Who decides validity of arbitration agreement? 9th Circuit reverses lower court

It’s human nature that people like authority, and that often goes for trial judges interpreting arbitration agreements as well. Here, the arbitration agreement gave the arbitrator the power to decide if the agreement was enforceable, but the trial court made the decision anyway. The U.S. 9th Circuit Court of Appeal (whose rulings apply to all California employers) didn’t see the logic in the trial court’s action. 

Arbitration is a creature of contract 

Kara Sandler and Modernizing Medicine (ModMed) entered into an employment contract that specifies any employment-related disputes “shall be subject to binding arbitration under the Federal Arbitration Act [FAA] in conformity with the procedures of the California Arbitration Act.” The contract also states that the arbitration shall be administered by JAMS (Judicial Arbitration & Mediation Services, Inc.), whose rules in turn say that an arbitrator must resolve questions of whether the contract itself (including the agreement to arbitrate) is valid and enforceable. 

Nonetheless, Sandler sued ModMed in federal court and alleged a variety of state- and federal-law claims, accusing ModMed of discriminating against her based on age and disability. ModMed asked the court to compel arbitration. 

Sandler opposed it, contending that the arbitration agreement was unconscionable. The district court agreed with Sandler and denied ModMed’s request.