Plaintiff Employees Appeal | California Fair Employment and Housing Act
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Armendariz v. Foundation Health Psychcare Services, Inc.Supreme Court of CaliforniaAugust 24, 2000, Decided No. S075942. Reporter24 Cal. 4th 83; 6 P.3d 669; 99 Cal. Rptr. 2d 745; 2000 Cal. LEXIS 6120; 83 Fair Empl. Prac. Cas. (BNA) 1172; 78 Empl. Prac. Dec. (CCH) P40,202; 2000 Cal. Daily Op. Service 7127; 2000 Daily Journal DAR 9401MARYBETH ARMENDARIZ et al., Plaintiffs and Respondents, v. FOUNDATION HEALTH PSYCHCARE SERVICES,INC., Defendant and Appellant.Prior History: Superior Court of Marin County. Super. Ct. No. 170420. Lynn Duryee, Judge. *Court of Appeals of California, First Appellate District, Division One. No. A080224. Disposition:The judgment of the Court of Appeal upholding the employer's petition to compel arbitration is reversed, and thecause is remanded to the Court of Appeal with directions to affirm the judgment of the trial court. Case SummaryProcedural PosturePlaintiff employees appealed a judgment of the Court of Appeals of California, First Appellate District, Division One,permitting defendant employer's petition to compel arbitration and enforcing an arbitration agreement minus one provisionfound unconscionable. Plaintiffs sued for wrongful termination and defendant petitioned to compel arbitration becauseplaintiffs signed a mandatory arbitration agreement before beginning employment.OverviewPlaintiff employees sued defendant employer. Plaintiffs alleged violations of the California Fair Employment and Housing Act,Cal. Gov. Code § 12900 et seq. Plaintiffs alleged they were terminated because of their perceived heterosexual orientation.Defendant petitioned to compel arbitration, since both plaintiffs had signed pre-employment application forms containingmandatory arbitration clauses. The clauses expressly limited damages, and did not mandate adequate discovery, a process forlimited judicial review, or limitations on cost. The trial court held the entire agreement unenforceable. The intermediateappellate court reversed and held the limitation on damages was unconscionable, but said the remainder was enforceable.Plaintiffs appealed. The court reversed. The court held the claims were arbitrable if arbitration permitted vindication ofplaintiffs' statutory rights. The court further held the arbitration agreement involved was unenforceable because the agreementcontained so many unconscionable provisions that it was not possible to make the agreement enforceable by severing theoffending provisions.OutcomeThe court reversed the judgment of the intermediate appellate court.Counsel:Pillsbury Madison & Sutro, William Gaus, Craig E. Stewart, Alice Kwong Ma Hayashi and Emily E. Flynn forDefendant and Appellant. **Judge of the former Municipal Court for the Marin Judicial District, assigned by the Chief Justice pursuant to article VI, section 6 of theCalifornia Constitution.
Page 2 of 23Armendariz v. Foundation Health Psychcare Services, Inc.Paul, Hastings, Janofsky & Walker, Paul W. Cane, Jr., Leslie L. Abbott and Kristen L. McMichael for California EmploymentLaw Council as Amicus Curiae on behalf of Defendant and Appellant. Jones, Day, Reavis & Pogue, William J. Emanuel, Harry I. Johnson III, Holger G. Besch; Law Offices of Steven Drapkin andSteven Drapkin for Employers Group as Amicus Curiae on behalf of Defendant and Appellant. Miller, Clark, Calvert & Raimondi, Glenn M. Clark, Allan C. Miller; Altshuler, Berzon, Nussbaum, Berzon & Rubin, MichaelRubin and Indira Talwani for Plaintiffs and Respondents. McGuinn, Hillsman & Palefsky, Cliff Palefsky and Keith Ehrman for California Employment Lawyers Association as AmicusCuriae on behalf of Plaintiffs and Respondents. Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Louis Verdugo, Jr, Assistant AttorneyGeneral, and Kathleen W. Mikkelson, Deputy Attorney General, for the State of California as Amicus Curiae on behalf ofPlaintiffs and Respondents. The Sturdevant Law Firm and James C. Sturdevant for Consumer Attorneys of California as Amicus Curiae on behalf ofPlaintiffs and Respondents. Judges:Opinion by Mosk, J., with George, C. J., Kennard, Baxter, and Werdegar, JJ., concurring. Concurring opinion byBrown, J., with Chin, J., concurring (see p. 127). Opinion by:MOSK Opinion[*90][**674][***750]MOSK, J.In this case, we consider a number of issues related to the validity of a mandatory employment arbitration agreement, i.e., anagreement by an employee to arbitrate wrongful termination or employment discrimination claims rather than filing suit incourt, which an employer imposes on a prospective or current employee as a condition of employment. The employees in thiscase claim that employees may not be compelled to arbitrate antidiscrimination claims brought under the California FairEmployment