Filed 5/23/18 (unmodified opn. attached)

CERTIFIED FOR PUBLICATION 

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

NIELSEN CONTRACTING, INC. et al.,

Plaintiffs and Respondents,

v.

APPLIED UNDERWRITERS, INC. et al.,

Defendants and Appellants.

 D072393

 (Super. Ct. No.

 37-2017-00001814-CU-CO-CTL)

 ORDER DENYING REHEARING

 AND MODIFYING OPINION

 NO CHANGE IN JUDGMENT

THE COURT:

It is ordered that the opinion filed herein on May 3, 2018, be modified as follows:

1. On page 5, following the third sentence of the first full paragraph and before 

footnote 3, the following two sentences are added:

This agreement was subject to certain exceptions, including that (1) 

CIC was permitted to renew a policy "issued in connection with an 

RPA in force as of July 1, 2016"; and (2) AUCRA could issue or 

renew an RPA if Shasta Linen's rulings were successfully challenged 

in a court proceeding. Additionally, the parties agreed that 

arbitrations under "an in-force RPA or a past RPA entered into or

issued in California will take place in California."

3. On page 25, following the second sentence of the first full paragraph, add as 

footnote 4 the following footnote, which will require renumbering of all subsequent 

footnotes:
2

Defendants maintain we should not consider Shasta Linen because 

its decision was "undermined" by the Stipulated Cease and Desist 

order. This argument is unsupported. The stipulation reaffirms 

Shasta Linen's ruling that AUCRA may not issue or renew RPAs 

absent compliance with the administrative filing requirements set 

forth in sections 11658 and 11735. The parties' agreement as to 

certain limited exceptions to this rule and to conduct any arbitrations 

in California does not undercut Shasta Linen's reasoning. The 

administrative decision is relevant to our analysis because we have 

found its reasoning persuasive, not because we are legally bound by 

its conclusions.

There is no change in the judgment.

The petition for rehearing is denied.

McCONNELL, P. J.

Copies to: All parties
Filed 5/3/18 (unmodified version)

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

NIELSEN CONTRACTING, INC. et al.,

Plaintiffs and Respondents,

v.

APPLIED UNDERWRITERS, INC. et al.,

Defendants and Appellants.

 D072393

 (Super. Ct. No.

 37-2017-00001814-CU-CO-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, Gregory 

W. Pollack, Judge. Affirmed.

Hinshaw & Culbertson, Spencer Y. Kook and Travis Wall for Defendants and 

Appellants.

Larry J. Lichtenegger for Plaintiffs and Respondents.

Nielsen Contracting, Inc. and T&M Framing, Inc. (collectively Nielsen) sued 

several entities (defendants) alleging these entities fraudulently provided workers'

compensation policies to Nielsen that were illegal and contained unconscionable terms. 

Defendants moved to compel arbitration and stay the litigation under an arbitration 
2

provision in one defendant's contract, titled Reinsurance Participation Agreement 

(RPA). Nielsen opposed the motion, asserting the arbitration provision and the 

provision's delegation clause were unlawful and void. After briefing and a hearing, the 

trial court agreed and denied defendants' motion.

Defendants appeal. They contend: (1) the arbitrator, and not the court, should 

decide the validity of the RPA's arbitration agreement under the agreement's delegation 

clause; and (2) if the court properly determined it was the appropriate entity to decide 

the validity of the delegation and arbitration provisions, the court erred in concluding 

these provisions are not enforceable. We reject these contentions and affirm.

FACTUAL AND PROCEDURAL SUMMARY

We summarize the facts based on the complaint's allegations, and the materials 

submitted in support of and opposition to the motion to compel arbitration. We describe 

only those facts necessary to resolve the issues pertaining to the arbitration issue, and 

make no attempt to discuss all of the facts relevant to Nielsen's substantive allegations 

against defendants.

Background

In 2012, Applied Underwriters, Inc. (Applied) provided quotes to Nielsen for 

Applied's patented workers' compensation program known as "EquityComp." Based on 

Applied's representations about the program's low cost and profit-sharing benefits, 

Nielsen signed a "Request to Bind" with Applied. Under this agreement, Nielsen was 
3

initially issued a guaranteed-cost workers' compensation policy by California Insurance 

Company (CIC), one of Applied's subsidiaries.

The Request to Bind also required Nielsen to sign a separate agreement (the 

RPA) with another one of Applied's subsidiaries, Applied Underwriters Captive Risk 

Assurance Company, Inc. (AUCRA). Nielsen and AUCRA signed the RPA in 

December 2012. The RPA had a three-year term.

The RPA modified and supplanted many of the CIC policy terms, including 

adding an arbitration provision. As discussed in more detail below, this provision 

required arbitration of "[a]ny dispute or controversy" in the British Virgin Islands before 

"disinterested officials of insurance or reinsurance companies." The arbitration 

provision delegated to the arbitrator the authority to rule on disputes concerning the 

enforceability of the arbitration provision. This is known as a "delegation clause."

