Filed 10/15/13 Sequoia Education v. Super. Ct. CA1/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

SEQUOIA EDUCATION, INC., et al., Petitioners,

v. THE SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; DAVID RIVERA et al., Real Parties in Interest. A134411
(Alameda County Super. Ct. No. RG11597698)

David Rivera and eight other plaintiffs commenced a putative class arbitration under an agreement subject to the Federal Ar bitration Act (FAA; 9 U. S.C. § 1 et seq.). After the arbitrator rendered an award ap plying the FAA to find class arbitration unavailable, defendants Sequoia Education, Inc. and Cori nthian Colleges filed a petition to confirm the award. Concluding the arbitrat or violated public policy by failing to apply California law in interpreting the arbitration agreement, the trial court vacated the award and ordered rehearing by the arbitrator. We reverse and remand for confirmation of the
award.
I. BACKGROUND On September 29, 2011, defendants filed a petition to confirm an arbitration award (petition). The petition alleged plaintiffs ar e former students of schools operated by defendant Sequoia Education, Inc. and its parent company, defendant Corinthian2 Colleges, Inc. In enrolling in the schools, each plaintiff executed an arbitration agreement requiring “any dispute” to be “r esolved by binding arbitration under the Federal Arbitration Act conducted by the American Arbitration Association (‘AAA’)
under its Commercial Rules .” The provision does not mention class arbitration. On May 28, 2008, plaintiffs commenced an arbitration challe nging the quality of their educations, asserting their claims on beha lf of a putative class. Pursuant to AAA rules, the arbitrator initially considered whether the arbitration clause permitted resolution of disputes by class arbitration. In a “Clause Construction Award” issued September 11, 2009, the arbitrator elected to apply California la w in finding class
arbitration to be available when an arbitration clause is silent. 1 Although he recognized
the same issue under the FAA was before the United States Supreme Court, the arbitrator declined to stay the arbitration pending the court’s decision. Following the submission of periodic br iefing by the parties over the next two years, the arbitrator reversed himself in an “Award on Motion to Reconsider Clause Construction Award,” issued September 22, 2011. In this award, the arbitrator concluded that the Supreme Court’s intervening decisions in Stolt-Nielsen S.A. v. AnimalFeeeds International Corp. (2010) 559 U.S. 662 [130 S.Ct. 1758] ( Stolt-Nielsen ) and AT&T Mobility LLC v. Concepcion (2011) 563 U.S. _ __ [131 S.Ct. 1740] ( Concepcion ) compelled the conclusion “where an arbitration agreement that is subject to the Federal Arbitration Act does not explicitly contain la nguage permitting class arbitration, class arbitration is not permitted. This is so even if applicable state law would dictate otherwise.” The petition sought confirmation of this award. In opposition to the petition, plaintiffs argued the arbitrator’s award should be vacated because it was “contrary to Californi a statutory and public policy.” They

