Date: 03-15-2018

Case Style: Gezel Saheli v. White Memorial Medical Center

Case Number: B283217

Judge: Bigelow, P.J.

Court: California Court of Appeals Second Appellate District Division Eight on appeal from the Superior Court, Los Angeles County

Plaintiff's Attorney: Jeffrey A. Berman, Joan E. Smiles, Dana Peterson, and Kiran A. Seldon

Defendant's Attorney: Nicholas D. Jurkowitz and Alexandra de Rivera

Description: White Memorial Medical Center (White Memorial) and
Juan Barrio, M.D. (together, Defendants) challenge the denial in
part of their petition to compel arbitration of claims brought
against them by Gezel Saheli, M.D. Although the trial court
ordered Saheli to arbitrate the majority of her claims, it refused
to compel arbitration of her claims brought pursuant to Civil
Code sections 51.7 (Ralph Act) and 52.1 (Bane Act).
1 The court
reasoned that the parties’ arbitration agreement failed to comply
with special requirements for agreements to arbitrate such
claims. Specifically, sections 51.7 and 52.1 prohibit the
enforcement of agreements to arbitrate Ralph Act and Bane Act
claims that are made as a condition of certain contracts or of
providing or receiving goods or services. They also mandate that
the party seeking to enforce an agreement to arbitrate such
claims prove the other party knowingly and voluntarily agreed to
arbitration. Defendants contend (1) the trial court erred in its
interpretation of the parties’ arbitration agreement and (2) the
Ralph Act’s and Bane Act’s special requirements for arbitration
agreements are preempted by the Federal Arbitration Act (FAA).
We agree and reverse the trial court’s order denying Defendants’
petition to compel arbitration of Saheli’s Ralph Act and Bane Act
claims.
FACTUAL AND PROCEDURAL BACKGROUND
Complaint
Saheli filed her initial complaint against Defendants on
February 21, 2017. In the operative First Amended Complaint,
Saheli alleges she is a native of Iran and completed medical
training at Tehran University of Medical Sciences. After

1 All further section references are to the Civil Code unless
otherwise specified.
3
immigrating to the United States, she enrolled in a medical
residency program at White Memorial. In July 2016, Saheli
discovered and reported to White Memorial violations of the
Health Insurance Portability and Accountability Act (HIPAA) by
physicians who were sending confidential protected health
information by unsecured and unauthorized means. Over the
next few months, she also reported unsafe patient care and
conditions. In September 2016, Saheli reported the violations to
the Accreditation Council for Graduate Medical Education.
Saheli alleges that, in response to such reports, Barrio
commenced a “campaign of retaliation, harassment, and
intimidation” against her, which included yelling at her and
threatening to terminate her. According to Saheli, a substantial
motivating factor for the yelling was the fact that she is female.
In addition, Saheli alleges Barrio made several slurs concerning
her Iranian nationality as well as sexual remarks about her and
another resident. On March 2, 2017, Saheli was placed on a paid
leave of absence pending termination.
Based on these allegations, Saheli asserts nine causes of
action against Defendants: (1) retaliation in violation of Health
and Safety Code section 1278.5; (2) violation of the Ralph Act
(§ 51.7); (3) violation of the Bane Act (§ 52.1); (4) sexual
harassment (§ 51.9); (5) retaliatory wrongful termination
(Lab. Code, § 1102.5); (6) wrongful termination in violation of
fundamental public policy; (7) gender discrimination and
harassment under the Fair Employment and Housing Act
(FEHA) (Gov. Code, § 12900 et seq.); (8) national origin
discrimination and harassment under the FEHA; and
(9) retaliation under the FEHA.
4
Petition to Compel Arbitration
On April 3, 2017, Defendants filed a petition to compel
Saheli to arbitrate all of her claims, relying on an arbitration
agreement found in an employment/training agreement and
employee handbook (Arbitration Agreement).
2 The Arbitration
Agreement provides that it “shall be governed by the Federal
Arbitration Act and the Arbitration Act of the state in which the
Organization is located.” It further provides that “[a]rbitration
pursuant to this [Arbitration Agreement] shall be the exclusive
means to address any arbitrable dispute, and the parties
mutually waive their right to a trial before a judge or jury in
federal or state court in favor of arbitration under this
[Arbitration Agreement]. Except as stated herein, the rights of
the parties under this [Arbitration Agreement] shall be the same
as those available to them in a court of competent jurisdiction.
The decision of the arbitrator shall be final and binding on all
parties.”
“Arbitrable claims” under the Arbitration Agreement are
defined as “those claims . . . that arise out of, or are related to,
(i) a claim of employment discrimination . . . ; (ii) a claim of

2 On June 7, 2016, Saheli signed a document entitled “PostDoctoral
Training Agreement,” which mandated that she
challenge her termination and all other grievances using White
Memorial’s grievance and arbitration procedures as contained in
its Employee Handbook. On June 16, 2016, Saheli signed an
acknowledgement stating she received a copy of the Employee
Handbook and was aware it contained the arbitration procedures.
She further acknowledged she understood and agreed that she
“shall submit all issues covered by the referenced Procedures to
final and binding arbitration.” In certain circumstances not
relevant here, the Employee Agreement provides a “Fair Hearing
Plan” as an alternative to arbitration.
5
wrongful or unlawful termination of employment, including
claims of constructive discharge; (iii) a claim for wages or other
compensation; (iv) a tort claim or any other claim in which
punitive damages or emotional distress damages could be
awarded that arose out of, or is related to, the employment
relationship; (v) a claim that is related in any manner to the
claims described in (i) through (iv) of this paragraph, whether
based on a statu[t]e, public policy, or otherwise.” However, per
the Arbitration Agreement’s “carve-out” provision, “[c]laims for
unemployment compensation, claims under the National Labor
Relations Act, claims under PAGA [Private Attorney General
Act], claims for workers’ compensation benefits, and any claim
that is non-arbitrable under applicable state or federal law are
not arbitrable under this [Arbitration Agreement].”
Saheli opposed Defendants’ petition, arguing the
Arbitration Agreement was unenforceable with respect to her
Ralph Act and Bane Act claims because it failed to comply with
certain requirements for arbitration agreements mandated by
those acts. Defendants countered that such requirements are
preempted by the FAA.
The trial court granted the petition in part and compelled
Saheli to arbitrate all her claims except those under the Ralph
Act and Bane Act. The court found that, per the terms of the
Arbitration Agreement, the parties agreed not to arbitrate claims
that are not arbitrable under California law. It further
determined that, pursuant to sections 51.7 and 52.1, the waiver
of any forum or procedure under the Ralph Act and Bane Act is
unenforceable unless expressly not made as a condition of
entering into a contract for services. Because Defendants failed
to show the parties expressly agreed the Arbitration Agreement
6
was not a condition of entering into a contract for services,
the court concluded the agreement is unenforceable with respect
to the Ralph Act and Bane Act claims. The trial court declined to
consider whether these requirements are preempted by the FAA.
Although not asserted as a defense by Saheli, the court proceeded
to find the Arbitration Agreement is not unconscionable. It then
compelled arbitration of Saheli’s non-Ralph Act and -Bane Act
claims.
Defendants appealed.
STANDARD OF REVIEW
Where, as here, the issues presented by a petition to compel
arbitration involve only the interpretation of an arbitration
agreement, and there are no factual disputes concerning the
language of the agreement or its formation, a reviewing court
determines the scope and enforceability of the agreement de
novo. (Coast Plaza Doctors Hospital v. Blue Cross of California
(2000) 83 Cal.App.4th 677, 684; Roman v. Superior Court (2009)
172 Cal.App.4th 1462, 1468–1469; Carlson v. Home Team Pest
Defense, Inc. (2015) 239 Cal.App.4th 619, 630.) Preemption is a
question of law subject to de novo review. (Choate v. Celite Corp.
(2013) 215 Cal.App.4th 1460, 1468–1469.)
DISCUSSION
I. The Parties Did Not Incorporate Preempted State
Law into the Arbitration Agreement
Defendants assert the trial court erred in implicitly
interpreting the Arbitration Agreement as incorporating state
law that is preempted by federal law. We agree.
The FAA3 “requires courts to enforce privately negotiated