and Housing Act (FEHA) ( Gov. Code, § 12900 et seq.) We conclude that such claims are in fact arbitrable if thearbitration permits an employee to vindicate his or her statutory rights. As explained, in order for [*91] such vindication tooccur, the arbitration must meet certain minimum requirements, including neutrality of the arbitrator, the provision of adequatediscovery, a written decision that will permit a limited form of judicial review, and limitations on the costs of arbitration. The employees further claim that several provisions of the arbitration agreement are unconscionable, both because they fail tomeet these minimum requirements and because the arbitration agreement is not bilateral. We conclude that the agreementpossesses a damages limitation that is contrary to public policy, and that it is unconscionably unilateral. [***751] Finally, the employees contend that the presence of these unconscionable provisions renders the entire arbitrationagreement unenforceable. The employer argues that even if some of the provisions are unconscionable or contrary to publicpolicy, the proper remedy is to strike or restrict those clauses pursuant to Civil Code section 1670.5, and to enforce the rest ofthe arbitration agreement. The trial court chose the employees' preferred solution of refusing to enforce the arbitrationagreement, but the Court of Appeal sided with the employer and enforced the agreement minus the one provision it foundunconscionable. We conclude, for reasons explained below, that the arbitration agreement is unenforceable and that thereforethe Court of Appeal's judgment must be reversed. I. STATEMENT OF FACTS AND PROCEDURAL ISSUES Marybeth Armendariz and Dolores Olague-Rodgers (hereafter the employees) filed a complaint for wrongful terminationagainst their former employer, Foundation Health Psychcare Services, Inc. (hereafter the employer). The complaint and certaindocuments filed in support of the employer's petition to compel arbitration provide us with the basic factual background of this
Page 3 of 23Armendariz v. Foundation Health Psychcare Services, Inc.case. In July and August of 1995, the employer hired the employees in the "Provider Relations Group" and they were latergiven supervisory positions with annual salaries of $ 38,000. [**675] On June 20, 1996, they were informed that their positionswere being eliminated and that they were being terminated. During their year of employment, they claim that their supervisorsand coworkers engaged in sexually based harassment and discrimination. The employees alleged that they were "terminated . . .because of their perceived and/or actual sexual orientation (heterosexual)." Both employees had filled out and signed employment application forms, which included an arbitration clause pertaining to anyfuture claim of wrongful termination. Later, they executed a separate employment arbitration agreement, containing the samearbitration clause. The clause states in [*92] full: "I agree as a condition of my employment, that in the event my employmentis terminated, and I contend that such termination was wrongful or otherwise in violation of the conditions of employment orwas in violation of any express or implied condition, term or covenant of employment, whether founded in fact or in law,including but not limited to the covenant of good faith and fair dealing, or otherwise in violation of any of my rights, I andEmployer agree to submit any such matter to binding arbitration pursuant to the provisions of title 9 of Part III of the CaliforniaCode of Civil Procedure, commencing at section 1280 et seq. or any successor or replacement statutes. I and Employer furtherexpressly agree that in any such arbitration, my exclusive remedies for violation of the terms, conditions or covenants ofemployment shall be limited to a sum equal to the wages I would have earned from the date of any discharge until the date ofthe arbitration award. I understand that I shall not be entitled to any other remedy, at law or in equity, including but not limitedto reinstatement and/or injunctive relief." The employees' complaint against the employer alleges a cause of action for violation of the FEHA 1 and three additionalcauses of action for wrongful termination based on tort and contract theories of recovery. The complaint sought generaldamages, punitive damages, injunctive relief, and the recovery of attorney fees and costs of suit. The employer countered by filing a motion for an order to compel arbitration pursuant to Code of Civil Procedure section1281.2. The parties submitted declarations in support of, and in opposition to, the motion. Relying on Stirlen v. Supercuts, Inc.