Kevin Breazeale v. Victim Services, Inc. , 878 F.3d 759 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEVIN BREAZEALE; KAREN Nos. 15-16549
SOLBERG; KEVIN HIEP VU; NANCY 16-16495
MORIN; NARISHA BONAKDAR, on
their own behalf and on behalf of
others similarly situated, D.C. No.
Plaintiffs-Appellees, 3:14-cv-05266-
VC
v.
VICTIM SERVICES, INC., DBA OPINION
CorrectiveSolutions; NATIONAL
CORRECTIVE GROUP, INC., DBA
CorrectiveSolutions; MATS
JONSSON,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Vince Chhabria, District Judge, Presiding
Argued and Submitted September 13, 2017
San Francisco, California
Filed December 27, 2017
2 BREAZEALE V. VICTIM SERVICES
Before: Mary M. Schroeder and Richard C. Tallman,
Circuit Judges, and Robert H. Whaley,* District Judge.
Opinion by Judge Schroeder
SUMMARY**
Jurisdiction / Arbitration
In an action under the Fair Debt Collection Practices Act
and California consumer protection law, the panel:
(1) dismissed for lack of jurisdiction an interlocutory appeal
from the district court’s denial of defendants’ motion to strike
claims under California’s Anti-SLAPP statute, and
(2) affirmed the district court’s denial of defendants’ motion
to compel arbitration.
Pursuant to an agreement with the district attorney’s
office, defendants sent notices to plaintiffs that to avoid
criminal prosecution under California’s bad check statute,
they could participate in California’s bad check diversion
program, including payment of specified fees. The notices
included an arbitration clause.
The panel held that it lacked jurisdiction to review the
district court’s denial of defendants’ Anti-SLAPP motion
*
The Honorable Robert H. Whaley, United States District Judge for
the Eastern District of Washington, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
BREAZEALE V. VICTIM SERVICES 3
because, under the terms of the state statute, such a denial in
a case deemed to be filed in the public interest is not
immediately appealable.
The panel affirmed the district court’s denial of
arbitration as to a plaintiff who elected to participate in the
diversion program because the diversion program agreement
was not a private or commercial contract subject to the
provisions of the Federal Arbitration Act.
COUNSEL
Sean M. Hardy (argued) and Michael A. Taitelman,
Freedman & Taitelman LLP, Los Angeles, California, for
Defendants-Appellants.
Deepak Gupta (argued) and Matthew W.H. Wessler, Gupta
Wessler PLLC, Washington, D.C.; Paul Arons, Law Offices
of Paul Arons, Friday Harbor, Washington; Beth E. Terrell
and Blythe Chandler, Terrell Marshall Law Group PLLC,
Seattle, Washington; for Plaintiffs-Appellees.
R. Orion Danjuma, Rachel Goodman, Nusrat J. Choudhury,
and Dennis D. Parker, New York, New York, as and for
Amicus Curiae American Civil Liberties Union Foundation
Inc.
Jennifer D. Bennett and Brian Hardingham, Public Justice
P.C., Oakland, California; David Seligman, Towards Justice,
Denver, Colorado; for Amici Curiae Public Justice, The
National Consumer Law Center, Towards Justice, and
Professors of Arbitration, Consumer, and Contract Law.
4 BREAZEALE V. VICTIM SERVICES
OPINION
SCHROEDER, Circuit Judge:
Plaintiffs are individuals who are subject to potential
prosecution for violations of California’s bad check statute,
which criminalizes the writing of bad checks with intent to
defraud. The Defendants, Victim Services and related
companies (collectively, “VSI”), pursuant to an agreement
with the District Attorney’s office, sent notices to the
Plaintiffs that to avoid criminal prosecution they could
participate in California’s Bad Check Diversion Program,
including payment of specified fees. Plaintiffs filed this
putative class action claiming VSI’s practices violated state
law and the federal Fair Debt Collection Practices Act,
15 U.S.C. § 1692 et seq. They seek injunctive as well as
monetary relief.