Complaint

In January 2017, Nielsen filed a complaint against Applied and its two 

subsidiaries (AUCRA and CIC) (collectively defendants). Nielsen sought a declaration 

that the RPA is void and its provisions are unconscionable, and sought damages for 

defendants' misrepresentations and breach of the implied covenant of good faith and fair 

dealing. Nielsen alleged the RPA is an adhesion contract with unfair and 

unconscionable terms; the RPA was written and structured to purposely mislead Nielsen 

and to intentionally avoid and circumvent California insurance laws; and the RPA is an 

illegal contract because it was not filed with or approved by the California Department 
4

of Insurance (Insurance Department), as required by Insurance Code section 11658 and 

title 10 of the California Code of Regulations section 2268.1 Nielsen alleged 

"EquityComp is the brainchild of Applied," which caused CIC to issue an approved 

guaranteed-cost workers' compensation insurance policy "to give the appearance of 

compliance with the California insurance regulations, although CIC is never responsible 

for making payment on claims using its own money."

Several months before this complaint was filed, in June 2016, the California 

Insurance Commissioner (Insurance Commissioner) issued an administrative decision in 

a case involving a different insured (Shasta Linen Supply, Inc.) that had challenged the 

same EquityComp insurance program offered by these same defendants. (Matter of 

Shasta Linen Supply, Inc., Decision & Order, dated June 20, 2016, File No. AHBWCA-14-31 (Shasta Linen).) In the 70-page decision, the Insurance Commissioner 

found the RPA to be unlawful and void as a matter of law for various reasons, including 

that it had not been filed and approved by the Insurance Department before it was 

issued. (Ibid.) In reaching this conclusion, the Insurance Commissioner also found the 

governing administrative regulations require workers' compensation insurers to obtain 

approvals for "side agreements," including arbitration provisions that differ from the 

 

1 Further unspecified statutory references are to the Insurance Code. Further 

references to Regulations sections are to title 10 of the California Code of Regulations. 

Unless otherwise stated, all references to Regulations section 2268 are to the version 

existing in 2012 when the parties signed the RPA.
5

dispute resolution provisions in a previously approved insurance policy. (Id. at p. 43; 

See Regs., § 2268.)

Two months after the Shasta Linen administrative decision was issued, the 

Insurance Department entered into a stipulated cease-and-desist order with Applied, 

CIC, and AUCRA. In this stipulation, defendants stated they disagreed with the Shasta 

Linen administrative decision, but acknowledged the decision "was made precedential"

under Government Code section 11425.60, subdivision (b).2 Defendants also agreed it 

would not issue any new RPA or renew any existing RPA unless the policy is filed with 

and approved by the Insurance Department.3

Motion to Compel Arbitration

In response to Nielsen's complaint, AUCRA moved to compel arbitration under 

the RPA's lengthy arbitration provision. Of relevance here, the provision states:

"(A) It is the express intention of the parties to resolve any disputes 

arising under this Agreement without resort to litigation in order to 

protect the confidentiality of their relationship and their respective 

business and affairs. Any dispute or controversy . . . arising out of 

 

2 This code section permits an administrative agency to designate a decision as 

"precedent" if the decision "contains a significant legal or policy determination of 

general application that is likely to recur." (Gov. Code, § 11425.60, subd. (b).) An 

administrative decision so designated can be relied upon by the agency in later cases. 

(Id., subd. (a).)

3 We deny Nielsen's request that we take judicial notice of a later settlement 

agreement between defendants and the Insurance Department in which defendants 

agreed to dismiss their superior court writ petition challenging the Shasta Linen

decision. This settlement agreement was not before the trial court, and therefore it is 

not properly before this court. (See Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 

14 Cal.4th 434, 444, fn. 3.)
6

or related to this Agreement shall be fully determined in the British 

Virgin Islands under the provisions of the American Arbitration 

Association [AAA].

"(B) All disputes between the parties relating in any way to (1) the 

execution and delivery, construction or enforceability of this 

Agreement, (2) the management or operations of the Company, or 

(3) any other breach or claimed breach of this Agreement or the 

transactions contemplated herein shall be . . . finally determined 

exclusively by binding arbitration in accordance with the 

procedures provided herein. . . . [¶] . . . [¶]

"(D) . . . All arbitrators shall be active or retired, disinterested 

officials of insurance or reinsurance companies not under the 

control or management of either party to this Agreement and will 

not have personal or financial interests in the result of the 

arbitration. [¶] . . . [¶]

"(G) . . . Judgment upon the award rendered by the arbitrator or 

arbitrators may be entered by any court of competent jurisdiction in 

Nebraska or application may be made in such court for judicial 

acceptance of the award and an order of enforcement as the law of 

Nebraska may require or allow.

"(H) The award of the arbitrator or arbitrators shall be binding and 

conclusive on the parties . . . .

"(I) All arbitration proceedings shall be conducted in the English 

language in accordance with the rules of the [AAA] and shall take 

place in Tortola, British Virgin Islands or at some other location 

agreed to by the parties." (Italics added.)

In seeking arbitration under these provisions, AUCRA argued the italicized 

language in paragraph (B) requiring arbitration of disputes concerning the 

"enforceability of this Agreement" was a delegation clause that gave the arbitrator the 

sole and exclusive authority to rule on challenges to the enforceability of the arbitration 

agreement. AUCRA presented evidence that the AAA rules likewise delegate to the 
7

arbitrator the exclusive authority to rule on the arbitration clause's enforceability. 

