Today, in DirecTV, Inc. v. Imburg, 2015 WL 1280237 (Mar. 23, 2015), the Supreme Court granted a petition for certiorari in a case stemming from a California Court of Appeal decision holding that a California choice of law clause in the parties’ arbitration agreement (which is governed by the Federal Arbitration Act) trumped the FAA preemption doctrine, which is federal law under the FAA.   The California Court of Appeal ruled that, under reigning California state law, a class action waiver in the arbitration agreement rendered the entire agreement unenforceable.  See Imburgia v. DIRECTV, Inc., 225 Cal. App. 4th 338, 170 Cal. Rptr. 3d 190 (2014).  However, in AT&T Mobility v. Concepcion, the Supreme Court held that the FAA preempts that California state law.  Because the California Court of Appeal’s decision conflicts with a Ninth Circuit holding that the FAA preemption doctrine supersedes the parties’ choice of law clause (see Murphy v. DirecTV, Inc., 724 F.3d 1218 (9th Cir. 2013)), DirecTV sought review in the Supreme Court (the California Supreme Court previously had denied its request for review.)

The question presented is:  “Did the California Court of Appeal err by holding, in direct conflict with the U.S. Court of Appeals for the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act requires the application of state law preempted by the Federal Arbitration Act?”

While I have not read the briefs yet, it seems hard to believe that the Supreme Court would permit parties to opt out of the FAA preemption doctrine via a choice of law clause, particularly where the parties agreed that the  contract was governed by the FAA.

Jill Gross is a Professor of Law and the Director of the Investor Rights Clinic at Pace Law. She teaches the Investor Rights Clinic and Seminar, Mediation and Arbitration, Professional Responsibility, and Securities Litigation and Enforcement. She has published numerous law review articles in the area of dispute resolution and investor justice, and has been quoted in the national media on issues relating to securities arbitration. She is also a contributor to ADR Prof Blog.