Before us are two consolidated appeals from separate
orders of the district court. VSI first pursues an interlocutory
appeal of the district court’s denial of its motion to strike
under California’s Anti-SLAPP statute. We lack jurisdiction
to consider the district court’s denial, however, because under
the terms of the state statute, such a denial in a case deemed
to be filed in the public interest is not immediately
appealable. VSI also appeals the district court’s denial of its
motion to compel arbitration. We have jurisdiction over that
appeal and affirm the arbitration denial because this is not a
private contract subject to the provisions of the Federal
Arbitration Act. We therefore affirm and remand to the
district court for the conduct of further proceedings.
BREAZEALE V. VICTIM SERVICES 5
FACTUAL AND PROCEDURAL BACKGROUND
A. California’s Bad Check Diversion Program
California’s bad check diversion program permits district
attorney offices throughout the state to defer prosecution of
those accused of writing bad checks if the accused satisfies
certain criteria established by statute. The district attorneys
may contract with private parties to administer the program.
Plaintiffs here allege that VSI, a private administrator under
the program, exceeded its statutory authority and
administered the program in violation of federal and state
laws applicable to debt collection practices.
The bad check diversion program attempts to address a
public policy problem facing the California criminal justice
system. California criminalizes the writing of bad checks
with intent to defraud. See Cal. Penal Code § 476a (added in
1907). And while the enactment of this proscription
addressed the problem of bad check writing, California began
to face a problem of overload: prosecutions of accused bad
check writers eventually “inundat[ed] the state’s criminal
courts.” del Campo v. Kennedy, 491 F. Supp. 2d 891, 895
(N.D. Cal. 2006), aff’d, 517 F.3d 1070 (9th Cir. 2008). In
response, California in 1985 passed Cal. Penal Code
§ 1001.60 et seq., authorizing a diversion program for bad
check writers that could be administered by private entities
under contract with the local district attorney. The statutory
scheme permits, but does not require, district attorneys
throughout the state of California to create within their offices
a diversion program for those who write bad checks. Of
particular relevance here, the statute allows the program to be
“conducted by the district attorney or by a private entity
6 BREAZEALE V. VICTIM SERVICES
under contract with the district attorney.” Cal. Penal Code § 1001.60.
The bad check diversion program is designed to operate
in accordance with certain statutory requirements that track
the life of a bad check case from investigation to
resolution—all without formal criminal prosecution—if
certain criteria are met. A district attorney may refer a case
to the bad check diversion program only if there is probable
cause that the bad check statute has been violated. Id. The
district attorney’s office that receives a grievance suggesting
a possible bad check prosecution must also consider a non-
exclusive list of factors before deciding to refer cases to the
diversion program. See Cal. Penal Code § 1001.62. These
factors include the amount of the bad check; the check
writer’s prior criminal record and whether that person has
been previously referred to the program; the number of bad
check grievances the district attorney has previously received
against the person, and “[t]he strength of the evidence, if any,
of intent to defraud the victim.” Id. These factors afford the
district attorney discretion to forgo prosecution, for example,
of those subject to prosecution for the first time, while
focusing the limited resources of the office instead on
prosecution of those who have been the subject of numerous
accusations.
After the district attorney has considered these factors and
concluded that there is probable cause that Cal. Penal Code
§ 476a has been violated, and that referral to the program is
appropriate, the person identified as a potential participant is
notified of referral to the program. Such person must receive
notice by mail of the referral. See Cal. Penal Code § 1001.63.
The statute provides the notice must include the date and
amount of the check; the name of the payee; the date by
which the potential participant must contact someone
BREAZEALE V. VICTIM SERVICES 7
designated by the district attorney, and a statement of the
penalty for writing a bad check. Id. To complete the
diversion program successfully, the person must then
complete a class conducted by the district attorney, or by the
private entity under contract with the district attorney’s
office, pay full restitution to the victim, and pay the diversion
fees. See Cal. Penal Code § 1001.64. Pending successful
completion of those conditions, the district attorney may
“enter into a written agreement with the person to forego
prosecution on the bad check for a period to be determined by
the district attorney . . . .” Id. Admission of guilt is not a
prerequisite to placement in the program. See Cal. Penal
Code § 1001.66.
VSI administers contracts with various county district
attorneys in California. VSI is a registered corporation in
Delaware, and VSI and its subsidiaries operate in a number
of states. Under VSI’s contracts, local district attorneys
retain prosecutorial discretion and approve the fees VSI
requests from bad check writers. VSI receives a cut of the
fees collected.