1 While it was expressly subject to the FAA, the arbitrati on provision did not require the application of any pa rticular state’s substantive la w, stating only that “[t]he arbitrator’s decision shall be set forth in writing and shall set forth the essential findings and conclusions upon which the decision is based. Any remedy available from a court under the law shall be availa ble in the arbitration.”3 contended that, in addition to violating various doctrines of contract interpretation, the decision violated the “public policy of California courts to refusal [ sic ] enforcement of adhesion provisions not within the reasonable expectations of the weaker or adhering party” and “California public policy encouraging ‘the use of the class action device.’ ” In a written order, the trial court denied the petition, vacated the award, and directed rehearing by the arbitrator. Applyi ng the purported principle that an arbitrator exceeds his or her authority wh en the award “ ‘vio lates a statutory right or otherwise violates a well-defined public policy,’ ” the c ourt found the arbitrat or “violated the welldefined public policy that the agreement was to be interpreted under California law.”
The court also found the arbitrator violated the “well-defined public policy that under California law the arbitrator must interpret the agreement to give effe ct to the intentions of the parties.” The court directed a “reheari ng by the arbitrator” in which the arbitrator was directed to apply “California law of cont ract interpretation to determine whether the parties intended to include or exclude class ar bitration.” No judgment has been entered.
II. DISCUSSION
Defendants contend the trial court erred in refusing to confir m the arbitrator’s
award. We review de novo a trial court’s decision confirming or vacating an arbitration award. ( California Statewide Law Enforcement Assn. v. De partment of Personnel
Administration (2011) 192 Cal.App.4th 1, 13.)
A. Appealability Plaintiffs have moved to dismiss the ap peal, correctly arguing an order vacating an arbitration award is appealable only if no rehe aring is ordered. (Code Civ. Proc., § 1294, subd. (c); Haworth v. Superior Court (2010) 50 Cal.4th 372, 379, fn. 3.) We deny the
motion because we find “unusual circumstance s” that persuade us to exercise our discretion to treat the improper appeal as a petition for a writ of mandate. ( Olson v. Cory (1983) 35 Cal.3d 390, 401.) Th e arbitrator’s award was a pre liminary legal ruling, rather than a ruling on the merits of the dispute re ndered after an eviden tiary hearing. In vacating the award and directing a rehearing, the trial court was, in effect, ordering the arbitrator to adopt a different legal rule. If, upon rehearing, the arbitrator acceded to the4 trial court’s instructions, this issue will be pr esented to us following entry of judgment on an additional petition to confirm or vacate. On the other hand, if the ar bitrator declined to follow the court’s instructions, the partie s could be caught in an endless round of petitions and orders for rehear ing, without producing an a ppealable judgment. Either way, there is nothing to be gained in requ iring the parties to take these additional procedural steps before allowing appella te review of the trial court’s order.
B. The Trial Court’s Ruling Before addressing the trial court’s order, we provide a brief legal background for its ruling. The United States Supreme Court has, in the past three years, rendered two significant decisions addressing the availability of class arbitration. In the first, StoltNielsen , the court held that “a party may not be compelled under the FAA to submit to
class arbitration unless there is a contract ual basis for concluding that the party agreed to do so.” ( Stolt-Nielsen, supra , 559 U.S. 662, 684.) The de cision accordingly reversed an order of class arbitration because the par ties “concurred that th ey had reached ‘no agreement’ on that issue.” ( Ibid. ) The second, Concepcion, overruled as preempted by the FAA a California Supreme Court doctrin e holding unconscionable any provision barring class arbitration in a contract of adhesion. ( Concepcion, supra , 563 U.S. at p. ___ [131 S.Ct. at p. 1750].) As the latter hol ding suggests, the United States Supreme Court’s approach to certain aspects of arbitration la w has been at odds with that of our own Supreme Court. (See, e.g., Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115, 1131.) With that background, we examine th e trial court’s decision to vacate the
arbitrator’s award. Coinci dentally, the United States S upreme Court rendered a decision under the FAA in its just-concluded term, Oxford Health Pl ans LLC v. Sutter (2013) ___ U.S. ___ [133 S.Ct. 2064] ( Oxford ), that is materially indis tinguishable from the present dispute. Prior to the decision in Stolt-Nielsen , the parties in Oxford submitted to their
arbitrator the issue of the ava ilability of class arbitration unde r their contract. (133 S.Ct. at p. 2067.) Interpreting the clause in a written decision, the arbitrator found class arbitration available, although the arbitration clause made no express reference to class5 arbitration. When asked to reconsider his decision after Stolt-Nielsen , the arbitrator reaffirmed his original reasoning. ( Oxford , at pp. 2067–2068.) Reviewing an unsuccessful petition to vacate based on the ar gument the award was directly contrary to
Stolt-Nielsen , the Supreme Court held any legal error immune from judicial review. The court explained, “Under the FAA, courts may vacate an arbitrator’s decision ‘only in very unusual circumstances.’ [Citation.] That lim ited judicial review, we have explained, ‘maintain[s] arbitration’s essential virtue of resolving disputes straightaway.’ [Citation.] If parties could take ‘full-bore legal and evid entiary appeals,’ arbitration would become ‘merely a prelude to a more cumbersome and time-consuming judicial review process.’ [Citation.] [¶] . . . ‘It is not enough . . . to show that the [arbitrator] committed an error— or even a serious error.’ [Citation.] Because the parties ‘bargained for the arbitrator’s construction of their agreement,’ an arbitr al decision ‘even arguably construing or applying the contract’ must stand, regardle ss of a court’s view of its (de)merits. [Citations.] . . . So the sole question for us is whether the arbitrator (even arguably) interpreted the parties’ contract, not whet her he got its meaning right or wrong.” ( Oxford , at p. 2068, fn. omitted.) Because the ar bitrator quite clearly made a good faith effort to interpret the parties’ contract, the court held, it did not matter whether he “misconstrued” it. That issue was “not proper ly addressed to a court,” since “ ‘[i]t is the arbitrator’s construction [of the contract] wh ich was bargained for; and so far as the
arbitrator’s decision concerns construction of the contract , the courts have no business overruling him because their interpretation of the contract is different from his.’ [Citation.] The arbitrator’s construction ho lds, however good, bad, or ugly.” ( Id. at pp. 2070–2071.) Because the parties’ arbitration clause is governed by the FAA, Oxford is arguably controlling

