all this bank and his claim that it's unconscionable be determined by a court not by an arbitrator for two reasons the primary one which i'm going to spend most of my time discussing this morning is because the language in that situation provision in his employment agreement did not clearly and unmistakably delegate that power to an arbitrator the the law that we are all applying here today has simply whether our through bill of the should be determined by a court and not an arbitrator do we have to determine whether the federal arbitration act or the state provisions regarding arbitration apply no you know not for purposes of today's argument where we're all working from federal arbiter ability law all stemming from obviously a federal opinion initially first options and kaplan which basically tells us and virtually every case that's be forced to arbitrate only those issues if it specifically has agreed to submit to arbitration and a court should hesitate to interpret silence or ambiguity on the who should decide arbiter ability point and getting arbitrators that power for doing a and it's in the rules without getting into the problem that i'm having with the article of what it means to have sophisticated people clearly we've got sophisticated people here but we have i mean if you've got a partner when  of that and clearly it's there readable and clearly he had to sophistication to go read and find out so i suppose what we have to decide is under this case with these parties do we have to go to just to the record or do we consider the nature of the individuals and i'm only reading this up because i don't understand the footnotes and articles but do we have to make factual determination zest to sophistication now all you interpret ing that agreement as a scope question of the scope of delegation not as a who question well i don't know or will says the only issue in this case is whether the parties agreed to arbitrate arbitrary correct that's what they're deciding and that's what we're deciding in this case well yes but but the point in this case is that the fifth and the critical sentence in section sixteen consists of two  martinez only paid attention to the second half of that sentence all these references to quote the majority view all involve cases where only a language in the second half of the sentence applied every is with the first half how can you have a clear and unmistakable delegation when the agreement says except with respect to a whole section of types of relief wh subject to provisions of that section and have the session to says any controversy or claim arising out of the agreement or employment shall be determined by arbitration the again going back to what the supreme court has told time and time again and every court up of the party when they sign this agreement they have to know they have to know what they agreed to and they have to have  d why can't the arbitrators decide whether the claim is one for equitable relief because the presumption the presumption under cap one in every case sense if delegation let me make clear what i'm getting at suppose you have an arbitration clause that says all disputes over pay and benefits show be decided by arbitration and they have a dispute thing that's one kind of dispute and maybe a court might say that terminations dispute isn't covered by the arbitration agreement but here it seems like what you'd get an arbitration decision is a decision about money say and then the arbitrators would have a paragraph saying the  employee signs that agreement and the employees sees that ok and i say if the really smart person like mr brennan is very sophisticated already the most sophisticated party if you want to call him out when i say if anyone's going to count as what's the significance if and any of the supreme court's decision in meant to center which tinkered with our own rules and things we might have sent in the the answer is that if the second mistake the judge martinez mate and constitutes an alternate reason for reversal because what some simplified fashion it's not enough if you're going to claim that and that's unconscionable to your employment agreement you can't just say the entire agreement is unconscionable you have to do you have to identify the arbitration portion of that employment agreement as being unconscionable that's the impactor benefactor and in the complaint filed by mr brown and we specifically we know there's a presumption against arbitrary arbitrary billet and we know there has to be clear evidence that the parties intended are which were billeted and then we've got this decision in oracle that says virtually every circuit to consider the issue has determined that incorporation of the american arbitration association rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrary milit and then we've got paragraph sixteen that says shall be settled by binding arbitration in accord with the rules of the american arbitration association it seems like they just locked it down tight and i'm still not understanding what what their problem if the first half of the sentence was not there i would have a very difficult time convincing you otherwise writer but the problem is as they carved out an explicit in inconsistency is there any  failure of the claim for breach of contract well in order for mr brennan to sue in district equitable doesn't mean fairness means what the chancellor used to have jurisdiction and one of the one of the affable claims is that my agreement is unconscionable and does not have to be injunctive and it does not have to be before he gets fired he alleged in order to be able to pursue his lawsuit but it doesn't matter of king's