The named plaintiffs in this case each received letters
from VSI describing probable criminal prosecution, with a
potential punishment of up to a year in jail, if they chose not
to participate in the BCDP. The letters they received were
sent on district attorney letterhead and were signed by the
local district attorney. The letters informed the recipients that
they had “been accused of violating California Penal Code
476a,” and that they could avoid criminal prosecution by
enrolling in the bad check diversion program and paying the
associated fees and restitution. The letters provided the
recipients thirty days to dispute the allegations in writing,
which would be reviewed by the “authorized administrator of
8 BREAZEALE V. VICTIM SERVICES
the Bad Check Restitution Program.” The letter does not
identify VSI by name, although it states that the BCDP is
“administered by a private entity under contract” with the
district attorney.
Under the terms of the letter, recipients who make full or
partial payment of fees and restitution “agree[] to be enrolled
in the Bad Check Restitution Program.” The letter also
includes an arbitration clause, which provides:
Agreement to Arbitrate: You and
Administrator agree to resolve any and all
claims and disputes relating in any way to the
Program (“Claims”), except for Claims
concerning the validity, scope or
enforceability of this Arbitration Agreement,
t h r o u g h B IN D IN G IN D IV ID U A L
ARBITRATION before the American
Arbitration Association (“AAA”). This
means you will be unable to have Claim(s)
resolved by a court or jury, or to participate in
a class action or class arbitration. Other rights
you would have if you went to court may be
unavailable or limited in arbitration, including
your right to appeal. The only exception to
this agreement to arbitrate is that you and/or
Administrator may seek relief in a small
claims court for Claims within the jurisdiction
of that court in any particular state.
The terms then stipulate the agreement is to be governed by
and enforceable under the FAA on only an individual basis.
No arbitrator or court can “permit or certify a class action,
representative action, private attorney-general action or
BREAZEALE V. VICTIM SERVICES 9
consolidated arbitration in connection with [the] arbitration
agreement.” Participants in the program are allowed to opt
out of arbitration in writing within sixty days of enrollment in
the program.
One of the named plaintiffs, Narisha Bonakdar, elected to
participate in the BCDP, while the others declined.
B. Plaintiffs’ Complaint
Plaintiffs instituted this action in the United States
District Court for the Northern District of California on
December 1, 2014. They filed their First Amended
Complaint—the operative complaint in this case—on
February 6, 2015.
The complaint alleges VSI’s programs violate state and
federal consumer-protection laws governing collection
abuses, and also shirk the requirements imposed under the
very state statutes governing bad check diversion programs.
Included were alleged violations of the Fair Debt Collection
Practices Act, (“FDCPA”), 15 U.S.C. § 1692 et seq., which
governs the conduct of statutorily defined “debt collectors.”
Plaintiffs allege that VSI’s use of official district attorney
letterhead conveys the false impression the letters were sent
by law enforcement, that the letters contained the false threat
that failure to pay would result in arrest or imprisonment, and
that the initial form letter failed to contain statutorily required
notices, all in violation of the FDCPA’s substantive
protections. See 15 U.S.C. §§ 1692d(6), 1692e(3)–(5), (9),
(11), and (14), 1692g(a).
Plaintiffs also allege violations of the California Unfair
Competition Law (“UCL”), California Business &
10 BREAZEALE V. VICTIM SERVICES
Professions Code § 17200 et seq., which broadly prohibits
unlawful, unfair, or fraudulent business practices, as well as
false or misleading advertising. Plaintiffs claim that VSI’s
conduct exceeds the authority granted under the diversion
program’s governing statutes, and therefore is “unlawful”
within the meaning of the UCL. Plaintiffs also allege that
VSI’s conduct constitutes the unauthorized and deceptive
practice of law. Also included were common law claims of
fraudulent and negligent misrepresentation.
Plaintiffs further allege that under VSI’s administration of
this program, no prosecutor has reviewed the evidence
against the accused, or made a probable cause determination
as required by the statute. Instead, Plaintiffs allege VSI
typically receives referrals directly from retailers and private
agencies—not from district attorneys. Indeed, Plaintiffs
allege that “very few” bad check writers sent collection letters
from VSI will ever be prosecuted, even if they make only
partial payment or no payment at all.