. As in Oxford, the parties here submitted to th e arbitrator the issue of the availability of class arbitration under the arbi tration clause in thei r agreement. In a thoughtful written award, the arbitrator interpreted the contract and found class6 arbitration unavailable. 2 Because “the arbitrator . . . inte rpreted the parties’ contract,” the trial court was required to confirm the award, without asking “whether he got its meaning right or wrong.” ( Oxford, supra, ___ U.S. at p. ___ [133 S. Ct. at p. 2068, fn. omitted].) Instead, the trial court reviewed the merits of the arbitrat or’s legal reasoning, found it wanting, and entered an order essentially direc ting the arbitrator to adopt a different view. This far exceeded the proper scope of judici al review. As the Supreme Court noted in Oxford , “[t]he arbitrator’s construction hold s, however good, ba d, or ugly.” ( Id. at pp. 2070–2071.)
We need not decide wh ether the trial court shou ld have been guided by Oxford or by California law in reviewing the arbitrato r’s award because both lead to the same conclusion. Under California law, “[a]n arbitr ation award is final and conclusive because the parties—as here—‘have agreed that it be so.’ [Citation.] Only limited judicial review is available; courts may not review the meri ts of the controversy, the validity of the arbitrator’s reasoning, or the sufficiency of the evid ence supporting the award. [Citation.] Thus, with ‘narrow exceptions,’ an arbitrator’s d ecision is not reviewable for errors of fact or law. [Citation.] This is so even if the error appears on the face of the award and causes substantial injustice.” ( Shahinian v. Cedars-Sinai Medical Center (2011) 194 Cal.App.4th 987, 999–1000; see similarly Haworth v. Superior Court (2010) 50 Cal.4th 372, 380.) This rest ricted scope of review is reflected in the Code of Civil Procedure, which permits a tria l court to vacate an arbitrat or’s award only on specific grounds: fraud, corruption, or misconduct by the arbitrator, serious procedural