(1997) 51 Cal. App. 4th 1519 [60 [***752] Cal. Rptr. 2d 138], the trial court denied the motion on the ground that thearbitration provision in question was an unconscionable contract. The trial court first found that the arbitration agreement wasan "adhesion contract." It also found that several of the provisions of the contract are "so one-sided as to 'shock the conscience.'" In particular, it singled out the fact that only employees who file claims against an employer are required to arbitrate theirclaims, but not vice versa. Second, the agreement limits damages to backpay, precluding damages available for statutoryantidiscrimination claims and tort damages, such as punitive damages. The trial court also mentioned the supposed lack ofdiscovery under the arbitration agreement. It concluded: "Given the overall unfairness of the provision," this was not anappropriate case for striking the unlawful provisions of the arbitration agreement; instead it invalidated the entire agreement. [*93] After the employer filed a timely appeal, the Court of Appeal reversed. The court concluded that the contract was indeedone of adhesion and that the damages provision was unconscionable and contrary to public policy. But for reasons elaboratedbelow, the Court of Appeal held, contrary to the trial court, that the rest of the arbitration agreement should be enforced. It alsodetermined that because the agreement incorporated the California Arbitration Act (CAA), adequate discovery, pursuant toCode of Civil Procedure section 1283.05, was available. We granted review. II. DISCUSSION A. Arbitrability of FEHA Claims (1) The employees urge us to adopt the conclusion of the United States Court of [**676] Appeals for the Ninth Circuit inDuffield v. Robertson Stephens & Co. (9th Cir. 1998) 144 F.3d 1182 (Duffield), which held that the Civil Rights Act of 1991(Pub.L. No. 102-166 (Nov. 21, 1991) 105 Stat. 1071, hereafter sometimes the 1991 Act) prohibits the enforcement ofmandatory employment agreements to arbitrate claims under title VII of the Civil Rights Act of 1964 (Title VII) or equivalent11Same-sex harassment has been held to be unlawful under the FEHA. ( Mogilefsky v. Superior Court (1993) 20 Cal. App. 4th 1409, 1418[26 Cal. Rptr. 2d 116].)
Page 4 of 23Armendariz v. Foundation Health Psychcare Services, Inc.state antidiscrimination statutes, such as the FEHA. Duffield involved a securities broker who sought to litigate Title VII andFEHA claims against her employer after alleged sexual discrimination and harassment, and who was subject to a mandatoryarbitration agreement. The starting point for the Duffield court is the fact that the 1991 Act "was primarily designed to 'overrule'hostile Supreme Court decisions in order to make discrimination claims easier both to bring and to prove in federal courts . . . ."(Duffield, supra, 144 F.3d at p. 1189.) It is against this background that the court examined section 118 of the 1991 Act, whichprovides: "Where appropriate and to the extent authorized by law, the use of alternative means of dispute resolution, including .. . arbitration, is encouraged to resolve disputes arising under the Acts or provisions of Federal law amended by this title."(Pub.L. No. 102-166, § 118, reprinted in notes foll. 42 U.S.C. § 1981.) The Duffield court found the language "[w]hereappropriate and to the extent authorized by law" to be indicative of a congressional intent to outlaw compulsory arbitration ofemployee civil rights claims, despite the apparently proarbitration thrust of section 118. ( Duffield, supra, 114 F.3d at p. 1195.)The court reasoned as follows: The term "[w]here appropriate," must be considered in the context of the statute as a whole,which provided "for a vast strengthening of employees' rights" (Id. at p. 1191); " 'Where appropriate,' as used in the Act, wouldappear to [*94] mean where arbitration furthers the purpose and objective of the Act--by affording victims of discrimination anopportunity to present their claims in an alternative forum, a forum that they find desirable--not by forcing an unwanted forumupon them." (Id. at p. 1194, italics omitted.) Likewise, the Duffield court explained the phrase "to the extent authorized by law" IN CONTEXT: "As the Supreme Court hasstated, we should 'examine initially' [***753] the statute 'with an eye toward determining Congress' perception of the law that itwas shaping or reshaping.' [Citation.] The overwhelming weight of the law at the time Congress drafted [section] 118, and itwas reported out of the House Education and Labor Committee, was to the effect that compulsory agreements to arbitrate TitleVII claims were unenforceable. In other words, such agreements were not 'authorized by law.' To the contrary, the law at thattime prohibited employers from compelling employees to arbitrate Title VII claims pursuant to collective bargainingagreements, 'in large part' because of the Court's recognition of the critical role that Congress envisioned for the independentfederal judiciary in advancing Title VII's societal goal. (See McDonald [v. West Branch (1984)] 466 U.S. [284,] 289, 104 S.Ct. 1799[, 1802-1803]; [Alexander v. ] Gardner-Denver [Co.] [(1974)] 415 U.S. [36,] 56, 94 S. Ct. 1011[, 1023-1024]." 