The remedies pursued are broad. Specifically, Plaintiffs
seek declaratory relief that VSI’s debt collection practices
violate the FDCPA and the California UCL. They seek a
preliminary and permanent injunction enjoining VSI from,
among other things, continuing to participate in the bad check
diversion program and further communicating with accused
bad check writers unless disclosing in each communication
that it is a debt collector, and not a district attorneys office.
Plaintiffs also seek actual damages, restitution, statutory
damages under 15 U.S.C. § 1692k, punitive damages, and
costs and reasonable attorneys’ fees.
BREAZEALE V. VICTIM SERVICES 11
C. VSI’s Motion to Strike State Law Claims Under
California’s Anti-SLAPP Statute
On April 17, 2015, VSI moved under California’s Anti-
SLAPP law to strike the UCL and fraudulent
misrepresentation claims. California passed its Anti-SLAPP
statute in 1992 to address a spike in lawsuits aimed at chilling
the exercise of the rights to free speech and to petition for
redress of grievances. See Cal. Civ. Proc. Code § 425.16(a).
“SLAPP” stands for strategic lawsuits against public
participation. See Batzel v. Smith, 333 F.3d 1018, 1023–24
(9th Cir. 2003).
It’s helpful to think of a “SLAPP” as a lawsuit defined by
a particular strategy: obtaining an economic advantage over
a defendant, and not necessarily the vindication of a
cognizable legal right. See Wilcox v. Superior Court, 27 Cal.
App. 4th 809, 816 (1994), as modified on denial of reh’g
(Sept. 15, 1994). The paradigm SLAPP, as a California Court
of Appeal has described, “is a suit filed by a large land
developer against environmental activists or a neighborhood
association intended to chill the defendants’ continued
political or legal opposition to the developers’ plans.” Id. at
815. The causes of action favored by those who bring these
suits—most often businesses—“are defamation, various
business torts such as interference with prospective economic
advantage, nuisance and intentional infliction of emotional
distress.” Id. at 816.
Attempting to root out these harassing cases, the
California statute provides for pre-trial dismissal of a SLAPP
through a “special motion to strike” the cause of action. Cal.
Civ. Proc. Code § 425.16(b)(1). The filing of the motion
stays all discovery proceedings. Cal. Civ. Proc. Code
12 BREAZEALE V. VICTIM SERVICES
§ 425.16(g). A court’s order granting or denying a special
motion to strike was immediately appealable under the
original SLAPP statute. Cal. Civ. Proc. Code §§ 425.16(i),
904.1(a)(13). Recognizing in 2003 that the statute may have
gone too far, however, the legislature added an exception, so
the statute now “does not apply to any action brought solely
in the public interest or on behalf of the general public[.]”
Cal. Civ. Proc. Code § 425.17(b). This has come to be known
as the statute’s “public-interest exception.” See, e.g.,
Blanchard v. DIRECTV, Inc., 123 Cal. App. 4th 903, 914
(2004).
A litigant defending against a motion to strike by
invoking the public interest exception must make the
following showing:
(1) The plaintiff does not seek any relief
greater than or different from the relief
sought for the general public or a class of
which the plaintiff is a member . . . .
(2) The action, if successful, would enforce
an important right affecting the public
interest, and would confer a significant
benefit, whether pecuniary or
nonpecuniary, on the general public or a
large class of persons.
(3) Private enforcement is necessary and
places a disproportionate financial burden
on the plaintiff in relation to the plaintiff's
stake in the matter.
Cal. Civ. Proc. Code § 425.17(b).
BREAZEALE V. VICTIM SERVICES 13
While orders disposing of SLAPP motions remain
generally immediately appealable, there is no right to
immediate appeal when the trial court has determined the
public interest exception applies. See Cal. Civ. Proc. Code
§ 425.17(e) (providing no immediate appeal “[i]f any trial
court denies a special motion to strike on the grounds that the
action or cause of action is exempt” under the public-interest
exception).
In VSI’s motion to strike, it argued plaintiffs were seeking
to discourage VSI’s communications made in connection
with proceedings authorized by law, and that plaintiffs did not
have a reasonable possibility of prevailing because, inter alia,
VSI was entitled to prosecutorial immunity. VSI also argued
the public interest exception to the Anti-SLAPP statute did
not apply. The district court rejected these contentions and
denied VSI’s Anti-SLAPP motion on the ground that the case
was within the public-interest exception.
