Background
Rebecca Orr, a former seasonal support driver for United Parcel Service, signed an employment arbitration agreement during the hiring process. She later sued UPS in California state court, asserting several state-law claims on behalf of putative classes and individual claims, and later added a Private Attorneys General Act claim. UPS removed the case to federal court and moved to compel arbitration. The district court ordered Orr to arbitrate her individual claims and stayed litigation of the class claims, but it declined to decide whether the Federal Arbitration Act or the California Arbitration Act governed the agreement.
The court’s reasoning
Applying the Bauman mandamus factors, the panel concluded that mandamus relief was warranted. On clear legal error, the panel held that the district court was required to determine the basis of its authority to compel arbitration before sending Orr’s claims to arbitration. Relying on New Prime Inc. v. Oliveira, the panel explained that a court, not an arbitrator, must decide whether the Federal Arbitration Act applies, including whether the Section 1 employment-contract exclusion is implicated. By compelling arbitration without deciding whether the Federal Arbitration Act or California law governed, the district court improperly delegated that threshold contractual and statutory question to the arbitrator. The panel also found no adequate alternative remedy because no contemporaneous ordinary appeal was available from the order compelling arbitration. It further found prejudice not correctable on appeal because the district court’s failure to identify the source of its authority created uncertainty, and because the arbitration’s course and outcome could differ depending on whether federal or state arbitration law applied. With the first three Bauman factors satisfied, including the critical factor of clear legal error, the panel granted the writ.
What it means going forward
The district court must vacate its order compelling arbitration and must determine whether federal or California arbitration law provides the authority to compel arbitration before requiring Orr to arbitrate her individual claims.