Sandquist v. Lebo Automotive, Inc.

In this case, a lower California court held that the question whether an arbitration agreement permits a class arbitration is always an issue to be decided by a court, not an arbitrator, and that the agreement in question did not permit class arbitration. The plaintiffs sought review in the California Supreme Court, where the parties disputed whether the Federal Arbitration Act (FAA) requires that the issue be decided by a court or an arbitrator. Public Citizen filed an amicus brief supporting the plaintiffs but arguing that the issue in this case is actually not governed by the FAA but by state law, because the parties’ agreement specifies that the arbitration should occur under the procedures of California’s Arbitration Act.

On July 28, 2016, the California Supreme Court held that the issue actually required consideration of both state and federal law: It held that under California principles of contract interpretation, the issue was best viewed as having been allocated to the arbitrator, and it went on to hold that the FAA did not preempt California contract law by requiring that the issue be decided by a court.