Los Angeles Unified School Dist. v. Safety National Casualty Corp.

Unless the arbitration clause expressly adopts them, the Federal Arbitration Act’s procedural rules do not apply in state court proceedings to compel arbitration, even when the FAA’s substantive provisions govern the arbitration clause.  Following Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, this decision holds that even if the arbitration clause appears in a contract evidencing a transaction in interstate commerce, California rather than FAA procedural rules apply unless the arbitration clause expressly states otherwise.  Here, the contract was silent on choice of procedural law to govern the arbitration, so California law applied–i.e., Cal. Code Civ. Proc. 1281.2(c) applied rather than 9 USC 3, so the trial court had discretion to stay arbitration since the litigation involved other parties that had not signed the arbitration agreement and there was a possibility of conflicting rulings if the arbitration went forward.  Plaintiff had no evidentiary burden to prove the possibility or likelihood of conflicting rulings.  The trial court also properly held that separate claims against different insurers under different insurance policies nevertheless involved the same “transaction” for purposes of section 1281.2(c) because the plaintiff sought coverage of the same underlying claims from each insurer.

California Court of Appeals, Second District, Division 8 (Grimes, J.); July 12, 2017; 2017 WL 2963003


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