2 At oral argument, plaintiffs’ counsel cont ended repeatedly that the arbitrator had not interpreted the contract. The record convincingly refutes the contention. The arbitrator issued a five-page decision that skillfully applies the governing legal authority to the language of the parties’ contract to de termine the availability of class arbitration. That is the very definition of “contract interpretation.” Plaintiffs’ counsel appears to have meant merely that the arbitrat or did not interpret the contract in the manner plaintiffs believe it should have b een interpreted. As the court indicated in Oxford, the manner in which an arbitrator interprets a contract is immaterial, so long as the arbitrator undertook some form of interpretation. ( Oxford, supra, ___ U.S. at p. ___ [133 S.Ct. at pp. 2070– 2071].) That unques tionably occurred here.7 unfairness, or a decision in excess of the arb itrator’s power. (Code Civ. Proc., § 1286.2, subd. (a).) The trial court purported to find that th e arbitrator exceeded his powers because he violated “public policy,” a ground deri ved from our Supreme Court’s decision in Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 ( Moncharsh ).) In that decision, the court considered the appellant’s argument that the arbitration award should be vacated because a provision of the parties’ contract was cont rary to attorney ethical rules. The court rejected the argument, explaini ng, “[Two prior decisions] perm itted judicial review of an arbitrator’s ruling where a party claimed the en tire contract or transaction was illegal. By contrast, Moncharsh challenges but a singl e provision of the overall employment contract. Accordingly, neither [prior decision ] authorizes judicial review of his claim. [¶] We recognize that there may be some limited and exceptional circumstances justifying judicial review of an arbitrator’s decision when a party claims illegality affects only a portion of the underlying contract. Such cases would include those in which granting finality to an arbitrator’s decision w ould be inconsistent w ith the protection of a party’s statutory rights. [Citation.] [¶] W ithout an explicit legislative expression of public policy, however, courts should be reluct ant to invalidate an ar bitrator’s award on this ground. The reason is clear: the Legisl ature has already expressed its strong support for private arbitration and the finality of arb itral awards in title 9 of the Code of Civil Procedure. [Citation.] Absent a clear expression of illegality or public policy undermining this strong presumption in favor of private arbitration, an arbitral award should ordinarily stand immune from judicial scrutiny.” ( Id. at p. 32, fn. omitted.) As the above quotation suggests, Moncharsh did not create a general exception to the limited scope of judicial review of arbitr ation awards when the award is claimed to violate public policy. Instead, the court’s pr onouncement related only to the claim that an
arbitrator’s award should be reversed because the provision of the contract enforced by the award was illegal. Even in those circumstances, the cour t held, the awar d should be enforced “[a]bsent a clear expression of illegality or public policy.” ( Moncharsh, supra, 3 Cal.4th at p. 32.) Although subsequent Supreme Court decisions have expanded the8 scope of this exception somewhat, holding an arbitration award can be vacated if “granting finality to an award woul d be inconsistent with a party’s statutory rights ” ( Board of Education v. R ound Valley Teachers Assn. (1996) 13 Cal.4t h 269, 276), none has acknowledged a general public policy ex ception. Plaintiffs made no claim of contractual illegality, nor did th ey contend the arbitrator’s award violated a specific statutory right. Yet even if there were some general public policy exception, 3 it would not encompass the trial court’s appr oach: to engage in independ ent judicial review, identify the rules of contract interpretation purportedl y violated by the arbitrator’s award, and label those rules “public policy” to justify imposition of the court’s interpretation on the
arbitrator. To enshrine ordi nary rules of contract interpretation as “public policy” adequate to justify the refu sal to enforce an otherwise valid arbitration award would entirely undo the restraints placed on ju dicial review of arbitration awards.

3 There are Court of Appeal decisions sugge sting, in dictum, that an arbitration award violating a “ ‘well-defined p ublic policy’ ” is invalid. (E.g., California Statewide Law Enforcement Assn. v. Departm ent of Personnel Administration (2011) 192 Cal.App.4th 1, 13.) These uniformly cite authority other than the decisions of our Supreme Court, which has never approved such a rule. In any event, whatever their statements in dictum, none of these Court of Appeal decisions woul d have sanctioned the trial court’s conduct here.9 III. DISPOSITION
The order of the trial court is vacated. The matter is remanded to the trial court for entry of a judgment confirming the arbitration award.

_ ____________ ____________ Margulies, Acting P.J.

We concur:

_____________ ____________ Dondero, J.

_____________ ____________ Banke, J.