3 Saheli does not dispute that the Arbitration Agreement is
governed by the FAA.
7
agreements to arbitrate, like other contracts, in accordance with
their terms.” (Volt Info. Sciences v. Leland Stanford Jr. U. (1989)
489 U.S. 468, 478 (Volt).) “Arbitration under the [FAA] is a
matter of consent, not coercion, and parties are generally free to
structure their arbitration agreements as they see fit. Just as
they may limit by contract the issues which they will arbitrate,
[citation], so too may they specify by contract the rules under
which that arbitration will be conducted.” (Ibid.) Under these
principles, the parties “might choose to have portions of their
contract governed by the law of Tibet, the law of prerevolutionary
Russia, or (as is relevant here) the law of
California” irrespective of that law’s preemption by the FAA.
(DIRECTV, Inc. v. Imburgia (2015) 136 S.Ct. 463, 468
(Imburgia); see Best Interiors, Inc. v. Millie & Severson, Inc.
(2008) 161 Cal.App.4th 1320, 1326 [“even if the FAA
applies . . . the parties may agree that California law governs
their agreement to arbitrate”].)
Here, the Arbitration Agreement provides that the parties
agree not to arbitrate claims that are not arbitrable under
“applicable state . . . law.” In other words, a claim is arbitrable
under the Arbitration Agreement only if it is arbitrate under
“applicable state . . . law.” The parties, however, disagree as to
the meaning of the phrase “applicable state . . . law.” Defendants
assert the phrase essentially means “applicable state law only to
the extent it is not preempted by federal law,” whereas Saheli
implies that the phrase means “applicable state law
notwithstanding any preemptive effect of federal law.”4

4 Defendants additionally assert that, regardless of the
preemption issue, the Arbitration Agreement does not mandate
compliance with requirements for arbitration agreements found
8
If Saheli’s interpretation is correct, the arbitrability of her
Ralph Act and Bane Act claims would turn on whether the
Arbitration Agreement complies with certain requirements found
in those acts. If Defendants’ interpretation is correct, the
question of arbitrability would additionally turn on whether
those requirements are preempted by federal law. If preempted,
such requirements would not be incorporated into the Arbitration
Agreement, and it would be irrelevant whether the Arbitration
Agreement complies with them.5
Generally, when faced with the task of determining the
meaning of contractual language, we apply well-established rules
of contract interpretation. The California Supreme Court
summarized such rules in TRB Investments, Inc. v. Fireman’s

