Safety National Casualty Corporation v. Los Angeles Unified School District

Section 2 of the Federal Arbitration Act (“FAA”) (9 U.S.C. § 2) makes written agreements to arbitrate “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Section 1281.2(c) of the California Arbitration Act (Cal. Code of Civil Proc. § 1281.2(c)) provides that a California state court may “refuse to enforce” an otherwise valid arbitration provision based on the possibility of conflicting rulings in pending litigation with third parties. In Volt Information Services, Inc. v. Board of Trustees of Leland Stanford Jr. University, 489 U.S. 468, 479 (1989), this Court held that where the parties expressly choose California law to govern their agreement, § 1281.2(c) could be applied to stay an arbitration. Where an arbitration agreement is governed by the FAA (because it involves interstate commerce), and the agreement is silent on choice of law—containing no provision adopting California (or any state) law—does the FAA preempt application of California Code of Civil Procedure § 1281.2(c), a provision of the California Arbitration Act (“CAA”), where the state statute is being used to deny enforcement of a valid arbitration provision?