District Court (Cal.) Orders Auto Case to Arbitration; Arbitrator to Determine Effect of McGill on Enforceability of Arbitration Clause

The arbitration provision stated in part, “Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action.” (Doc. 22 at 7) Plaintiffs contend this provision “is contrary to California public policy and is thus unenforceable under California law” because it “directly bans arbitration of any private attorney general action for public injunctive relief, since such a claim is never brought ‘on an individual basis,’ but always on behalf of the general public.” (Id. at 7-8, citing McGill v. Citibank, 2 Cal.5th 945, 952 (2017)) According to Plaintiffs, “since the alleged arbitration clause does not otherwise permit a court action for such private attorney general claims, it completely waives the consumer’s statutory right to seek public injunctive relief as a private attorney general.” (Id. at 7)  As the Magistrate Judge observed, “In McGill, the California Supreme Court was not considering the validity of an entire arbitration agreement but only the validity of a provision in the agreement that waived the ‘right to seek public injunctive relief in any forum.’ ” (Doc. 27 at 11, quoting McGill, 2 Cal. 5th at 956 (emphasis in original)). In McGill, the court determined “a provision in any contract—even a contract that has no arbitration provision—that purports to waive, in all fora, the statutory right to seek public injunctive relief under the UCL, the CLRA, or the false advertising law is invalid and unenforceable under California law.” Id., 2 Cal. 5th at 962 (emphasis in original)  Here, there was no provision waiving the right to seek public injunctive relief, and the parties have not stipulated that the scope and effect of the arbitration provision includes such a waiver. To the contrary, the arbitration provision indicates “the interpretation and scope” is a matter for the arbitrator to decide. Thus, the provision now pending before the Court must be distinguished from the facts presented to the California court in McGill. As the Northern District recently determined, a provision indicating that an arbitrator is to decide the “scope and enforceability” also indicates the arbitrator should determine whether the “agreement purports to waive [the] right to seek public injunctive relief in all fora, and, if so, what impact this has on the enforceability of the arbitration agreement as a whole.” DeVries v. Experian Info. Solutions, Inc., 2017 WL 2377777, at *3 (N.D. Cal. June 1, 2017). Accordingly, the Court finds the Magistrate Judge did not err in concluding that McGill does not mandate a finding that the arbitration provision is unenforceable.