in the Ralph Act and Bane Act. They contend the fact that the
Arbitration Agreement’s “carve-out” excludes from arbitration
claims for unemployment compensation, claims under the
National Labor Relations Act, and claims for workers’
compensation benefits, indicates that the phrase “any claim that
is non-arbitrable under applicable state . . . law” refers only to
claims that are subject to adjudication by administrative bodies
and are not the proper subject of arbitration. Defendants,
however, wholly ignore the additional carve-out for PAGA claims.
PAGA claims are not subject to adjudication by administrative
bodies. (See Lab. Code, § 2699, subd. (a) [under PAGA, an
aggrieved employee may recover civil penalties through a civil
action].) Moreover, although PAGA claims may not be the
subject of pre-dispute arbitration agreements, an individual may
agree to arbitrate such claims after a dispute has arisen. (Julian
v. Glenair, Inc. (2017) 17 Cal.App.5th 853, 870.)
5 The trial court implicitly agreed with Saheli’s
interpretation when it declined to consider the issue of FAA
preemption.
9
Fund Ins. Co. (2006) 40 Cal.4th 19: “ ‘ “The fundamental rules of
contract interpretation are based on the premise that the
interpretation of a contract must give effect to the ‘mutual
intention’ of the parties. ‘Under statutory rules of contract
interpretation, the mutual intention of the parties at the time the
contract is formed governs interpretation. (Civ. Code, § 1636.)
Such intent is to be inferred, if possible, solely from the written
provisions of the contract. (Id., § 1639.) The “clear and explicit”
meaning of these provisions, interpreted in their “ordinary and
popular sense,” unless “used by the parties in a technical sense or
a special meaning is given to them by usage” (id., § 1644),
controls judicial interpretation. (Id., § 1638.)’ [Citations.]
A [contract] provision will be considered ambiguous when it is
capable of two or more constructions, both of which are
reasonable. [Citation.] But language in a contract must be
interpreted as a whole, and in the circumstances of the case, and
cannot be found to be ambiguous in the abstract.” [Citation.]’ ”
(TRB Investments, Inc. v. Fireman’s Fund Ins. Co, supra, at
p. 27.) The United States Supreme Court has cautioned that we
may not apply such rules in a way that “does not place
arbitration contracts ‘on equal footing with all other contracts,’
[citation].” (Imburgia, supra, 136 S.Ct. at p. 471.)
In Imburgia, supra, 136 S.Ct. 463, the United States
Supreme Court held that language very similar to that now
before us unambiguously excluded state law preempted by the
FAA, and a contrary interpretation would itself be preempted by
the FAA. In that case, the plaintiffs entered into service
agreements with DIRECTV that contained arbitration
agreements and waivers of class arbitration. (Id. at p. 466.)
The agreements provided that if the “law of your state” makes
10
waivers of class arbitration unenforceable, the entire arbitration
provision is unenforceable. At the time the parties entered into
the agreements, California law would have made the class
arbitration waivers unenforceable under what is referred to as
the Discover Bank rule. (See Discover Bank v. Superior Court
(2005) 36 Cal.4th 148, 162–163.)
In 2008, the plaintiffs brought an action against DIRECTV
in California state court. (Imburgia, supra, 136 S.Ct. at p. 466.)
DIRECTV did not attempt to compel arbitration, presumably
because the Discover Bank rule would have rendered the
arbitration agreements unenforceable. While the action was
pending, the United States Supreme Court decided AT&T
Mobility LLC v. Concepcion (2011) 563 U.S. 333 (Concepcion),
which concluded the FAA preempts the Discover Bank rule.
In effect, this meant class arbitration waivers were now
enforceable if contained in agreements governed by the FAA.
Sometime thereafter, DIRECTV moved to compel arbitration of
the plaintiffs’ claims. (Imburgia, supra, at p. 466.)
Despite Concepcion’s invalidation of the Discover Bank
rule, a California Court of Appeal denied DIRECTV’s motion to
compel arbitration. The court determined the phrase “law of your
state” contained in the service contracts referred to California
law notwithstanding its preemption by the FAA. The court
reasoned that the phrase was ambiguous and should therefore be
construed against the drafter, DIRECTV. (Id. at p. 467.) Based
on this interpretation, the court concluded the arbitration
agreements remained unenforceable.
The United States Supreme Court reversed. (Imburgia,
supra, 136 S.Ct. at p. 471.) It held that, because the Court of
Appeal employed principles and reasoning not applicable to
11
contracts generally, its “interpretation of the phrase ‘law of your
state’ does not place arbitration contracts ‘on equal footing with
all other contracts,’ [citation]. For that reason, it does not give
‘due regard . . . to the federal policy favoring arbitration.’
[Citation.] Thus, the Court of Appeal’s interpretation is preempted
by the Federal Arbitration Act. [Citation.]” (Ibid.)6
In reaching this decision, the Supreme Court detailed
numerous ways in which the Court of Appeal’s interpretation of
the phrase “law of your state” was inconsistent with California
law. It began by noting that California courts would normally
find the phrase to be unambiguous: “Absent any indication in the
contract that this language is meant to refer to invalid state law,
it presumably takes its ordinary meaning: valid state law.
Indeed, neither the parties nor the dissent refer us to any
contract case from California or from any other State that
interprets similar language to refer to state laws authoritatively
held to be invalid.” (Imburgia, supra, 136 S.Ct. at p. 469.)
Moreover, under California’s general contract principles,
“references to California law incorporate the California
Legislature’s power to change the law retroactively.” (Ibid.)
The high court further criticized the Court of Appeal for its
failure to provide any reasoning or principles to suggest it would
reach the same interpretation in a non-arbitration context, its

6 The Supreme Court acknowledged that, “when DIRECTV
drafted the contract, the parties likely believed that the words
‘law of your state’ included California law that then made classarbitration
waivers unenforceable.” (Imburgia, supra, 136 S.Ct.
at pp. 468–469.) Nonetheless, the high court noted the relevant
question before it was whether “at the time the Court of Appeal
made its decision . . . the ‘law of your state’ included invalid
California law.” (Id. at p. 469.)
12
use of language focused solely on arbitration, and its view that
state law retains independent force even after being invalidated.
(Id. at pp. 469–470.)
We perceive no meaningful difference between the phrases
“ ‘law of your state’ ” and “ ‘applicable state . . . law’ ” that would
lead us to interpret the latter differently than the United States
Supreme Court interpreted the former. Like the phrase “ ‘law of
your state,’ ” the phrase “applicable state . . . law” is not
ambiguous and its ordinary meaning refers only to valid state
law. (See Imburgia, supra, 136 S.Ct. at p. 469.) Saheli has not
provided any reasoning or general principles of contract
interpretation that would lead to a different interpretation.
7 Nor
has she pointed us to any cases in which courts have interpreted
similar language in the manner she suggests. Accordingly, we
interpret the phrase “applicable state . . . law” to encompass only
California law that is not preempted by the FAA. (§ 1638
[contractual language that is clear and explicit governs].)
Saheli suggests that Imburgia is distinguishable because
there, the relevant restriction on arbitration had been declared
preempted prior to DIRECTV’s attempt to compel arbitration.
Here, in contrast, there had been no judicial declaration that the
relevant portions of the Ralph Act and Bane Act are preempted
by the FAA when Defendants petitioned the trial court to compel
arbitration.

7 In fact, Saheli simply assumes, without providing or
applying any reasoning or principles of contract interpretation,
that the phrase “applicable state . . . law” includes California law
that is preempted by the FAA.
13
We do not find this distinction meaningful. In interpreting
the phrase “applicable state . . . law,” we are not concerned with
the parties’ or the trial court’s understanding of the state of
California law when Defendants first attempted to compel
arbitration.8 Nor, for that matter, are we concerned with the
parties’ understanding of the state of California law when they
entered into the Arbitration Agreement. (See Imburgia, supra,
136 S.Ct. at pp. 468–469 [disregarding fact that parties would
have understood Discover Bank rule to be valid law when they
entered into the arbitration agreement].) Instead, we are
concerned only with the meaning of the phrase “applicable
state . . . law” as understood by the parties when they entered
into the Arbitration Agreement. (§ 1636 [a “contract must be so
interpreted as to give effect to the mutual intention of the parties
as it existed at the time of contracting”].) As we discussed, the
ordinary meaning of the phrase does not encompass preempted
state law. The supposed distinction between Imburgia and the
present case does not warrant a contrary interpretation.
II. The Ralph Act and Bane Act are Preempted by the
FAA to the Extent They Condition the Enforceability
of Arbitration Agreements on Compliance with
Special Requirements Not Applicable to Contracts
Generally
Given our interpretation of the phrase “applicable
state . . . law,” the Arbitration Agreement’s failure to comply with