On August 3, 2015, VSI filed its notice of appeal from the
district court’s order. The district court subsequently denied
VSI’s motion to stay proceedings pending appeal, and it also
denied plaintiffs’ motion to certify VSI’s appeal as frivolous.
D. VSI’s Motion to Compel Arbitration
After filing its Anti-SLAPP appeal to this Court, VSI filed
in the district court a motion to compel arbitration against
Narisha Bonakdar, the only plaintiff who had elected to
participate in the BCDP and hence the only plaintiff party to
the arbitration agreement. VSI contended that the Federal
Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., applied and
required arbitration of Bonakdar’s claims.
14 BREAZEALE V. VICTIM SERVICES
The district court twice requested further briefing as to
whether the FAA applies. Then in an order filed July 27,
2016, the district court denied VSI’s motion to compel
arbitration, concluding the FAA does not apply to the type of
agreement at issue here, which it described as “an agreement
between a criminal suspect and the local authorities about
how to resolve a potential state-law criminal violation.” The
agreement was outside the purview of the FAA and not “a
contract evidencing a transaction involving commerce” as
Congress intended in 9 U.S.C. § 2. The court then applied
California law and concluded the agreement between
Bonakdar and the El Dorado County District Attorney is
contrary to California public policy because California public
policy requires the conduct of its agents be subject to judicial
review. VSI on August 24, 2016, filed its notice of appeal to
this Court from the district court’s order denying the motion
to compel arbitration. We then granted VSI’s motion to
consolidate these appeals.
In its consolidated appeals, VSI argues the district court
erred in applying the Anti-SLAPP statute’s public interest
exception. VSI also argues the district court erred in denying
its motion to compel arbitration. We address each issue in
turn, agreeing with plaintiffs that we lack jurisdiction to
review the denial of the Anti-SLAPP motion and that the
district court correctly denied the motion to compel
arbitration. The facts for purpose of this appeal are not
disputed and both appeals present issues of law we review de
novo.
BREAZEALE V. VICTIM SERVICES 15
ANALYSIS
A. This Court Lacks Appellate Jurisdiction to Review
the District Court’s Denial of VSI’s Motion to
Strike
VSI attempts to appeal on an interlocutory basis the
district court’s denial of its motion to strike under
California’s Anti-SLAPP statute. See Appeal No. 15-16549.
Our appellate jurisdiction is generally limited to “final
decisions” of district courts. 28 U.S.C. § 1291. Some orders,
however, finally decide issues collateral to the merits of the
case and are appealable as collateral orders. Under the
“collateral order doctrine,” federal appellate courts have
jurisdiction over “not only judgments that ‘terminate an
action,’ but also a ‘small class’ of collateral rulings that,
although they do not end the litigation, are appropriately
deemed ‘final.’” Mohawk Indus., Inc. v. Carpenter, 558 U.S.
100, 106 (2009) (quoting Cohen v. Beneficial Indus. Loan
Corp., 337 U.S. 541, 545–46 (1949)). To establish
jurisdiction under the collateral order doctrine, the appellants
must show the order they seek to appeal determines the
disputed question conclusively, resolves an important issue
completely separate from the merits of the action, and is
effectively unreviewable on appeal from a final judgment.
See Will v. Hallock, 546 U.S. 345, 349 (2006) (citation
omitted).
VSI argues this Court’s decision in Batzel v. Smith,
333 F.3d 1018 (9th Cir. 2003), expressly permits
interlocutory appeals from district court rulings on motions to
strike under California’s Anti-SLAPP statute. Yet later
statutory history shows our decision in Batzel is no longer
controlling. In Batzel, relying on analysis similar to that we
16 BREAZEALE V. VICTIM SERVICES
use in considering issues of qualified immunity, we
concluded we had collateral order jurisdiction to review an
appeal from a trial court’s denial of a motion to strike under
California’s Anti-SLAPP law, as it then provided. Id. at
1024–26. We looked to California’s legislative intent and
reasoned the statute’s provision granting the right of
immediate appeal from a denial of a motion to strike, Cal.