AUCRA thus argued the court had no authority to rule on challenges to the 

enforceability of the arbitration agreement or its delegation clause.

As explained in more detail below, AUCRA alternatively argued that if the court 

reached the arbitrability issues, the arbitration clause is valid and enforceable.

Defendants Applied and CIC (not named parties in the RPA) joined in the 

motion to the extent AUCRA sought to stay the litigation pending the arbitration.

Opposition to Motion to Compel

In opposing the motion to compel arbitration, Nielsen argued that under settled 

authority a delegation clause is severable from the main contract and from the 

arbitration clause, and the court must first resolve challenges to the enforceability of the 

delegation clause if the party brings a specific challenge to the delegation clause. (See 

Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S 63 (Rent-A-Center).)

Nielsen argued that its specific challenge to the delegation clause satisfied this 

test and therefore the court (and not the arbitrator) was required to rule on the 

enforceability of the delegation clause and the arbitration provision. In explaining this 

challenge, Nielsen argued that the RPA's arbitration provision and delegation clause 

materially changed the dispute resolution provisions in the approved CIC insurance 

policies, and therefore they were "collateral" agreements required to be filed with the 

Insurance Department under section 11658 and Regulations section 2268. Nielsen 
8

maintained that by not filing these provisions with the Insurance Department, the 

provisions were void and unenforceable.

Nielsen also presented evidence showing the RPA was "virtually identical" to the 

agreement found to be unlawful and void in the Shasta Linen administrative decision.

Reply to Motion to Compel

In reply, defendants argued that because Nielsen's illegality challenge was "not 

specific" to the arbitration provision or its delegation clause, and instead "implicates"

the RPA "as a whole," the court must allow the arbitrator to decide if the delegation 

clause and arbitration agreement are enforceable. Defendants alternatively argued that 

even if the court were to consider Nielsen's challenge to the enforceability of the 

arbitration provisions (including the delegation provision), these provisions are 

enforceable under California law despite the failure to file them with the appropriate 

agency.

Court's Ruling

After a hearing, the court denied defendants' motion to compel. On the question 

whether the court has the authority to decide the enforceability of the delegation and 

arbitration clauses, the court stated that Nielsen was not merely derivatively challenging 

the legality of the main contract, but instead was asserting that "both the delegation 

provision and the arbitration provision are illegal and unenforceable separate and apart 

from the evident unenforceability of the entire RPA, albeit for the same reason, i.e.,

failure to file with, and obtain approval from, the Insurance Commissioner."
9

On the merits, the court agreed with Nielsen that neither the delegation clause 

nor the arbitration requirement was enforceable. The court reasoned: "The delegation 

and arbitration provisions qualify as collateral agreements which modify the obligation 

of the underlying CIC policy that should have been attached to the original CIC policy 

as endorsements and filed with the Insurance Commissioner for approval. Because they 

were not filed and approved, they are unenforceable as a matter of law pursuant to 

[section] 11658 and [Regulations section] 2268."

Defendants appeal.

DISCUSSION

In ruling on a motion to compel arbitration, the trial court shall order parties to 

arbitrate "if it determines that an agreement to arbitrate the controversy exists . . . ." 

(Code Civ. Proc., § 1281.2.) "[T]he party seeking arbitration bears the burden of 

proving the existence of an arbitration agreement by a preponderance of the evidence, 

and the party opposing arbitration bears the burden of proving by a preponderance of 

the evidence any defense . . . ." (Peng v. First Republic Bank (2013) 219 Cal.App.4th 

1462, 1468.) In evaluating an order denying a motion to compel arbitration, " ' "we 

review the arbitration agreement de novo to determine whether it is legally enforceable, 

applying general principles of California contract law." ' " (Carmona v. Lincoln 

Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 82.) If the trial court resolved 

contested facts, we "review the court's factual determinations for substantial evidence." 

(Ibid.)
10

The parties agree the RPA is governed by the Federal Arbitration Act (FAA), 

which provides that a contractual arbitration provision "shall be valid, irrevocable, and 

enforceable, save upon such grounds as exist at law or in equity for the revocation of 

any contract." (9 U.S.C. § 2.) The FAA " 'declare[s] a national policy favoring 

arbitration' of claims that parties contract to settle in that manner." (Preston v. Ferrer 

(2008) 552 U.S. 346, 353 (Preston).) Arbitration is a matter of contract, and "parties 

are generally free to structure their arbitration agreements as they see fit." (Volt Info. 

Sciences v. Leland Stanford Jr. University (1989) 489 U.S. 468, 479.) However, under 

the FAA's savings clause, an arbitration agreement is not enforceable if a party 

establishes a state law contract defense, such as fraud, duress, unconscionability, or 

illegality. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339; Poublon v. 

C.H. Robinson Co. (9th Cir. 2017) 846 F.3d 1251, 1259; see McGill v. Citibank, N.A.

