A California Court of Appeal reversed a trial court's decision to resolve questions of arbitrability, noting that the parties' agreement expressly reserved that authority to the arbitrator and incorporated arbitration rules requiring the arbitrator to decide those issues.


In Lippert v. TJR Industries, Inc., No. B199977, 2008 WL 2908713 (Cal. Ct. App. July 30, 2008), TJR and PiperEve executed a consulting contract. The contract contained an arbitration agreement encompassing all disputes and claims arising out of or relating to the contract. The agreement incorporated the Judicial Arbitration and Mediation Services (JAMS) rules. A continuation of the contract was signed one year later.

A dispute arose between TJR and PiperEve's principal Lippert. Lippert sued TJR for breach of contract, wrongful discharge, and related claims. TJR demurred, stating that Lippert had no standing individually to bring contractual claims against TJR. Lippert amended her complaint to add PiperEve as a plaintiff. TJR moved to compel arbitration. The trial court denied the motion, holding that the arbitration agreement had expired and, in the alternative, that TJR had waived its right to arbitrate.

The Court found that the scope of the agreement should have been decided by the arbitrator. Under California law, the scope of a valid arbitration agreement is for the court to decide "unless the parties clearly and unmistakably provide otherwise." Here, the Court noted that the agreement expressly reserved all issues of scope and applicability of the agreement to the arbitrator. Furthermore, the Court pointed to the agreement's incorporation of JAMS rules, which reserved the scope issue for the arbitrator, as clear evidence of the parties' intent. See JAMS Employment Arbitration R. 11(c) ("Jurisdictional and arbitrability disputes… shall be submitted to and ruled on by the Arbitrator.").

The Court also determined that Lippert had not shown the necessary prejudice to justify the trial court's holding that TJR had waived the right to arbitrate, observing that the scope of discovery TJR had requested was no more extensive than was available under the incorporated arbitration rules. See JAMS Employment Arbitration R. 17 (requiring an exchange of all relevant non-privileged documents, names of witnesses, names of experts, and experts' reports).

Finally, the Court held the agreement was not unconscionable, noting that the incorporated rules satisfied the procedural requirements for employment arbitration under Armendariz v. Found. Health Psychare Servs, Inc., 24 Cal.4th 83, 102 (Cal. 2000) (requiring, in part, neutral arbitrators, more than minimal discovery, and a written award). See JAMS Employment Arbitration Rs. 7, 17, & 24.

Similarly, incorporation of the National Arbitration Forum (FORUM) Code of Procedure satisfies these Armendariz procedural requirement factors in California courts. See FORUM Code of Procedure Rs. 23(A), 29, & 37(F) (providing for a neutral arbitrator through disqualification based on conflict of interest, more than minimal discovery, and a written award, respectively).