Federal arbitration law trumps state laws, appellate court rules

Continuing a series of opinions upholding the enforcement of arbitration agreements, an appellate court panel has reversed a trial judge’s order allowing a plaintiff to litigate her civil rights claims in court rather than arbitration.

The 2nd District Court of Appeal found Wednesday that special requirements to be carved out in arbitration agreements under the Ralph and Bane Acts are not necessary as they are preempted by the Federal Arbitration Act, or FAA.

“In essence, what they’re saying is that the provisions of these acts are invalid and useless,” said plaintiff’s attorney Nicholas D. Jurkowitz of Fenton Law Group.

Los Angeles County Superior Court Judge Randolph M. Hammock refused to grant the defense’s motion to compel arbitration for two of plaintiff Gezel Saheli’s claims under state civil rights statutes because it failed to comply with certain requirements for arbitration agreements mandated by those acts.

The defense countered that those requirements are preempted by the FAA, and the appellate court agreed. Saheli v. White Memorial Medical Center et al., B283217 (Cal. App. 2nd Dist., filed March 14, 2018).

A claim is arbitrable under arbitration agreements only if it’s arbitrable under applicable state law, according to the appellate court’s opinion. The plaintiffs and defense disagree as to the meaning of applicable state law.

“Given our interpretation of ‘applicable state law,’ the arbitration agreement’s failure to comply with state law that is preempted by federal law does not provide a basis for the trial court to deny Defendants’ petition to compel arbitration,” wrote Presiding Justice Tricia A. Bigelow.

Defense attorney Kiran A. Seldon of Seyfarth Shaw LLP said this opinion affirms that courts can’t burden arbitration agreements with special requirements. She added that courts are also trying to send the message that arbitration is an equal platform for vindicating rights and shouldn’t be treated as inferior to the court system.

“I think the appellate court is saying that if parties agreed to an arbitration agreement and it’s fair, which the trial court had already found that it is, then Ralph and Bane Act claims can be pursued in arbitration just like anything else,” Seldon said. “Arbitration is not inferior to trial courts in their ability to adjudicate claims.”

Jurkowitz questioned the point of state civil rights statutes, like the Ralph and Bane Acts, if they are going to be preempted by the FAA anyway. He complained that the courts’ continued undermining of labor protections hurts the public interest, as pursuing legal action through arbitration is less likely to be publicized.

The initial complaint was filed in Los Angeles Superior Court.

Saheli filed a suit against White Memorial Medical Center, where she was finishing her residency after completing her medical training at Tehran University of Medical Sciences, after she was terminated for reporting unsafe patient care and conditions.

She alleged the hospital and Juan Barrio, a doctor also named in the suit, retaliated against her for reporting the violations in addition to violations of the Bane and Ralph Acts and sexual harassment.