(2017) 2 Cal.5th 945, 962.) Although arbitration agreements cannot be "invalidated 'by 

defenses that apply only to arbitration or that derive their meaning from the fact that an 

agreement to arbitrate is at issue,' " the enforceability of the agreement remains subject 

to defenses applicable to all other contracts. (McGill, at p. 962.)

Under these general principles, we consider defendants' contentions that the trial 

court erred in concluding (1) the court, and not the arbitrator, decides the enforceability 

of the delegation clause and arbitration agreement; and (2) the unfiled delegation and 

arbitration agreements were unlawful and therefore unenforceable.
11

I. "Who Decides": Enforceability of Delegation Clause

The parties agree the delegation clause expresses the parties' clear intent to 

delegate the issue of the enforceability of the arbitration clause to the arbitrator, but that 

applicable law requires courts to rule on specific challenges to the enforceability of 

delegation clauses before compelling the matter to arbitration. They disagree as to 

whether Nielsen raised an adequate challenge to the enforceability of the delegation 

clause to require judicial resolution of the challenge.

We conclude the court properly found Nielsen's challenge to the delegation 

clause was sufficient to require the court to rule on the question of the enforceability of 

the delegation clause. To explain this conclusion, it is helpful to understand the general 

rules pertaining to the "who decides" issue, and the United States Supreme Court's view 

that a delegation clause, an arbitration agreement, and the underlying agreement are 

each evaluated—for purposes of applying the FAA—as severable contracts. (Rent-ACenter, supra, 561 U.S. at pp. 70-72.)

A. Legal Principles

It has long been settled that when parties have agreed to arbitration, challenges to 

the validity of the underlying contract, including contract defenses such as fraud in the 

inducement or illegality, are for the arbitrator to decide. (Preston, supra, 552 U.S. at p. 

353; Buckeye Check Cashing, Inc, v. Cardegna (2006) 546 U.S. 440, 443-445 

(Buckeye); Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967) 388 U.S. 395, 402-

403 (Prima Paint).) This is because the arbitration clause is viewed as separate from 
12

the underlying contract. (Buckeye, at pp. 445-446.) Thus, allegations that the main 

contract is unlawful or unconscionable does not affect the enforceability of the 

arbitration clause. (Ibid.)

However, challenges to the validity of the arbitration clause itself are generally 

resolved by the court in the first instance. (Rent-A-Center, supra, 561 U.S. at p. 71; 

Buckeye, supra, 546 U.S. at pp. 444-445; Prima Paint, supra, 388 U.S. at pp. 403-404.) 

An exception to this rule applies when the parties have clearly and unmistakably agreed 

to delegate questions regarding the validity of the arbitration clause to the arbitrator. 

(Rent-A-Center, at pp. 68-69; Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 

891-892.) Such delegation clauses are generally enforceable according to their terms. 

(First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944; Aanderud, at pp. 

891-892; Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 239.)

In Rent-A-Center, the United States Supreme Court addressed the question of 

who rules on a challenge to the enforceability of a delegation clause: does the court 

decide or does the arbitrator decide? (Rent-A-Center, supra, 561 US. at pp. 67-76.) The 

high court began this analysis by confirming that a delegation clause—nested within the 

larger arbitration agreement—must be viewed as an independent ("severable") contract. 

(Id. at pp. 70-71.) Thus, the court held that as with any independent contract, the court

must resolve specific challenges to the delegation clause that are proper under section 2 

of the FAA, i.e., any "generally applicable contract defenses." (Rent-A-Center, at pp. 

68, 71.) "If a party challenges the validity under [FAA] § 2 of the precise agreement to 
13

arbitrate at issue, the federal court must consider the challenge before ordering 

compliance with" the delegation clause. (Id. at p. 64.) Otherwise, courts would be 

treating the delegation clause on a ground that would " 'elevate it over other forms of 

contract,' " which is not permitted under the FAA. (Id. at p. 71.)

But—consistent with its severability reasoning—the Rent-A-Center court made 

clear this rule requiring judicial consideration of contractual defenses to the 

enforceability of the delegation clause is triggered only if the challenge is "directed 

specifically to the agreement to arbitrate." (Rent-A-Center, supra, 561 U.S. at p. 71.) 

Thus, an argument that the arbitration agreement or the underlying contract is 

unenforceable is not sufficient to trigger the court's obligation to resolve contentions 

regarding the enforceability of a severable delegation clause. (Id. at pp. 71-76.)

The facts of Rent-A-Center illustrate this principle. There, the plaintiff filed an 

employment discrimination suit against his former employer. (Rent-A-Center, supra, 

561 U.S. at p. 65.) The employer responded by seeking arbitration based on an 

arbitration agreement that was separate from the underlying employment contract and 

contained a delegation clause. (Id. at pp. 65-66.) The employee opposed the motion, 

arguing the arbitration agreement was unconscionable. (Id. at p. 66.) But the employee 

challenged only the validity of the arbitration contract and never "even mention[ed] the 

delegation provision." (Id. at p. 72.) On this record, the United States Supreme Court 

found the arbitrator, and not the court, was to consider the enforceability of the 

delegation clause because the employee had not challenged the delegation provision. 
14

(Id. at pp. 72-76.) The court reasoned that the delegation clause must be viewed as a 

separate agreement nested within the arbitration agreement, and unless the clause is 

directly challenged, the arbitrator must resolve all of the disputed issues. (Ibid.)