Civ. Proc. Code § 425.16(i), was to ensure that if the statute
applied there would be no trial. “California lawmakers
wanted to protect speakers from the trial itself rather than
merely from liability.” Batzel, 333 F.3d at 1025. A
defendant’s rights under the California statute, we said, are
thus “in the nature of immunity: [t]hey protect the defendant
from the burdens of trial, not merely from ultimate judgments
of liability.” Id. We were bound by the state law. We said
that because “California law recognizes the protection of the
anti-SLAPP statute as a substantive immunity from suit, this
Court, sitting in diversity, will do so as well.” Id. at 1025–26.
After our decision in Batzel, however, the California
legislature amended the Anti-SLAPP law to add the public-
interest exception to the right of immediate appeal of orders
denying Anti-SLAPP motions. The amendment effectively
stripped the right of immediate appealability from all cases in
which the trial court determines the public interest exception
applies. See Cal. Civ. Proc. Code § 425.17(e) (providing “[i]f
any trial court denies a special motion to strike on the
grounds that the action or cause of action is exempt” under
the public-interest exception, the appeal provisions “do not
apply”). The law has thus changed since we decided Batzel.
That case is no longer controlling. The California legislature
has now made the substantive determination that in public
interest cases, the Anti-SLAPP statute does not provide
immunity from suit, and denials of Anti-SLAPP motions to
BREAZEALE V. VICTIM SERVICES 17
strike are no longer immediately appealable. Here, as in
Batzel, we must follow the intent of the California legislature
under the applicable state law. See Batzel, 333 F.3d at
1025–26.
Accordingly, we lack jurisdiction to review the district
court’s order denying the motion to strike. The appeal from
that order must be dismissed for lack of jurisdiction.
B. Denial of the Motion to Compel Arbitration
VSI separately appeals on an interlocutory basis the
district court’s denial of its motion to compel arbitration. See
Appeal No. 16-16495. The parties in this appeal do not
dispute our appellate jurisdiction. It rests on 28 U.S.C.
§ 1292 and 9 U.S.C. § 16. For the reasons that follow, we
affirm the district court’s order denying the motion to compel
arbitration.
VSI relied on the arbitration provision in the diversion
agreement, invoking the FAA. The FAA has preemptive
sweep and requires that arbitration agreements be enforced
like other private contractual agreements. See AT&T Mobility
LLC v. Concepcion, 563 U.S. 333, 341, 352 (2011) (the FAA
displaces state law rules that prohibit “outright the arbitration
of a particular type of claim,” or that pose an obstacle to the
“accomplishment and execution of the full purposes and
objectives of Congress” in passing that Act) (internal
quotation marks and citation omitted).
The Act provides:
A written provision in any maritime
transaction or a contract evidencing a
18 BREAZEALE V. VICTIM SERVICES
transaction involving commerce to settle by
arbitration a controversy thereafter arising out
of such contract or transaction, or the refusal
to perform the whole or any part thereof, or an
agreement in writing to submit to arbitration
an existing controversy arising out of such a
contract, transaction, or refusal, shall be valid,
irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the
revocation of any contract.
9 U.S.C. § 2. The district court concluded the FAA does not
apply to an arbitration provision in the type of agreement at
issue in this case. The court reasoned the agreement was not
“a contract evidencing a transaction involving commerce”
under 9 U.S.C. § 2. The district court explained its reading
was supported by the language of the FAA and further
bolstered by the lack of any indication that Congress intended
the FAA to cover agreements between prosecutors and
criminal suspects resolving potential violations of state law.
The district court observed that even if Congress intended the
FAA to capture the type of agreement at issue in this case,
“this would likely exceed the scope of Congress’s commerce
power.”
We agree with the district court that Congress never
intended the FAA to apply to agreements between citizens
and prosecutors resolving an individual’s potential criminal
liability. As the Supreme Court’s seminal decision in
Concepcion noted, the FAA applies to privately negotiated
commercial agreements. See 563 U.S. at 344. An agreement
with an entity acting on behalf of a prosecutor is not a private
agreement. The FAA would therefore provide no basis to
compel arbitration here or in any contract where the
BREAZEALE V. VICTIM SERVICES 19
underlying agreement is a plea agreement, quasi-plea
agreement, or deferred prosecution agreement between an
individual and a party acting on behalf of the state.