bench could decide on conscionable what he rather than canterbury but is still a natural part of it all is what the what the church used to decide about your mind i guess we can beat that dead horse for a while but the point isn't whether or not mr brennan agreement was unconscionable that's the that's the issue and that is the only if you and it is absolutely clear that the answer is no i it seems to me that that i mean i have trouble with a footnote norco but if you just forget the footnote we hold as long as an arbitration agreement is between sophisticated parties which it is here to commercial contracts which it is here those parties should be expected to understand that incorporation of the unocal  delegates the questions of arbitrarily to the arbitrator this contract has exactly the same thing he's put on notice that he has to go look at the rule the aaa rules and there he will find that arbitrary arbitrary questions arbitrary is going to be with the ad and then he can say no but once he doesn't say no it seems to me on under oracle i don't know how you get out of that tell me why two points number one is he can look at the aaa rules all he wants and it's not going to tell him who determines cancian ability for an equitable claim he might want to file it's not there that's the problem with the inconsistency between the first half of the sentence and the second half of the sentence which is what all those cases cited by oracle and all other ones to about the majority view that's what they all talk about there's no first half of the sentence there's no carve out in any of those there are only two cases i've been able to find where they had this instance the hartley case of california where there was even a more blatant it wouldn't matter unless the arbitrators decide it's or to reinstate it only will really what matters is whether or not equitable relief that the arbitrator will not decide then you're saying that there's something that if that is fist a good person wouldn't realize everything else the arbitrator is going to decide how could how could he and that is you're saying that they wouldn't understand that a sophisticated person and the law says if there is any ambiguity or silence regarding an cussing ability then the court must make the decision but as you do it on the basis of this contract with these people are talking about not oracle we're not talking about someone as just off the street in pasadena we're talking about a sophisticated person has been a partner in jones day that's run businesses isn't that the way we have to decide it not whether somebody else who's never been to high school would do it well well who's going to answer the question if there's equitable claim who's going to determine unconscionably i can't i'm for the sophisticated i think i can if i would handle arbitrator one determine whether or not the arbitration provision was unconscionable and there is an ambiguity pure and simple and said status the case there is no clear and unmistakable delegation horizon can play a dual equitable claims of courts well how does doesn't and we're talking about does does mr brant first of all we're talking reasonable people here we're not talking just about the brilliant mr brennan but i if i were mr the court properly finding that first question california has been increasingly hostile to arbitration clauses while the u s supreme court has been increasingly receptive to them all but you're not going to find a case in any  and i assume that you probably would like to have a couple minutes to respond to the pellets in reply although you haven't saved time i'm going to give you three minutes to reply  believe the view of both parties is that to the extent that there was a reversal that issues of caution village should be remanded to the trial court for determination the first instance i'm reluctant to add anything to what the panel has already said which is this case is determined by oracle so we've you have to know that we ask the hardest questions to find out perhaps whether we're right or wrong and so i wouldn't be sure entire argument based upon the questions but i think i would you know rather than go through my prepared remarks i would like to turn to the argument that mr hunt singer seems to have focused on and capsulated in his oral argument which is the argument that an ambiguity is chancellor used to do and law is what king's bench used to do and with the merger of law and equity everybody could do but they matter because of it's law you get a jury and if it's equity you don't  and i thought unconscionable it was law and not equity is there something that is my view as well your honor the the way i think of it is that if it was a claim for equitable relief such as injunctive relief such as reinstatement as your honor indicated that that would be a claim in equity that by the terms of this arbitration clause would not be applicable to reinstate you are commanded to reinstate this man correct equity and then right and law courts didn't used to be able to do correct a distance from unconscionable indeed so it's it's a lot of question and it goes to the jury well there is some authority that there are equitable considerations involved in the unconscionable determination but i'm certain that in the traditional sense of law and equity or but i do think it just is kind of a fancy word for fairness a fancy word for fairness is how i would characterize it your honor going back then to mr hunt singer's argument that an ambiguity was created by the car  out of equitable claims from the arbitration agreement that issue was actually addressed in the oracle decision the argument was made before this