Following Rent-A-Center, California courts have recognized that a court is the 

appropriate entity to resolve challenges to a delegation clause nested in an arbitration 

clause when a specific contract challenge is made to the delegation clause. (See, e.g., 

Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1559-1560 (Malone).) In 

Malone, the plaintiff challenged an employment contract and the delegation clause on 

grounds of unconscionability. (Id. at pp. 1556-1557.) The reviewing court held the 

unconscionability challenge to the delegation clause was for the court to resolve. (Id. at 

pp. 1559-1560.) However, after evaluating that challenge, the court held the 

unconscionability challenge to the delegation clause was without merit. (Id. at pp. 

1560-1571.) The court thus held the delegation clause was enforceable and the 

defendants' motion to compel arbitration should have been granted. (Id. at pp. 1570-

1571.)

B. Analysis

Defendants contend the court erred in finding that Nielsen raised an adequate 

challenge to the enforceability of the delegation clause to require judicial resolution of 

the challenge. The contention is unsupported. Unlike the Rent-A-Center plaintiff and 

similar to the Malone plaintiff, Nielsen expressly raised contract challenges to the 

delegation clause. In opposing the motion to compel, Nielsen argued the delegation 
15

clause was unenforceable because it constituted a material change to CIC's filed 

insurance policy (which contained no arbitration clause or delegation clause), and the 

RPA's delegation clause constituted an endorsement or collateral agreement that was 

required to be filed with the Insurance Department to be lawful and enforceable. 

Defendants countered by arguing California law does not require a delegation clause to 

be approved by the Insurance Department, and an unfiled arbitration provision and 

delegation clause remain lawful and enforceable. These issues relate specifically to the 

enforceability of the delegation clause, and thus under Rent-A-Center these issues are 

for the court to resolve.

Relying on Rent-A-Center, defendants contend a court may rule on the 

enforceability of the delegation clause only if the plaintiff's challenge to the delegation 

clause is different from the plaintiff's challenge to the entire contract or to the entire 

arbitration agreement. This argument is not supported by Rent-A-Center's holding or 

logic. The high court's determination that a court should generally resolve specific state 

law contractual defenses to delegation clauses was based on its view that delegation 

clauses are separate and severable from the remainder of the arbitration agreement and 

the FAA requires that arbitration provisions be enforced in the same manner as other 

types of contractual provisions. (Rent-A-Center, supra, 561 U.S. at pp. 67, 70-71 [under 

the FAA courts must "place[] arbitration agreements on an equal footing with other 

contracts"].) If we were to accept defendants' argument that courts are precluded from 

ruling on specific contract defenses to a delegation clause merely because the same 
16

defense is also brought to invalidate other related contractual provisions, we would be 

treating delegation clauses differently than other contractual clauses, a determination 

that would be inconsistent with the FAA, as interpreted by the United States Supreme 

Court.

Rent-A-Center's discussion of the type of challenge that might have triggered 

court review supports our conclusion. In explaining that the plaintiff's 

unconscionability challenge specifically concerned only the validity of the contract as a 

whole, rather than the delegation provision, the high court noted that the plaintiff's 

"substantive unconscionability arguments assailed arbitration procedures called for by 

the [arbitration] contract—the fee-splitting arrangement and the limitations on 

discovery—procedures that were to be used during arbitration under both the agreement 

to arbitrate employment-related disputes and the delegation provision. It may be that 

had [the employee] challenged the delegation provision by arguing that these common 

procedures as applied to the delegation provision rendered that provision 

unconscionable, the challenge should have been considered by the court. To make such 

a claim based on the discovery procedures, [the employee] would have had to argue that 

the limitation upon the number of depositions causes the arbitration of his claim that the 

Agreement is unenforceable to be unconscionable. That would be, of course, a much 

more difficult argument to sustain than the argument that the same limitation renders 

arbitration of his factbound employment-discrimination claim unconscionable. 

Likewise, the unfairness of the fee-splitting arrangement may be more difficult to 
17

establish for the arbitration of enforceability than for arbitration of more complex and 

fact-related aspects of the alleged employment discrimination. [The employee], 

however, did not make any arguments specific to the delegation provision; he argued 

that the fee-sharing and discovery procedures rendered the entire Agreement invalid." 

(Rent-A-Center, supra, 561 U.S. at p. 74.)

This hypothetical—that if the plaintiff had directed the unconscionability 

challenges (the unfairness of the discovery limitations and the fee-splitting 

requirements) against the delegation clause in addition to asserting the same 

unconscionability challenge against the arbitration agreement itself, the "challenge [to 

the delegation clause] should have been considered by the court"—illustrates that the 

focus of the court's attention must be on whether the particular challenge is directed at

the delegation clause, not whether the same challenges are also directed at the 

agreement or agreements into which the delegation clause is embedded or nested. 

(Rent-A-Center, supra, 561 U.S. at p. 74.) Under Rent-A-Center's reasoning, whether 

the challenge is the same as or different from the challenge to other provisions of the 

arbitration clause or underlying agreement is not dispositive of whether the challenge is 

specifically directed at the delegation clause. (See Malone, supra, 226 Cal.App.4th at 

pp. 1559-1560.)