8 We also note that a “ ‘judicial construction of a statute is an
authoritative statement of what the statute meant before as well
as after the decision of the case giving rise to that construction.’
[Citations.]” (McClung v. Employment Development Dept. (2004)
34 Cal.4th 467, 474.)
14
state law that is preempted by federal law does not provide a
basis for the trial court to deny Defendants’ petition to compel
arbitration. Here, the trial court denied in part Defendants’
petition to compel arbitration after determining the Arbitration
Agreement failed to comply with certain requirements found in
the Ralph Act and Bane Act. Accordingly, to determine if the
trial court erred, we must decide whether those requirements are
preempted by the FAA. We find that they are preempted, and
the trial court erroneously denied the petition to compel
arbitration of these claims.
A. The Ralph Act and Bane Act
“The Legislature’s focused effort to combat discriminatory
and pernicious conduct often referred to as hate crimes began
with the 1976 enactment of Civil Code section 51.7, commonly
referred to as the ‘Ralph Civil Rights Act’ or the ‘Ralph Act.’ ”
(Venegas v. County of Los Angeles (2004) 32 Cal.4th 820, 845,
conc. opn. of Baxter, J. (Venegas).) The Ralph Act broadly
provides that all persons “have the right to be free from any
violence, or intimidation by threat of violence, committed against
their persons or property” because of, among other things, the
person’s race, religion, national origin, sex, sexual orientation, or
position in a labor dispute. (§ 51.7, subd. (a).) Persons who
violate section 51.7 are liable for actual and exemplary damages,
a civil penalty of $25,000, and attorney fees. (§ 52, subd. (b);
Venegas, supra, at p. 842.)
A civil action for a violation of the Ralph Act may be
brought by an aggrieved individual, the Attorney General, a
district attorney, or a city attorney. (See § 52, subd. (c).)
Regardless of who initiates the action, any civil penalties
recovered shall be awarded to the person denied the right
15
provided by the Ralph Act. (§ 52, subd. (b)(2).) In addition to a
civil action, an aggrieved individual may file a complaint with the
Department of Fair Employment and Housing. (§ 52, subd. (f).)
Ten years after enacting the Ralph Act, the Legislature
enacted section 52.1—commonly referred to as the “Tom Bane
Civil Rights Act” or “Bane Act”—which was “intended to
supplement the Ralph Civil Rights Act as an additional
legislative effort to deter violence.” (Stamps v. Superior Court
(2006) 136 Cal.App.4th 1441, 1447.) Section 52.1, subdivision (a),
“provides that if a person interferes, or attempts to interfere, by
threats, intimidation, or coercion, with the exercise or enjoyment
of the constitutional or statutory rights of ‘any individual or
individuals,’ the Attorney General, or any district or city
attorney, may bring a civil action for equitable or injunctive
relief. Subdivision (b) allows ‘[a]ny individual’ so interfered with
to sue for damages [under section 52].” (Venegas, supra, 32
Cal.4th at p. 841.) In addition to damages, the individual may
seek “injunctive relief, and other appropriate equitable relief to
protect the peaceable exercise or enjoyment of the right or rights
secured, including appropriate equitable and declaratory relief to
eliminate a pattern or practice of conduct . . . .” (§ 52.1, subd.
(b).) A violation of a temporary restraining order or temporary or
permanent injunction issued under section 52.1 “may be
punished either by prosecution under Section 422.77 of the Penal
Code, or by a proceeding for contempt.” (§ 52.1, subd. (i).)
In 2014, the Legislature passed Assembly Bill No. 2617
(AB 2617), which limited the circumstances under which an
individual may waive his or her rights under the Ralph Act and
Bane Act, including the right to a judicial forum and procedures.
As amended, section 51.7 now provides that “[a]ny waiver of any
16
legal right, penalty, remedy, forum, or procedure for a violation of
this section, including the right to file and pursue a civil action or
complaint with, or otherwise notify, the Attorney General or any
other public prosecutor, or law enforcement agency, the
Department of Fair Employment and Housing, or any other
governmental entity shall be knowing and voluntary, and in
writing, and expressly not made as a condition of entering into a
contract for goods or services or as a condition of providing or
receiving goods and services.” (§ 51.7, subd. (3).)
It further provides that “[a]ny waiver of any legal right,
penalty, remedy, forum, or procedure for a violation of this
section that is required as a condition of entering into a contract
for goods or services shall be deemed involuntary,
unconscionable, against public policy, and unenforceable.”
(§ 51.7, subd. (4).) In addition, any “person who seeks to enforce
a waiver of any legal right, penalty, remedy, forum, or procedure
for a violation of this section shall have the burden of proving
that the waiver was knowing and voluntary and not made as a
condition of the contract or of providing or receiving the goods or
services.” (§ 51.7, subd. (5).) AB 2617 amended the Bane Act to
provide that the “rights, penalties, remedies, forums, and
procedures of this section shall not be waived by contract except
as provided in Section 51.7.” (§ 52.1, subd. (l).)
B. FAA Preemption
“The FAA was designed ‘to overrule the judiciary’s longstanding
refusal to enforce agreements to arbitrate,’ [citation],
and to place such agreements ‘ “upon the same footing as other
contracts,” ’ [Citation.] While Congress was no doubt aware that
the Act would encourage the expeditious resolution of disputes,
its passage ‘was motivated, first and foremost, by a congressional
17
desire to enforce agreements into which parties had entered.’
[Citation.]” (Volt, supra, 489 U.S. at p. 478.)
Section 2 of the FAA “declares written provisions for
arbitration ‘valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any
contract.’ 9 U.S.C. § 2.” (Doctor’s Associates, Inc. v. Casarotto
(1996) 517 U.S. 681, 683 (Doctor’s Associates).) By enacting
section 2, “ ‘Congress declared a national policy favoring
arbitration and withdrew the power of the states to require a
judicial forum for the resolution of claims which the contracting
parties agreed to resolve by arbitration.’ [Citation.]” (Perry v.