The history of the FAA, the various cases construing its
reach, and the body of law governing the formation and
interpretation of plea-agreements bear this out. The Supreme
Court has recognized the import of the history leading up to
the FAA. Because courts were refusing to order
arbitration,“[t]he preeminent concern of Congress in passing
the Act was to enforce private agreements into which parties
had entered . . . .” Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213, 221 (1985). As the Court pointed out in
Concepcion, “[t]he FAA was enacted in 1925 in response to
widespread judicial hostility to arbitration agreements.”
563 U.S. at 339. That judicial hostility dated back centuries
to a time when English courts “refused to enforce specific
agreements to arbitrate upon the ground that the courts were
thereby ousted from their jurisdiction.” Byrd, 470 U.S. at 220
n.6 (1985) (quoting H. R. Rep. No. 96, 68th Cong., 1st Sess.,
1–2 (1924)). This hostile principle became embedded in the
English common law and was thereby adopted by the
American courts. Id. It would take an act of Congress to
place arbitration agreements on an equal footing with other
contracts. Enter the FAA.
The point of the FAA was to enforce private agreements
between contracting parties. A unanimous Supreme Court
surveyed the history of the FAA and expressly stated that
intent: “[t]he legislative history of the Act establishes that the
purpose behind its passage was to ensure judicial enforcement
of privately made agreements to arbitrate.” Id. at 219. The
Court went on to explain that it is the contractual intent of the
parties that controls. The Act “does not mandate the
20 BREAZEALE V. VICTIM SERVICES
arbitration of all claims, but merely the enforcement—upon
the motion of one of the parties—of privately negotiated
arbitration agreements.” Id. The Court apparently believed
the point worth repeating. See id. at 221 (stating “[t]he
preeminent concern of Congress in passing the Act was to
enforce private agreements into which parties had entered”).
The Supreme Court again considered the history of the
FAA in Volt Info. Scis., Inc. v. Bd. of Trustees of Leland
Stanford Junior Univ., 489 U.S. 468 (1989). The Court once
more emphasized the FAA’s primary purpose is to ensure
enforcement of private agreements to arbitrate. Volt,
489 U.S. at 479. The Court said the FAA “simply requires
courts to enforce privately negotiated agreements to arbitrate,
like other contracts, in accordance with their terms.” Id. at
478. Over twenty years later, in an opinion emphasizing the
robust reach of the FAA, the Supreme Court in Concepcion
repeated that the Act’s “‘principal purpose’ . . . is to ‘ensur[e]
that private arbitration agreements are enforced according to
their terms.’” 563 U.S. at 344 (quoting Volt, 489 U.S. at 478)
(emphasis added).
Against this historical backdrop, it is apparent that
Congress never contemplated that the FAA would apply to
agreements between prosecutors and citizens resolving
alleged violations of a state’s criminal law. VSI, of course,
can point to a steady march of Supreme Court cases affirming
the broad reach of the FAA, but all the underlying disputes
arose from privately negotiated agreements. See, e.g.,
Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421
(2017) (private agreements between nursing homes and
residents’ relatives); Concepcion, 563 U.S. at 333 (agreement
between cell phone provider and customers); Circuit City
Stores, Inc. v. Adams, 532 U.S. 105 (2001) (contract of
BREAZEALE V. VICTIM SERVICES 21
employment); Buckeye Check Cashing, Inc. v. Cardegna,
546 U.S. 440 (2006) (agreements between individuals and
check cashing service); Allied-Bruce Terminix Cos., Inc. v.
Dobson, 513 U.S. 265 (1995) (agreement between
homeowner and company for protection against termite
infestation); Volt, 489 U.S. at 468 (construction contract
governing installation of electrical conduits); Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967)
(consulting agreement between two corporations). None even
remotely suggest the FAA’s application in the criminal law
context.