court in oracle that because the arbitration clause in that case had a carve out for equitable relief that that created an ambiguity and as a result it was argued by the party who was opposing arbitration that for that reason the contract other authority for it we don't agree with it we reject it so that is another part of the reason that i would say again to the panel i we believe that this case is controlled by the oracle decision the only wiggle room that i can see in the oracle decision and what i speculated the panel might be interested in hearing is the footnote in oracle and what is the significance of the possible carve out of non commercial disputes but no i would not say that i would not say that what i would say is that that is a that was a panel of this court doing what courts do which is say we're deciding the case in front of us and not another case that is not in front of us i think that that's a fair turpitude and i take nothing further from it but there are a couple district court decisions that have implied the negative as you know footnote without analysis and that's that is the dinner later we're going to have straight night out the district courts are going all over the the map on this one on that but the to the extent that there's that there is a question left open as clearly there there was in that case as as your honor says it was explicitly on the issue of commercial versus consumer and so that's a distinction that really does not apply here one could generalize that distinction to say well to the extent that distinction arbitration rules on a consumer contract and then i don't have any of the words in the footnote that is all that's in there that's all it says yes this isn't a consumer contract no it is not so what is a matter of what it is not in my view council let me ask you question could you please address the question that i asked your colleague mr holmes and that is what is the significance if there is any what the supreme court said and rent a center and how would you respond to mr on thing there's argument that it's kind did challenge the ar under the significance of rent a center is that it makes clear that there can be an arbitration agreement inside an arbitration agreement and that the doctrine of severability the fee that is a federal doctrine under the federal arbitration act applies equally to an arbitration agreement within an arbitration agreement i mean a little more about that in rent a center of the entire contract was an agreement to arbitrate one of the clauses supreme court analyze that and i would refer the panel particularly to footnote three in the run a center decision us supreme court made a very careful distinction to say that it was the clause inside that arbitration agreement that was the relevant agreement to arbitrate for purposes of determining whether the party opposing arbitration had attacked the validity of the right arbitration clause and footnote three discusses the issue of can you really have to arbitration agreements as i said they say that the court says of course you can you can have an agreement delegating to the arbitrator the right to decide issues of scope and validity which is itself a separate agreement to arbitrate separate from the broader agreement to arbitrate disputes between the parties and when that kind of agreement within an agreement exists as it does in this case right of center says very clearly that it is incumbent upon the party who is challenging the validity of the agreement arbitrate to direct their unconscionable and challenge directly to the agreement within the agreement what the court called the delegation clause the agreement that delegates to the arbitrator the right to determine questions of arbitrar ability scope and validity in our view that case applies exactly on all four corners with the facts in this case where what you have is a broader agreement to arbitrat that being the case what we have is an agreement to arbitrate inside a bigger agreement agreement arbitrate the bigger agreement to arbitrate in this case with section sixteen of the employment contract the subsidiary agreement to arbitrate inside that is the incorporated rule six a of the aaa rules that is the agreement that grants the arbitrator the power to determine questions of arbiter belittle and under the teaching validity of the agreement to arbitrate one of the validity issues that is commonly raised probably the most common validity issue that is raised in attacking an arbitration clause is the question on caution villainy and so if it's through the power to offense which can't defeat an arbitration agreement that's the hartley case to address rent a center right of center only involves one issue and that is how specific do does a party have to challenge the terms of an arbitrary bill any provision for unconscionable body and what all this is saying is that in our case we had to challenge not the arbitration agreement itself the provision which is only one section of an entire employment agreement but ten words within that section which says must be decided by the american arbitration association there is no case that supports that there is one clear opinion on almost exact same provisions since all of the cases finding clear and unmistakable are commercial or consumer contracts consumer contracts apply the commercial rules of the american arbitration station and none of them none of them none of them apply to an employment contract you make a really good argument what do you how do you interpret footnote two of oracle to simply say that the court doesn't want to get involved in it and didn't want to get involved in that distinction at that time