2(Duffield, supra, 144 F.3d at p. 1194, italics omitted.) This reading of the statute is especially supported by the legislativehistory, particularly the report of the House Committee on Education and Labor (the House report), which stated of the bill thatwas to become the 1991 Act: " 'The Committee emphasizes . . . that the use of alternative dispute mechanisms is . . . [**677]intended to supplement, not supplant, the remedies provided by Title VII. Thus, for example, the committee believes that anyagreement to submit disputed issues to arbitration, whether in the context of collective bargaining or in an employmentcontract, does not preclude the affected person from seeking relief under the enforcement provisions of Title VII. This view isconsistent with the Supreme Court's interpretation of Title VII in Alexander v. Gardner-Denver Co. . . . The Committee doesnot intend this section to be used [*95] to preclude rights and remedies that would otherwise be available.' H.R.Rep. No. 40(I)at 97." (Duffield, supra, 144 F.3d at p. 1195, italics added by the Duffield court.) Finally, the Duffield court reasoned that if the 1991 Act precluded the enforcement of mandatory employment arbitrationagreements with respect to Title VII claims, the employee's FEHA claims must also be exempted from mandatory arbitration.Because " '[p]arallel state anti-discrimination laws are explicitly made part of Title VII's enforcement scheme,' FEHA claimsare arbitrable to the same extent as Title VII claims." (Duffield, supra, 144 F.3d at p. 1187, fn. 3.) In support of thisproposition, the Duffield court cited Kremer v. Chemical Construction Corp. (1982) 456 U.S. 461, 477-478 [102 S. Ct. 1883,1894-1895, 72 L. Ed. 2d 262], which held that because state antidiscrimination laws were intended by Congress to be part ofthe federal antidiscrimination enforcement scheme, a judgment under New York's anti-employment-discrimination statuteprecludes parties from relitigating the same issues in a Title VII action. 22Alexander v. Gardner-Denver Co., supra, 415 U.S. 36 (Gardner-Denver), to which the Duffield court referred, was summarized thus bythe United States Supreme Court: "In Gardner-Denver, the issue was whether a discharged employee whose grievance had been arbitratedpursuant to an arbitration clause in a collective-bargaining agreement was precluded from subsequently bringing a Title VII action basedupon the conduct that was the subject of the grievance. In holding that the employee was not foreclosed from bringing [a] Title VII claim, westressed that an employee's contractual rights under a collective-bargaining agreement are distinct from the employee's statutory Title VIIrights." ( Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 33-34 [111 S. Ct. 1647, 1656, 114 L. Ed. 2d 26] (Gilmer).) McDonaldv. West Branch, supra, 466 U.S. 284, involved a similar statutory claim submitted to arbitration pursuant to a collective bargainingagreement, with a similar holding.
Page 5 of 23Armendariz v. Foundation Health Psychcare Services, Inc.As the employer points out, the Ninth Circuit stands alone in its interpretation of the 1991 Act. (See Rosenberg v. MerrillLynch, Pierce, Fenner & Smith (1st Cir. 1999) 170 F.3d 1, 10 [specifically considering and rejecting Duffield's analysis]; Seusv. John Nuveen & Co., Inc. (3d Cir. 1998) 146 F.3d 175, 183 (Seus) [same]; [***754]Koveleskie v. SBC Capital Markets, Inc.(7th Cir. 1999) 167 F.3d 361, 365 [same].) Aside from the fact that Duffield is a minority of one, we find its reasoning unpersuasive. First and foremost, it is difficult tobelieve that Congress would have chosen to ban mandatory employment arbitration by means of a clause that encourages theuse of arbitration and has no explicit prohibitory language, when it could have simply and straightforwardly proscribedmandatory employment arbitration of Title VII claims. Second, the Duffield court's analysis of the phrase "to the extentauthorized by law" would perhaps be credible but for the fact that, as the court acknowledged (Duffield, supra, 144 F.3d at p.1189), the United States Supreme Court decided Gilmer, supra, 500 U.S. 20, shortly before the passage of the 1991 Act.Gilmer modified the Gardner-Denver decision referred to in the congressional legislative history quoted above. Gilmer heldthat an Age Discrimination in Employment Act (ADEA) claim was arbitrable under a preemployment arbitration agreementbetween the plaintiff, a securities broker, and the New York Stock Exchange, with which he was required by his employer toregister. The Gilmer court, in distinguishing its decision from the