Thomas (1987) 482 U.S. 483, 489 (Perry).) Section 2 “requires
courts to place arbitration agreements ‘on equal footing with all
other contracts.’ [Citations.]” (Kindred Nursing Centers Ltd.
Partnership v. Clark (2017) 137 S.Ct. 1421, 1424 (Kindred
Nursing).) It precludes “[s]tates from singling out arbitration
provisions for suspect status,” (Doctor’s Associates, supra, 517
U.S. at p. 687), no matter how laudable the reasons for doing so,
(Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59
Cal.4th 348, 384 (Iskanian)). In effect, section 2 of the FAA
“preempts any state rule discriminating on its face against
arbitration—for example, a ‘law prohibit[ing] outright the
arbitration of a particular type of claim.’ [Citation.] And not only
that: The [FAA] also displaces any rule that covertly
accomplishes the same objective by disfavoring contracts that (oh
so coincidentally) have the defining features of arbitration
agreements.” (Kindred Nursing, supra, 137 S.Ct. at p. 1426; see
Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 924
(Sanchez) [“a state rule can be preempted not only when it
facially discriminates against arbitration but also when it
18
disfavors arbitration as applied”].) Under section 2’s saving
clause, a state court may invalidate an arbitration agreement
under generally applicable contract defenses, such as fraud,
duress, or unconscionability, but not under a defense that is
specific to arbitration agreements. (Doctor’s Associates, supra,
517 U.S. at p. 687.)
C. Analysis
The Ralph Act and Bane Act, as amended by AB 2617,
unquestionably discriminate against arbitration by placing
special restrictions on waivers of judicial forums and procedures
in connection with claims brought under those acts. In effect,
sections 51.7 and 52.1 deem an agreement to arbitrate such
claims unenforceable unless the party seeking to enforce it proves
(1) the other party knowingly and voluntarily agreed to
arbitration, and (2) the arbitration agreement was not made a
condition of a contract for goods or services or of providing or
receiving goods or services. (§§ 51.7, subd. (b)(5); 52.1, subd. (l).)
For the reasons we discuss, we conclude these restrictions are
preempted by the FAA. Accordingly, the trial court’s reliance on
special requirements found in sections 51.7 and 52.1 to deny in
part Defendants’ petition to compel arbitration was in error.
Sections 51.7’s and 52.1’s special requirements for
agreements to arbitrate Ralph Act and Bane Act claims do not
apply to contracts generally. For example, the party seeking to
enforce a contract generally need not prove the other party
knowingly agreed to each term contained in a written contract.
(Randas v. YMCA of Metropolitan Los Angeles (1993) 17
Cal.App.4th 158, 163 [“ ‘[o]rdinarily, one who accepts or signs an
instrument, which on its face is a contract, is deemed to assent to
all its terms’ ”]; Marin Storage & Trucking, Inc. v. Benco
19
Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042,
1049 [same].) Moreover, although mutual assent to a contract is
essential, (§§ 1550, 1565), the party opposing enforcement of a
contract generally has the burden to show his or her assent was
involuntary. (Evid. Code, § 500 [“a party has the burden of proof
as to each fact the existence or nonexistence of which is essential
to the . . . defense that he is asserting”]; Townsend v. Wingler
(1952) 114 Cal.App.2d 64, 68 [party seeking to invalidate contract
has burden of showing fraud, undue influence, or coercion]; Fio
Rito v. Fio Rito (1961) 194 Cal.App.2d 311, 322 [defendant had
burden of proving affirmative defense of duress].) It is also wellestablished
that there is no general prohibition on contract terms
that are required as a condition of a contract or of providing or
receiving goods or services. (See, e.g., Graham v. Scissor-Tail,
Inc. (1981) 28 Cal.3d 807, 819–820, fns. omitted [“a contract of
adhesion is fully enforceable according to its terms [citations]
unless certain other factors are present which, under established
legal rules - legislative or judicial - operate to render it
otherwise”]; Lagatree v. Luce, Forward, Hamilton & Scripps
(1999) 74 Cal.App.4th 1105, 1127–1128 [“under both federal and
state law, an employee’s rights to a jury trial and a judicial forum
can be validly waived by agreement, even where the waiver is
required as a condition of employment”]; Franco v. Arakelian
Enterprises, Inc. (2015) 234 Cal.App.4th 947, 956 [“waivers that
are obtained as a condition of employment and that limit
employees’ ability to vindicate statutory employee
protections[]are not categorically invalid or unenforceable”].)
Sections 51.7’s and 52.1’s special requirements for waivers of
judicial forums and procedures in connection with Ralph Act and
Bane Act claims—and consequently their limitations on the
20
enforcement of arbitration agreements related to such claims—
contravene these general rules of contracts. As such, the special
requirements are preempted by the FAA. (Doctor’s Associates,
supra, 517 U.S. at p. 687 [state law is preempted if it “conditions
the enforceability of arbitration agreements on compliance with a
special . . . requirement not applicable to contracts generally”].)
The legislative history of AB 2617 confirms that the Ralph
Act’s and Bane Act’s special requirements represent a hostility to
arbitration and their purpose is primarily, if not exclusively, to
discourage arbitration of Ralph Act and Bane Act claims.9 A
Senate Judiciary Committee analysis states that the
amendments were needed because “courts are increasingly
inclined to honor a signed waiver requiring the parties to submit
to arbitration” Ralph Act and Bane Act claims, which, in practice,
“seriously undermine[s]” the “spirit and intent of the state’s civil
rights law.” (Sen. Com. on Judiciary, Analysis of Assem. Bill No.
2617 (2013–2014 Reg. Sess.) June 23, 2014, pp. 3–4.) An
Assembly Judiciary Committee report explains that the specific
impetus for the bill was a “controversial” case, D.C. v. HarvardWestlake
School (2009) 176 Cal.App.4th 836 (Harvard-Westlake),
in which a young man and his parents were compelled to
arbitrate Ralph Act and Bane Act claims asserted against the
young man’s school. (Assem. Com. on Judiciary, Analysis of
Assem. Bill No. 2617 (2013–2014 Reg. Sess.) April 25, 2014,