We find unhelpful defendants' reliance on Justice Paul Steven's dissenting 

opinion to support their interpretation. (Rent-A-Center, supra, 561 U.S. at pp. 76-88

(dis. opn. of Stevens, J.).) Justice Stevens disagreed with the majority's view that a 
18

court can "pluck" a delegation clause from a potentially invalid or illegal arbitration 

clause, and enforce the delegation clause despite the alleged invalidity of the arbitration 

provision in which it is nested. (Id. at pp. 85, 86-87.) In explaining this objection, 

Justice Stevens suggested that under the majority opinion, "A claim that an entire

arbitration agreement is invalid will not go to the court unless the party challenges the

particular sentences that delegate such claims to the arbitrator, on some contract ground 

that is particular and unique to those sentences." (Id. at p. 86, third italics added.)

Viewed in context, this "particular and unique" observation does not support that 

a challenge to the delegation clause cannot be the same as the challenge to the 

arbitration agreement. Justice Stevens was emphasizing the majority's view (with 

which he disagreed) that the objection must be directed to the delegation clause and not 

to the larger arbitration provisions into which it is nested, and did not consider 

circumstances when a party makes the same or similar challenge to the delegation and 

arbitration clause. Moreover, a dissenting opinion's interpretation of a majority opinion 

is not binding, and its validity is particularly questionable when, as here, it is based on 

an expansive reading of the majority opinion beyond the particular holding of the case.

Recently, a federal court held the court was the proper entity to resolve 

challenges to a delegation clause in a similar RPA. (See Minnieland Private Day 

School, Inc. v. Applied Underwriters Captive Risk Assurance Co. (4th Cir. 2017) 867 

F.3d 449 (Minnieland).) In Minnieland, a daycare center sued AUCRA, asserting that 

the " 'Equity Comp' " program and the RPA "constituted an unlawful 'attempt to 
19

circumvent' various Virginia laws related to insurance and workers' compensation." (Id.

at pp. 451, 452.) In response to AUCRA's motion to compel arbitration under an 

arbitration provision and delegation clause essentially identical to the provision here, 

Minnieland argued that Virginia law "rendered void 'any' arbitration provision in the 

RPA" (including the delegation clause) and therefore the court must determine the 

enforceability of the delegation clause and the arbitration provision. (Id. at p. 453.) The 

district court agreed, and refused to enforce the delegation clause. (Ibid.)

The Fourth Circuit affirmed, reasoning:

"Rent-A-Center makes clear . . . that '[i]f a party challenges the 

validity under § 2 of the precise agreement to arbitrate at issue, the 

federal court must consider the challenge before ordering 

compliance with that agreement . . . .' [¶] . . . [¶]

"[AUCRA] argues that Minnieland, like the plaintiff in Rent-ACenter, failed to specifically challenge the delegation provision in 

the RPA. But before the district court, Minnieland argued that 

[Virginia law] rendered void 'any' arbitration provision in the RPA 

[citation], necessarily including the delegation provision, which is 

simply 'an additional, antecedent agreement' to arbitrate [citations].' 

And to avoid any doubt that its challenge to the enforceability of 

the arbitration agreements in the RPA extended to the delegation 

provision, Minnieland expressly asserted that under [a Virginia 

statute], 'the court must resolve the validity of the arbitration 

provision,' an argument relevant only to the enforceability of the 

delegation provision. [Citation.] Accordingly, Minnieland 

'challenged the validity of that delegation with sufficient force and 

specificity' to satisfy Rent-A-Center." (Minnieland, supra, 867 

F.3d at pp. 455-456.)

In Minnieland, the specific challenge to the delegation clause was the same as the 

challenge to the arbitration clause as a whole, but this fact did not preclude the 
20

reviewing court from upholding the district court's conclusion that it was the proper 

entity to rule on the enforceability of the delegation clause. (Ibid.)

This case and Minnieland are factually distinguishable from the decisions relied 

upon by defendants. (See Matter of Monarch Consulting, Inc. v. National Union Fire 

Insurance Company of Pittsburgh, PA (2016) 26 N.Y.3d 659 (Monarch Consulting); 

Mike Rose's Auto Body, Inc. v. Applied Underwriters Captive Risk Assurance Company,

Inc. (N.D. Cal. 2016) 2016 WL 5407898; South Jersey Sanitation Company, Inc. v. 

Applied Underwriters Captive Risk Assurance Company, Inc. (3d Cir. 2016) 840 F.3d 

138; Milan Express Co., Inc. v. Applied Underwriters Captive Risk Assurance 

Company, Inc. (6th Cir. 2014) 590 Fed. Appx. 482, 485-486.) Although these courts 

addressed the enforceability of the same (or similar) arbitration clause contained in the 

same (or similar) insurance contracts, the courts found the plaintiff-insured had not 

asserted a specific challenge to the delegation clause. (See, e.g., Monarch Consulting,

at p. 676 ["a review of the record reveals that [the insured] did not specifically direct 

any challenge to the delegation clauses empowering the arbitrators to determine 

gateway questions of arbitrability," italics added]; Mike Rose's, at p. *9 [rejecting 

plaintiff-insured's argument that "the delegation provision cannot be enforced because 

the Agreements themselves are unlawful"; see also Milan Express, at pp. 485-486.)