Gardner-Denver line of cases, did not rely on the fact that thelatter was a Title VII [*96] case. Rather, the court emphasized that Gardner-Denver and its progeny were collective bargainingcases, and that there was "[a]n important concern [for] the tension between collective representation and individual statutoryrights" that was not present outside the collective bargaining context. (Gilmer, supra, 500 U.S. at p. 35 [111 S. Ct. at p. 1657].)The court also noted that the scope of the collective bargaining agreements in the Gardner-Denver line of cases did not seem toencompass the arbitration of statutory claims, and that those cases "were not decided under the [Federal Arbitration Act], which. . . reflects a 'liberal federal policy favoring arbitration agreements.' " (Ibid.) The Gilmer court did not decide whether employment contracts are generally subject to the Federal Arbitration Act, asexplained below, nor did it definitively rule on whether Title VII claims were arbitrable. But at the very least, it was not at allclear at the time the 1991 Act was enacted that mandatory arbitration of Title VII claims (outside of the collective bargaining[**678] context) was prohibited according to judicial interpretation of Title VII, and in fact the contrary appeared to be morelikely the case. The fact that the authors of the House report may have believed that section 118 of the 1991 Act was intendedto incorporate a broad reading of the Gardner-Denver line of cases to preclude mandatory employment arbitration agreementsof all types does not negate the fact that at the time Congress passed the 1991 Act, Gilmer was the law. Congress must bepresumed to have been aware of Gilmer when it used the phrase "to the extent authorized by law." Nor can the phrase "[w]here appropriate" bear the weight given to it by the Duffield court. There is no reason to suppose thatCongress believed mandatory arbitration agreements of civil rights claims to be inappropriate, provided that arbitration givesclaimants the full opportunity to pursue such claims. Although the Gilmer court acknowledged that federal statutes mayprovide exceptions to the rule of arbitrability found in the FAA, it held that " 'questions of arbitrability must be addressed witha healthy regard for the federal policy favoring arbitration.' " ( Gilmer, supra, 500 U.S. at p. 26 [111 S. Ct. at p. 1652].) Wecannot discern in the general phrase "[w]here appropriate and to the extent authorized by law" a specific congressional intent toban mandatory employment arbitration agreements. We therefore conclude that nothing in the 1991 Act prohibits mandatory employment arbitration agreements that encompassstate and federal antidiscrimination claims. [***755] B. The Applicability of the FAA and the CAA (2) The Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) incorporates a strong federal policy of enforcing arbitrationagreements, including [*97] agreements to arbitrate statutory rights. (See Broughton v. Cigna Healthplans (1999) 21 Cal. 4th1066, 1074-1075 [90 Cal. Rptr. 2d 334, 988 P.2d 67] (Broughton), and cases cited therein.) (3a) The employees claim,however, that employment contracts are not subject to the FAA. Their position is based on a reading of section 1 of the FAA,which, in defining the term "commerce," provides that "nothing herein shall apply to contracts of employment of seamen,railroad employees, or any other class of workers engaged in foreign or interstate commerce." (9 U.S.C. § 1.) The employeescontend that the language "engaged in foreign or interstate commerce" was intended to apply to all employees within the reachof the FAA. That is, section 1 effectively excludes all employment contracts because employees not engaged in interstatecommerce would be beyond the legislative power of Congress and therefore beyond the FAA. This is essentially the position ofthe Ninth Circuit in Craft v. Campbell Soup Co. (9th Cir. 1998) 161 F.3d 1199. The Craft court, after reviewing the legislative
Page 6 of 23Armendariz v. Foundation Health Psychcare Services, Inc.history of section 1 of the FAA, and the academic literature, rejected the position of the majority of courts that the phrase"engaged in foreign or interstate commerce" signifies only those directly engaged in interstate commerce, such as workersinvolved in the transportation industry. ( Craft, supra, 161 F.3d at pp. 1202-1205; see also Finkin, "Workers' Contracts"UNDER THE UNITED STATES ARBITRATION ACT: An Essay in Historical Clarification (1996) 17 Berkeley J. Emp. & Lab.L. 282.) Several courts have since disagreed with Craft and sided with what continues to be the majority rule. (See Koveleskiev. SBC Capital Markets, Inc., supra, 167 F.3d at pp. 363-364, and cases cited therein.) 