9 The United States Supreme Court has suggested that the
legislative or judicial intent behind a state law is relevant to the
question of FAA preemption. (See Perry, supra, 482 U.S. at
p. 493, fn. 9 [a state law is not preempted “if that law arose to
govern issues concerning the validity, revocability, and
enforceability of contracts generally” (italics added)];
Doctor’s Associates, supra, 517 U.S. at pp. 686-687 [same].)
21
pp. 4–5.) The arbitrator found in favor of the school on all claims
and awarded attorney fees to the school in accordance with the
parties’ arbitration agreement. (Harvard-Westlake, supra, at
p. 847.) The Court of Appeal reversed the award of fees, finding
that an individual cannot waive the Ralph Act’s and Bane Act’s
prohibition on a defendant’s recovery of attorney fees. (Id. at
p. 866.) The Assembly Report criticizes the Harvard-Westlake
court for “failing to acknowledge that . . . requiring a party to
allow a private arbitrator to decide hate crimes violations is,
inherently, a waiver of rights and procedures provided by the
statutes.” (Assem. Com. on Judiciary, Analysis of Assem. Bill No.
2617 (2013–2014 Reg. Sess.) April 25, 2014, p. 7.)
The Assembly report proceeds to detail numerous supposed
shortcomings of arbitration. Under a section titled “Private
Arbitration Is Essentially Unregulated And Highly Controversial
When It Is Mandatory, Rather Than Voluntary,” the report notes
that “arbitrators are not regulated in any fashion; they need not
be trained in the law, or even apply the law in a particular
dispute, or render a decision consistent with the evidence
presented to them. What evidence is presented may, in fact, be
incomplete because parties in arbitration have no legal right to
obtain evidence in support of their claims or defenses, or the
claims or defenses of the other party, contrary to the
longstanding discovery practice in public courts. . . . There is no
need to justify [the arbitrator’s] decision because the law and the
evidence need not be followed and because there is no right for
any party to appeal or obtain an independent review of the
arbitrator’s ruling unless the contract expressly so provides.”
(Assem. Com. on Judiciary, Analysis of Assem. Bill No. 2617
(2013–2014 Reg. Sess.) April 25, 2014, at pp. 5–6.) The analysis
22
concludes that, in part due to these supposed shortcomings,
private arbitration is “controversial . . . when it is imposed by
more powerful parties without negotiation or the right to
withhold consent to unfair terms.” (Id. at p. 6.)
The above legislative history clearly shows the motivating
force behind the enactment of AB 2617 was a belief that
arbitration is inherently inferior to the courts for the adjudication
of Ralph Act and Bane Act claims. In accordance with this dim
view of arbitration, the Legislature placed special restrictions on
waivers of judicial forums and procedures in connection with such
claims. In practice, such restrictions discourage arbitration by
invalidating otherwise valid arbitration agreements. It is
precisely this sort of hostility to arbitration that the FAA
prohibits.
Saheli suggests that sections 51.7’s and 52.1’s special
requirements escape FAA preemption because they merely place
restrictions on arbitration agreements and do not ban them
outright.
10 We disagree. It is well-established that a law need
not prohibit entirely arbitration agreements to be preempted by
the FAA. (See, e.g., Doctor’s Associates, supra, 517 U.S. 681 [FAA

