Here comes Chapter Three in the law of arbitration and class actions in California.
Chapter One: In Discover Bank v. Superior Court (2005) 36 Cal. 4th 148, Cal Supremes rule that a consumer contract provision that waives the right to class action litigation as part of a binding arbitration agreement is unconscionable and void.
Chapter Two: In AT & T Mobility LLC v. Concepcion (2011) 563 U.S. 333, SCOTUS responds to Cal Supremes with "the heck you say," overruling Discover Bank as preempted by the Federal Arbitration Act. And now,
Chapter Three: If there is a binding arbitration agreement without a waiver of class action rights, does the class action matter go to arbitration or trial? And who decides? That is the issue in the recently decided Sandquist v. Lebo Automotive, Inc., ___ Cal.4th ___ (Jul. 28, 2016).
Sandquist was a case involving allegations of racial discrimination, harassment and retaliation. The Plaintiff had signed three binding arbitration agreements, all stating he agreed that "any claim or dispute or controversy . . . which would otherwise require or allow resort to any court or other governmental dispute resolution forum" would be "submitted to and determine[d] exclusively by binding arbitration."
The parties had a dispute about whether the agreement permitted or prohibited classwide arbitration. Cal Supremes held that, since this was a "claim or dispute" that would other wise be submitted to a court for decision, then as a matter of contract interpretation, the arbitrator would decide. "[W]ho decides is in the first instance a matter of agreement, with the parties' agreement subject to interpretation under state law." And since a majority of the Supremes found no contrary presumption under federal law and concluded that under California law, this language meant the decision went to the arbitrator, that's how the Court ruled.
This was a 4-3 decision, with Justices Kruger, Chin and Corrigan dissenting that under federal law, this was a decision for the court, not the arbitrator, as it was a "gateway question of arbitrability."
So there is a conflict between four justices' position that state law applies and the minority's view that federal law governs. This certainly seems like a likely case for a cert petition to the SCOTUS.