VSI similarly fails to direct us to any cases from the
federal courts of appeals suggesting the FAA applies to plea
agreements, quasi-plea agreements, or deferred-prosecution
agreements. Indeed, the only authority we have located that
discusses the issue dismissed any contention that the FAA
could apply. In Neal v. LaRiva, the Seventh Circuit ruled the
Bureau of Prisons was not required to arbitrate a dispute with
a prisoner because “the Federal Arbitration Act governs only
maritime contracts and contracts involving interstate
commerce,” and the prisoner’s documents, which he claimed
compelled arbitration of his habeas corpus claim, “involve[d]
neither kind of contract.” 765 F.3d 788, 790 (7th Cir. 2014)
The foundational principle, underlined repeatedly in all
these decisions, as our Court aptly put it not too long ago, is
that “[a] plea bargain is not a commercial exchange. It is an
instrument for the enforcement of the criminal law.” United
States v. Barron, 172 F.3d 1153, 1158 (9th Cir. 1999) (en
banc). Contract law doctrines operate in the realm of
criminal plea bargains by analogy only—and even then,
“[t]he contract analogy is imperfect.” United States v.
Partida-Parra, 859 F.2d 629, 634 (9th Cir. 1988); see also
22 BREAZEALE V. VICTIM SERVICES
Barron, 172 F.3d at 1158 (“reliance on contract law is by
analogy”). In the context of plea bargains, traditional black
letter rules applicable to commercial contracts between
private parties often yield, as they must, to substantive and
procedural requirements, including federal or state rules of
criminal procedure, that protect the various rights of the
accused. See, e.g., Fed. R. Crim. P. 11 (governing plea
agreements). We acknowledged as much in Partida-Parra,
when we said “[t]he formation of binding plea agreements is
governed not by the Uniform Commercial Code, but by the
Federal Rules of Criminal Procedure, which requires, among
other things, that the court approve the plea agreement and
find it to have a factual basis.” 859 F.2d at 634.
We expanded on the nature of plea agreements in Barron,
where we explained why interests greater than contractual
rights are involved:
A plea bargain is not a commercial exchange.
It is an instrument for the enforcement of the
criminal law. What is at stake for the
defendant is his liberty. On rescission of the
agreement, the prisoner can never be returned
to his “original position”: he has served time
by reason of his guilty plea and his surrender
of basic constitutional rights; the time he has
spent in prison can never be restored, nor can
his cooperation in his punishment. What is at
stake for the government is its interest in
securing just punishment for violation of the
law and its interest that an innocent act not be
punished at all. The interests at stake and the
judicial context in which they are weighed
BREAZEALE V. VICTIM SERVICES 23
require that something more than contract law
be applied.
172 F.3d at 1158.
California courts agree that plea bargains are not the same
as private or commercial contracts. In Brown v. Cty. of Los
Angeles, for example, a California Court of Appeal concluded
an appellant’s reliance on the California Civil Code to argue
plea bargains with minors are void was “misplaced.”
229 Cal. App. 4th 320, 323 (2014). The court reasoned the
appellant “incorrectly assume[d] that since civil statutes
govern contracts in general, they must govern plea bargains
as well.” Id. Plea bargains in California are governed by the
California Penal Code, not civil law, and so “principles of
contract law should not be imported wholesale into the plea
bargaining process.” Id.
Principles of federalism also militate against the FAA’s
application in this context. In our system of dual sovereignty,
“[s]tates possess primary authority for defining and enforcing
the criminal law,” and “the administration of criminal justice
rests with the States except as Congress . . . has created
offenses against the United States.” United States v. Lopez,
514 U.S. 549, 561 n.3 (1995) (internal quotation marks and
citations omitted).
Once it held the FAA did not apply, the district court
looked to California law to see whether it would compel
arbitration. The district court ruled that an agreement to
arbitrate disputes invoking the criminal law would be
contrary to public policy. California law supports this
conclusion. See, e.g., Bayscene Resident Negotiators v.
Bayscene Mobilehome Park, 15 Cal. App. 4th 119, 129
24 BREAZEALE V. VICTIM SERVICES
(1993) (threats of criminal prosecution “to force individuals
to give up their legal rights and to agree to binding arbitration
implicates strong public policy considerations”). VSI does
not argue that California law would compel arbitration. It
simply disagrees with the district court’s ruling that state law
would prohibit arbitration in this case. The controlling issue
with respect to arbitration is therefore whether the FAA
applies. The district court correctly decided it does not.
CONCLUSION
VSI’s appeal from the district court’s denial of its motion
to strike is DISMISSED for lack of appellate jurisdiction.
The district court’s order denying VSI’s motion to compel
arbitration against Narisha Bonakdar is AFFIRMED. We
remand to the district court for the conduct of further
proceedings.