10 The legislative history suggests AB 2617 was drafted in
this way in an attempt to avoid FAA preemption. Under a
section titled “Is This Bill Carefully Crafted to Avoid Federal PreEmption
Questions?,” an Assembly report states, “this bill does
not bar arbitration or other waiver agreements; it simply makes
it unlawful to seek an unknowing and involuntary waiver of
rights or procedures regarding abuse laws prior to a dispute
arising. Proponents point out that there is no state or federal
policy favoring involuntary waiver or arbitration agreements.”
(Assem. Com. on Judiciary, Analysis of Assem. Bill No. 2617
(2013–2014 Reg. Sess.) April 25, 2014, pp. 7–8.)
23
preempts Montana law mandating special notice requirements
for arbitration agreements]; Hedges v. Carrigan (2004) 117
Cal.App.4th 578, 585 [FAA preempts font and point size,
notification, and warning requirements for arbitration
agreements in real estate transaction documents]; Pinnacle
Museum Tower Assn. v. Pinnacle Market Development (US), LLC
(2012) 55 Cal.4th 223, 245 [FAA preempts requirements “such as
proof of actual notice, meaningful reflection, signature by all
parties, and/or a unilateral modification clause favoring the
nondrafting party”]; Scott v. Yoho (2016) 248 Cal.App.4th 392
[FAA preempts Code of Civil Procedure section 1295’s 30-day
cancellation period for certain arbitration agreements related to
medical disputes].) Rather, it is sufficient, as is the case here,
that the state law “conditions the enforceability of arbitration
agreements on compliance with a special . . . requirement not
applicable to contracts generally.” (Doctor’s Associates, supra,
517 U.S. at p. 687.)
We also reject Saheli’s assertion that the FAA “displaces”
the Ralph Act and Bane Act, and therefore Defendants must
show that “Congress intended to disrupt the statutory
enforcement scheme” and “interfere with California’s ability to
curb discriminatory violence.” The premises of Saheli’s argument
are flawed. The FAA does not displace the Ralph Act and Bane
Act. Nor does it interfere with their enforcement schemes or
California’s ability to curb discriminatory violence. Instead, the
FAA simply mandates that we treat agreements to arbitrate,
including agreements to arbitrate Ralph Act and Bane Act
claims, as we would other contracts. The special requirements in
sections 51.7 and 52.1 do not comport with this mandate, and are
therefore preempted by the FAA.
24
1. The Ralph Act’s And Bane Act’s Special Requirements
Do Not Avoid Preemption by Virtue of their Application to
the Waiver of Any Legal Right, Penalty, Remedy, Forum, or
Procedure
Saheli contends that sections 51.7’s and 52.1’s special
requirements avoid preemption because they apply to the waiver
of “any legal right, penalty, remedy, forum, or procedure” under
the Ralph Act and Bane Act. According to Saheli, because the
requirements are not targeted solely at arbitration agreements,
they fall within section 2’s saving clause as grounds that exist at
law or in equity for the revocation of any contract. We disagree.
In Southland Corp. v. Keating (1984) 465 U.S. 1
(Southland), the United States Supreme Court rejected a similar
argument to the one advanced by Saheli. In Southland, our
nation’s high court reversed a California Supreme Court decision
holding that Corporations Code section 31512 prohibits
arbitration of claims brought under the Franchise Investment
Law. (See Keating v. Superior Court (1982) 31 Cal.3d 584, 596–
597.) Corporations Code section 31512 provides, “Any condition,
stipulation or provision purporting to bind any person acquiring
any franchise to waive compliance with any provision of this law
or any rule or order hereunder is void.” After finding such
language prohibits agreements to waive a judicial forum, the
California Supreme Court determined such a prohibition was not
preempted by the FAA. The court reasoned that “[s]uch
exceptions to the general principle of arbitrability, like those
expressed in California’s Franchise Investment Law, do not
reflect hostility toward arbitration, nor do they constitute an
obstacle to the general enforcement of arbitration agreements in
a manner consistent with federal law. Rather, such exceptions
25
are narrowly confined to rights and remedies created by state
regulatory statutes, and represent a determination that the
public interest is best served by maintaining access to the
remedies which the Legislature has provided.” (Keating v.
Superior Court, supra, 31 Cal.3d 584 at p. 602.) The United
States Supreme Court reversed, holding that, to the extent
Corporations Code section 31512 prohibits arbitration of
California Franchise Investment Law claims, it is preempted by
the FAA. (Southland, supra, 465 U.S. at p. 10.)
In his dissent in part, Justice Stevens asserted a nearly
identical argument to that advanced by Saheli in this case. Like
Saheli, Justice Stevens argued the California Supreme Court’s
application of Corporations Code section 31512 to preclude
arbitration was proper because it was based on such grounds as
exist at law or in equity for the revocation of any contract.
(Southland, supra, 465 U.S. at p. 20, dis. opn. of Stevens, J.) He
explained, “A contract which is deemed void is surely revocable at
law or in equity, and the California legislature has declared all
conditions purporting to waive compliance with the protections of
the Franchise Investment Law, including but not limited to
arbitration provisions, void as a matter of public policy.” (Ibid.)
The majority rejected Justice Stevens’s argument, stating:
“[T]he defense to arbitration found in the California Franchise
Investment Law is not a ground that exists at law or in equity
‘for the revocation of any contract’ but merely a ground that
exists for the revocation of arbitration provisions in contracts
subject to the California Franchise Investment Law. Moreover,
under this dissenting view, ‘a state policy of providing special
protection for franchisees . . . can be recognized without
impairing the basic purposes of the federal statute.’ [Citation.]
26
If we accepted this analysis, states could wholly eviscerate
congressional intent to place arbitration agreements ‘upon the
same footing as other contracts,’ [citation], simply by passing
statutes such as the Franchise Investment Law. We have
rejected this analysis because it is in conflict with the Arbitration
Act and would permit states to override the declared policy
requiring enforcement of arbitration agreements.” (Southland,
supra, 465 U.S. at pp. 16–17, fn. 11.)
Sanchez, supra, 61 Cal.4th 899 is also instructive. In
Sanchez, the California Supreme Court held that the Consumers
Legal Remedies Act’s (CLRA) prohibition on the waiver of class
actions is preempted by the FAA, despite the fact that the CLRA
prohibits the waiver of numerous other statutory rights. (Id. at
pp. 923–924; see §§ 1751 & 1780.) Our state’s high court rejected
the plaintiff’s argument that enforcement of the anti-waiver
provision “merely puts arbitration agreements on an equal
footing with other contracts,” reasoning that “a state rule can be
preempted not only when it facially discriminates against
arbitration but also when it disfavors arbitration as applied.”
(Sanchez, supra, 61 Cal.4th at p. 924, citing Concepcion, supra,
563 U.S. at pp. 341–342.)
Saheli’s argument fails for the reasons articulated by the
courts in Southland and Sanchez. Sections 51.7’s and 52.1’s
special requirements for waivers of judicial forums or procedures
are not “ground[s] that exist[] at law or in equity ‘for the
revocation of any contract’ but merely [] ground[s] that exists for
the revocation of arbitration provisions in contracts subject to”
the Ralph Act and Bane Act. (Southland, supra, 465 U.S. at
p. 16, fn. 11.) Although sections 51.7 and 52.1 place the same
restrictions on waivers of various other statutory rights, the
27
statutes unquestionably disfavor arbitration as applied.
(See Sanchez, supra, 61 Cal.4th at p. 924; Concepcion, supra,
563 U.S. at pp. 341–342.) Moreover, were we to accept Saheli’s
argument, the Legislature could circumvent the FAA by simply
declaring a restriction on arbitration agreements equally
applicable to the waiver of other rights under a particular
statutory scheme. Given the ease with which the Legislature
could avoid preemption in this manner, such a rule would, in
practice, render ineffective section 2 of the FAA. (See Southland,
supra, 465 U.S. at p. 16, fn. 11.)
2. The Ralph Act’s And Bane Act’s Special Requirements
Do Not Codify the Doctrine of Unconscionability
Saheli suggests sections 51.7’s and 52.1’s special
requirements fall within section 2’s saving clause because they
are a codification of the existing doctrine of unconscionability.
We find no merit to this argument.
A court may refuse to enforce contracts or clauses in
contracts that are unconscionable. (§ 1670.5, subd. (a).)
“ ‘[U]unconscionability has both a “procedural” and a
“substantive” element,’ the former focusing on ‘ “oppression” ’
or ‘ “surprise” ’ due to unequal bargaining power, the latter on
‘ “overly harsh” ’ or ‘ “one-sided” ’ results. [Citation.] ‘The
prevailing view is that [procedural and substantive
unconscionability] must both be present in order for a court to
exercise its discretion to refuse to enforce a contract or clause
under the doctrine of unconscionability.’ [Citation.] But they
need not be present in the same degree. ‘Essentially a sliding
scale is invoked which disregards the regularity of the procedural
process of the contract formation, that creates the terms, in
proportion to the greater harshness or unreasonableness of the
28
substantive terms themselves.’ [Citations.] In other words, the
more substantively oppressive the contract term, the less
evidence of procedural unconscionability is required to come to
the conclusion that the term is unenforceable, and vice versa.”
