Harris v. Bingham McCutchen: Court Enforces Massachuetts Choice-of-Law Provision, Affirms Order Denying Motion to Compel Arbitration of Discrimination Claims

Harris v. Bingham McCutchen (3/29/13) --- Cal.App.4th ---, is an unusual arbitration decision that I will note briefly.

Hartwell Harris sued her former employer and others (Bingham) for discrimination and wrongful termination. Bingham moved to compel arbitration under an agreement to apply "the internal substantive laws of The Commonwealth of Massachusetts." The trial court denied the motion, and the Court of Appeal affirmed, holding: 

Massachusetts law governed questions of arbitrability.  Bingham created the arbitration agreement, including the Massachusetts choice-of-law provision, and it could not now attack that provision. Slip op. at 3-5. 

Under Massachusetts law, an agreement to arbitrate must "state in clear and unmistakable terms that plaintiff was waiving or limiting any statutory antidiscrimination rights." This rule applies to claims under California antidiscrimination law, as well as claims under Massachusetts antidiscrimination law. The agreement here did not meet this standard, and Bingham could not compel Harris to arbitrate.  Slip op. at 5-7. 

Massachusetts law is not preempted by the Federal Arbitration Act (FAA) because it is not inconsistent with the FAA's purposes, as articulated by the Supreme Court of the United States in Concepcion.  Slip op. at 7-9.  

In addition, we note that the Concepcion opinion itself contains language supportive of the Warfield court's conclusion on the preemption issue. Footnote six of Justice Scalia's majority opinion reads as follows: "Of course states remain free to take steps addressing the concerns that attend contracts of adhesion – for example, requiring class-action-waiver provisions in adhesive arbitration agreements to be highlighted. Such steps cannot, however, conflict with the FAA or frustrate its purpose to ensure that private arbitration agreements are enforced according to their terms." (Concepcion, supra, 131 S. Ct. at p. 1750.) This language suggests the Supreme Court would approve of the requirement at issue here, that contractual waivers of statutory antidiscrimination litigation rights must be expressly stated to be enforceable. 

Slip op. at 9.  I'm not sure that Justice Scalia would agree, but I suppose that is a question for another day.  

In the meantime, the opinion is available here.