3 Whether the FAA applies to employment contracts presents a substantial question, but one we need not decide here. Californialaw, like federal law, favors enforcement of valid arbitration agreements. (Broughton, supra, 21 Cal. 4th at p. 1074.) As wehave [**679] observed: "Two years after the FAA was enacted, this state adopted its first modern arbitration statute (Stats.1927, ch. 225), declaring arbitration agreements to be irrevocable and enforceable in terms identical to those used in section 2of the federal act, and since that time California courts and its Legislature have 'consistently reflected a friendly policy towardthe arbitration process.' [Citation.] That policy was expanded and clarified in the current arbitration statute which was adopted[*98] in 1961 (Stats. 1961, ch. 461, § 2 et seq.), and it continues to be the policy of this state." ( Keating v. Superior Court(1982) 31 Cal. 3d 584, 601-602 [183 Cal. Rptr. 360, 645 P.2d 1192], disapproved on other grounds sub nom. Southland Corp.v. Keating (1984) 465 U.S. 1 [104 S. Ct. 852, 79 L. Ed. 2d 1].) Thus, under both federal and California law, arbitrationagreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation 4 ofany contract. (9 U.S.C. § 2; see also, Code Civ. Proc., § 1281.) In other words, under California [***756] law, as under federallaw, an arbitration agreement may only be invalidated for the same reasons as other contracts. Moreover, the CAA, unlike theFAA, contains no exemption for employment contracts. 5 Indeed, Code of Civil Procedure section 1280, subdivision (a),defines the term "agreement," for purposes of the CAA, as including "agreements between employers and employees orbetween their respective representatives." There is, of course, one major difference between the FAA and the CAA. The former generally preempts state legislation thatwould restrict the enforcement of arbitration agreements (see Doctor's Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 687-688 [116 S. Ct. 1652, 1656-1657, 134 L. Ed. 2d 902]), while the CAA obviously does not prevent our Legislature fromselectively prohibiting arbitration in certain areas. But the statute in question in this case, the FEHA, contains no suchprohibition. "The unsuitability of a statutory claim for arbitration turns on [legislative] intent, which can be discovered in thetext of the statute in question, its legislative history or in an ' "inherent conflict" between arbitration and the [statute's]underlying purposes.' " (Broughton, supra, 21 Cal. 4th at p. 1075, first bracketed text added, quoting Gilmer, supra, 500 U.S.at p. 26 [111 S. Ct. at p. 1652].) We find nothing in the language or the legislative history of the FEHA that suggests it wasintended to prohibit arbitration, and the employees cite us to none. To be sure, the FEHA provides critically importantprotections against discrimination. But the imperative to enforce such protections does not, as a general matter, inherentlyconflict with arbitration. (4) Assuming an adequate arbitral forum, we agree with the Supreme Court that "[b]y agreeing toarbitrate a statutory claim, a party does not forgo the substantive rights [*99] afforded by the statute; it only submits to theirresolution in an arbitral, rather than a judicial, forum." ( Mitsubishi Motors v. Soler Chrysler-Plymouth (1985) 473 U.S. 614,628 [105 S. Ct. 3346, 3354, 87 L. Ed. 2d 444] (Mitsubishi Motors).) 633Gilmer did not address the issue of the applicability of the FAA to employment contracts, instead finding that Gilmer's arbitrationagreement was not contained in an employment contract but in his security broker's registration application with the New York StockExchange, which falls outside the literal terms of section 1 of the FAA. (Gilmer, supra, 500 U.S. at p. 25, fn. 2 [111 S. Ct. at pp. 1651-1652].)We note that the United States Supreme Court has recently granted a writ of certiorari in Circuit City Stores, Inc. v. Adams (9th Cir. 2000)194 F.3d 1070, certiorari granted May 22, 2000, 529 U.S. 1129 [120 S. Ct. 2004, 146 L. Ed. 2d 955], apparently to address this question.44"As has been pointed out, the 'revocation of a contract' . . . is something of a misnomer. 'Offers are "revoked." . . . Contracts areextinguished by rescission.' " ( Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal. 4th 951, 973 [64 Cal. Rptr. 2d 843, 938 P.2d 903](Engalla).) We will refer throughout to the "rescission" or, simply, the "voiding" of an arbitration agreement.55Former Code of Civil Procedure section 1280 contained a provision exempting contracts pertaining to labor (Stats. 1927, ch. 225, § 1, p.404), but this exemption was interpreted narrowly by courts and was omitted, pursuant to the California Law Revision Commission'srecommendation, from the 1961 statute. (See Recommendation and Study Relating to Arbitration (Dec. 1960) 3 Cal. Law Revision Com.Rep. (1961) pp. G-32 to G-34.)
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