find that the employees had signed, Justice Pollak explained: "It is hornbook law that failing to read an agreement before signing it does not prevent formation of a contract."

        The panel disagrees with Gamboa v. Northeast Community Clinic, 72 Cal.App.5th 158. (2021), which cited cases rejecting proof of electronic signatures under similar circumstances in order  to reject proof of a handwritten signature. Justice Pollak explains:  "Authenticating an electronic signature if challenged can be quite daunting. . . If a party confronted with his or her handwritten signature on an arbitration agreement is unable to allege that the signature is inauthentic or forged, the fact that that person does not recall signing the agreement neither creates a factual dispute as to the signature’s authenticity nor affords an independent basis to find that a contract was not formed." 

        The employees argued that the arbitration provision, which was governed by the Federal Arbitration Act, was unconscionable, because California Labor Code § 925 provides that an employer cannot require an employee who resides and works in California, as a condition of employment, to agree to adjudicate a claim arising in California outside of California. But the FAA does not displace state substantive law, which can be asserted in arbitration, so this argument failed.

            The employees also argued that the contract, which allowed the party against whom a claim was made to choose between two arbitration providers, and that this would benefit the employer as the party against whom a claim was more likely to be made. But the panel believed this would not provide a significant advantage to the employer, as both dispute resolution providers were well recognized and respected dispute resolution providers.