Defendants argue that a party cannot trigger a judicial determination on the 

enforceability of a delegation provision merely by labeling a challenge to the broader 

arbitration clause or the substantive contract as a challenge to the delegation provision. 
21

They maintain "it is not enough simply to state that one is challenging" the delegation 

provision " 'if [the argument] is a subterfuge for a challenge that the entire agreement

. . .' is unenforceable." We agree with these assertions. But the need for a careful 

inquiry regarding the nature of the party's challenge does not support a blanket rule that 

any time there is a similar challenge to the delegation clause and to other contractual 

provisions, a court must ignore its statutory obligation to rule on state law contract 

defenses specifically asserted against the enforceability of the delegation clause. (See 

Malone, supra, 226 Cal.App.4th at pp. 1559-1560.)

In this case, the court found Nielsen asserted a specific, substantive challenge to 

the delegation clause separate from the challenge to the arbitration clause and the 

underlying contracts, and this challenge was not merely a device to challenge other 

provisions in the contract. The record supports this conclusion. The court thus properly 

found it was the proper entity to rule on Nielsen's challenges to the enforceability of the 

delegation clause.

II. Enforceability of Delegation Clause and Arbitration Provision

Defendants contend that assuming the court had the authority to decide the issue, 

the court erred in concluding Nielsen met its burden to show the delegation clause and 

arbitration provision were unenforceable. This contention is without merit. The court 

properly found these provisions were void and unenforceable because defendants had 

not filed these provisions with the Insurance Commissioner as required by section 

11658 and Regulations section 2268.
22

A. Applicable Law

Section 11658 states in relevant part:

"(a) A workers' compensation insurance policy or endorsement 

shall not be issued by an insurer to any person in this state unless 

the insurer files a copy of the form or endorsement with [the 

Workers Compensation Insurance Rating Bureau] . . . and 30 days 

have expired from the date the form or endorsement is received by 

the commissioner from the rating organization . . . , unless the 

commissioner gives written approval of the form or endorsement 

prior to that time.

"(b) If the commissioner notifies the insurer that the filed form or 

endorsement does not comply with the requirements of law, 

specifying the reasons for his or her opinion, it is unlawful for the 

insurer to issue any policy or endorsement in that form." (Italics 

added.)

At the time the RPA was executed, Regulations section 2268 provided: "No 

collateral agreements modifying the obligation of either the insured or the insurer shall 

be made unless attached to and made a part of the policy . . . ." (Italics added.) In 2016, 

this Regulations section was amended to delete the reference to "collateral agreements"

and instead state: "An insurer shall not use a policy form, endorsement form, or 

ancillary agreement except those filed and approved by the Commissioner in 

accordance with these regulations." (Regs., § 2268, subd. (b), italics added.) The 

Regulations were also amended to define an "Ancillary agreement" to include a "dispute 

resolution agreement[]." (Regs., § 2250, subd. (f).)

In this case, Applied (and/or its subsidiary) filed the CIC guaranteed-cost policies 

with the Insurance Commissioner and the Workers Compensation Insurance Rating 

Bureau (Rating Bureau). These policies did not require arbitration or contain a 
23

delegation clause, and instead provided that the insured had the right to appeal CIC's 

classification and rating decisions to administrative agencies under applicable statutory 

procedures (§§ 11737, 11753.1).

Shortly after, AUCRA (another one of Applied's wholly-owned subsidiaries) 

entered into the contractually-required RPA with Nielsen that changed many of the CIC 

policy terms, and for the first time included the broad arbitration provision requiring all 

disputes to be submitted to arbitration (including the enforceability of the arbitration 

clause), and arbitration proceedings to be conducted in the British Virgin Islands before 

"disinterested" insurance executives. The Insurance Commissioner had no opportunity 

to consider or evaluate these arbitration provisions.

In Shasta Linen, the Insurance Commissioner found the RPA between Shasta 

Linen and AUCRA was a "collateral agreement" within the meaning of Regulations 

section 2268 because it modified and supplanted the terms of the CIC policies and 

therefore it should have been filed with, and approved by, the Insurance Department 

before it became effective. (Shasta Linen, at pp. 1, 46, 53, 58.) The Insurance 

Commissioner also found the failure to do so rendered the RPA void as a matter of law. 

(Id. at p. 65.) The Insurance Commissioner emphasized section 11658's mandatory 

language that an unfiled policy or endorsement " 'shall not be issued by an insurer' " and 

that "issuing an unapproved policy or endorsement 'is unlawful.' " (Shasta Linen, at p. 

65, italics added.)

The Insurance Commissioner also observed:
24

"By its own admission [Applied] designed EquityComp and the 

RPA to circumvent workers' compensation policy. It would defeat 

the statutory purpose to allow CIC to bypass the governmental

review process by simply waiting until after the insurance policy 

has gone into effect to introduce additional or modified terms to its 

insurance program. Workers' compensation insurance is 

mandatory and California employers expect the statute's protection. 