(Armendariz v. Foundation Health Psychcare Services, Inc. (2000)
24 Cal.4th 83, 114, abrogated on other grounds by Concepcion,
supra, 563 U.S. 333.)
Sections 51.7’s and 52.1’s special requirements for
arbitration agreements are not simply a codification of the abovedescribed
principles. Although the special requirements
potentially reflect elements of procedural unconscionability, they
say nothing about substantive unconscionability. Thus, to find
that sections 51.7’s and 52.1’s prohibitions on the enforcement of
certain arbitration agreements codify existing rules of
unconscionability would require us to declare all agreements to
arbitrate Ralph Act and Bane Act claims, regardless of their
actual terms, to be substantively unconscionable. Such a blanket
rule is not permitted under the FAA.
In Concepcion, the United States Supreme Court cautioned
that even when a court purports to apply a doctrine normally
thought to be generally applicable, such as unconscionability, it
may not “ ‘rely on the uniqueness of an agreement to arbitrate as
a basis for a state-law holding that enforcement would be
unconscionable, for this would enable the court to effect
what . . . the state legislature cannot.’ [Citation.]” (Concepcion,
supra, 563 U.S. at p. 341.) According to our nation’s high court,
“[a]n obvious illustration of this point would be a case finding
unconscionable or unenforceable as against public policy
consumer arbitration agreements that fail to provide for
judicially monitored discovery. . . . A court might reason that no
29
consumer would knowingly waive his right to full discovery, as
this would enable companies to hide their wrongdoing. Or the
court might simply say that such agreements are exculpatory—
restricting discovery would be of greater benefit to the company
than the consumer, since the former is more likely to be sued
than to sue. [Citation.] And, the reasoning would continue,
because such a rule applies the general principle of
unconscionability or public-policy disapproval of exculpatory
agreements, it is applicable to ‘any’ contract and thus preserved
by § 2 of the FAA. In practice, of course, the rule would have a
disproportionate impact on arbitration agreements . . . .” (Id. at
pp. 341–342.) As such, it would be preempted by the FAA.
A declaration that all agreements to arbitrate Ralph Act
and Bane Act claims are per se substantively unconscionable
would necessarily be premised on the uniqueness of an
agreement to arbitrate. Indeed, we could not reach such a
conclusion without finding, for whatever reason, that it is
inherently unfair to require a party to arbitrate Ralph Act and
Bane Act claims. Stated otherwise, Saheli essentially urges us to
declare that arbitration, in the abstract and without regard to the
specific procedures to which the parties agreed, is fundamentally
incapable of fairly adjudicating an entire class of claims. Such a
rule would itself represent an improper hostility toward
arbitration that would not be permitted under the FAA.
Even if the FAA permitted such a declaration, sections
51.7’s and 52.1’s special requirements would still be inconsistent
with the existing doctrine of unconscionability. First, by
declaring unconscionable arbitration agreements that fail to
comply with certain procedural requirements, sections 51.7 and
52.1 preclude courts from performing the sliding scale analysis
30
typically employed to determine whether a specific arbitration
agreement is enforceable. In addition, sections 51.7 and 52.1
alter the burden of proving unconscionability. Generally, the
burden is on the party opposing arbitration to show an
arbitration agreement is unconscionable. (Sanchez, supra,
61 Cal.4th at p. 911 [“[b]ecause unconscionability is a contract
defense, the party asserting the defense bears the burden of
proof”]; Engalla v. Permanente Medical Group, Inc. (1997)
15 Cal.4th 951, 972 [“a party opposing [a] petition [to arbitrate]
bears the burden of proving by a preponderance of the evidence
any fact necessary to its defense”].) Sections 51.7 and 52.1,
however, place the burden on the party seeking to enforce the
arbitration agreement to show it was made knowingly and
voluntarily and not as a condition of the contract or of providing
or receiving goods or services. (§ 51.7, subd. (b)(5).) In effect, this
shifts the burden to the party seeking enforcement to show that
the arbitration agreement is not unconscionable. In that way,
sections 51.7 and 52.1 depart from the preexisting doctrine of
unconscionability, and treat arbitration agreements differently
from other types of contracts. Such discriminatory treatment is
not permitted under the FAA.
3. An Agreement to Arbitrate Ralph Act and Bane Act
Claims Does Not Require the Waiver of Substantive
Rights or Remedies
Finally, we reject Saheli’s various arguments that sections
51.7’s and 52.1’s special requirements avoid preemption because
they are consistent with general California law restricting the
waiver of certain substantive rights and remedies. The
fundamental flaw with all of these arguments is that Saheli has
failed to identify any substantive rights or remedies that are
31
necessarily waived simply by submitting a Ralph Act or Bane Act
claim to arbitration.
In passing, and without any explanation or citation to the
record or authority, Saheli asserts the Arbitration Agreement
precludes injunctive relief. Contrary to this assertion, the
Arbitration Agreement provides that the rights of the parties
“shall be the same as those available to them in a court of
competent jurisdiction.” Further, it expressly empowers the
arbitrator to award “such remedies as could be awarded by a
court under the applicable substantive law, which may include
injunctive or other equitable relief.”
We also find no merit to concerns expressed in the
legislative history of AB 2617 that an arbitrator could not provide
meaningful, immediate relief—such as a temporary restraining
order or preliminary injunction—to prevent the sort of abuse
prohibited under the Ralph Act and Bane Act. (Assem. Com. on
Judiciary, Analysis of Assem. Bill No. 2617 (2013–2014 Reg.
Sess.) April 25, 2014, p. 7.) Such concerns are addressed by Code
of Civil Procedure section 1281.8, which provides that a party to
an arbitration agreement may seek from a court a preliminary
injunction or temporary restraining order if “the award to which
the applicant may be entitled may be rendered ineffectual
without provisional relief.” (Code Civ. Proc., § 1281.8, subd. (b).)
Saheli’s reliance on McGill v. Citibank, N.A. (2017) 2
Cal.5th 945 (prohibiting the waiver of certain statutory remedies
under the CLRA, UCL, and FAL), and Iskanian, supra, 59
Cal.4th 348 (prohibiting the waiver of PAGA claims) is misplaced.
Unlike the present controversy, those cases involved agreements
to completely waive, in any forum, certain unwaivable
substantive rights and remedies. Here, in contrast, the
32
Arbitration Agreement does not mandate the waiver of any
substantive rights or remedies. Nor has Saheli identified any
substantive rights or remedies necessarily waived by virtue of
agreeing to arbitrate Ralph Act or Bane Act claims.
Although Courts of Appeal have relied on Iskanian to limit
pre-dispute agreements to arbitrate PAGA claims, (see
Betancourt v. Prudential Overall Supply (2017) 9 Cal.App.5th
439, 445–446; Tanguilig v. Bloomingdale’s, Inc. (2016) 5
Cal.App.5th 665, 678), the reasoning employed by those courts is
not applicable here. In limiting the enforceability of arbitration
agreements related to PAGA claims, those courts relied on the
fact that a PAGA action is not a “dispute between an employer
and an employee arising out of their contractual relationship.
It is a dispute between an employer and the state, which alleges
directly or through its agents—either the [Labor and Workforce
Development] Agency or aggrieved employees—that the employer
has violated the Labor Code.” (Iskanian, supra, 59 Cal.4th at
pp. 386–387.) Consistent with the representative nature of such
actions, prior to asserting a PAGA claim, an individual must give
notice to the Labor and Workforce Development Agency (Agency),
and may only pursue the claim if the Agency declines to
investigate the alleged violation or issue a citation. (See Lab.
Code, § 2699.3.) Accordingly, “[b]ecause a PAGA plaintiff,
whether suing solely on behalf of himself or herself or also on
behalf of other employees, acts as a proxy for the state only with
the state’s acquiescence (see § 2699.3) and seeks civil penalties
largely payable to the state via a judgment that will be binding
on the state, a PAGA claim cannot be ordered to arbitration
without the state’s consent.” (Tanguilig v. Bloomingdale’s, Inc.,
supra, 5 Cal.App.5th at p. 678.)
33
An action by an individual asserting Ralph Act and Bane
Act claims is fundamentally different from a PAGA action.
Although the government has the authority to pursue Ralph Act
and Bane Act claims, an aggrieved individual asserting such
claims does not act as a proxy for the state. Instead, the
individual pursues the claims “in his or her own name and on his
or her own behalf . . . .” (§ 52.1, subd. (b).) In addition, unlike
PAGA, the Ralph Act and Bane Act do not require that an
individual provide the state notice of her claims and the
opportunity to pursue them in the first instance. We are also
aware of no authority providing that the state is a real party in
interest in individual Ralph Act or Bane Act claims. Given such
fundamental differences between PAGA and the Ralph Act and
Bane Act, Iskanian does not compel a finding that sections 51.7’s
and 52.1’s restrictions on arbitration agreements avoid FAA
preemption.

Outcome: The order denying in part Defendants’ petition to compel arbitration is reversed. The parties are to bear their own costs on appeal.

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