CIC knew of the review and pre-approval process and deliberately 

ignored that process with regard to the RPA. . . .

"[T]he legal requirement for modifying any workers' compensation 

insurance obligation is to endorse the agreement to the insurance 

policy. This is done by filing the agreement with the [Rating 

Bureau], which in turn will file it with the Insurance 

Commissioner, and endorse it to the insurance policy after the 

requisite time or approval. Unfiled side agreements are prohibited 

and shall not be used without complying with these requirements; 

otherwise, they are not permitted in this state and are void as a 

matter of law." (Shasta Linen, at pp. 66-67, fns. omitted.)

Although Shasta Linen pertained primarily to the validity of the entire RPA 

agreement, the Insurance Commissioner also considered the RPA's arbitration 

provisions. The Insurance Commissioner found the RPA's arbitration clause was 

"intended to supersede [the dispute resolution provisions] of the [CIC] guaranteed cost 

policy" and the arbitration clause substantially modified these CIC provisions. (Shasta 

Linen, at p. 56.) The Insurance Commissioner found that Regulations section 2268 was 

"clear on its face" that "unendorsed side agreements are prohibited" and an "arbitration 

obligation" comes within the definition of a "side agreement" that must be filed before it 

is effective. (Shasta Linen, at p. 43.)
25

B. Filing Required for RPA's Delegation Clause and Arbitration Agreement

The RPA considered in Shasta Linen was essentially identical to the RPA issued 

to Nielsen. Although we are not bound by the Shasta Linen decision (Yamaha Corp. of 

America v. State Board of Equalization (1998) 19 Cal.4th 1, 7-8), we find its analysis 

persuasive on the prohibition of unfiled "collateral" or "side-agreements." Under the 

plain language of section 11658 and Regulations section 2268, defendants were required 

to file the delegation clause and arbitration provision with the Insurance Commissioner 

because these provisions were collateral side agreements that materially modified the 

earlier approved CIC policies.4

Defendants contend the delegation clause and arbitration requirement contained 

in the RPA were not subject to the filing requirement because AUCRA is not an 

"insurer"; the RPA is not a workers' compensation policy; and the RPA did not 

"modify" the CIC issued policies. The Insurance Commissioner rejected identical 

arguments. After carefully reviewing the terms of Shasta Linen's RPA, the Insurance 

Commissioner found that "it is clear the RPA's dispute resolution . . . provisions are 

meant to replace those of [the CIC policies]" and that the "affiliated entities" (Applied, 

 

4 The 2016 amendments to Regulations sections 2268 and 2250, subdivision (f) 

specifically require ancillary agreements, including dispute resolution provisions, to be 

filed with the Insurance Commissioner. Although these amendments are not expressly 

applicable here (as the RPA was executed earlier) and there is no information showing 

the reason for the amendment, we agree with Nielsen's contention that these 

amendments appeared to be clarifications, rather than substantive changes, to the 

applicable regulations.
26

AUCRA, and CIC) were "so enmeshed" and "intertwined" that they should be 

considered together in determining whether the RPA constitutes a modification of the 

CIC policies. (Shasta Linen, at pp. 57, 49.)

The record here supports those findings. The RPA expressly pertains to 

Nielsen's workers' compensation coverage and states that it "represents the entire 

understanding . . . between the parties with respect to the subject matter hereof and 

supersedes all prior negotiations, proposals, letters of intent, correspondence and 

understandings relating to the subject matter hereof." The RPA additionally states that 

its terms apply "to all payroll, premium, and losses occurring under the Policies . . . ." 

In materials provided to Nielsen, Applied stated that its EquityComp program (that 

includes the CIC policies and the RPA agreement) "is a seamlessly integrated package 

providing nationwide workers' compensation coverage . . . ." Based on this evidence, 

we are unpersuaded by defendants' attempt to recharacterize their integrated 

EquityComp program to suggest that the statutory filing requirements should not apply.

We likewise find unhelpful defendants' argument that the added arbitration 

provision was not an "endorsement" or a "collateral" agreement under applicable law. 

(§ 11658; Regs., § 2268.) An endorsement "is an amendment to or modification of an 

existing policy of insurance" that " 'may alter or vary any term or condition of the 

policy.' " (Adams v. Explorer Ins. Co. (2003) 107 Cal.App.4th 438, 451, 450.) A 

collateral agreement is a "secondary," "accompanying," or "auxiliary" agreement. 

(Random House Dict. of the English Language (2d. Unabridged ed. 1987) p. 403, col. 
27

2.) As found by the Insurance Commissioner, the RPA's arbitration provision and 

delegation clause are endorsements and/or collateral agreements to the CIC policies 

because they relate to and materially alter the dispute resolution provisions in the earlier 

approved policy. (See American Zurich Ins. Co. v. Country Villa Service Corp. (C.D. 

Cal. 2015) 2015 WL 4163008, *5-6 (American Zurich).)

Defendants contend the RPA was not an "endorsement" because it was issued by 

AUCRA rather than CIC. Defendants rely on authority which they say describe an 

endorsement as a modification to the existing insurance contract. (See e.g. AerojetGeneral Corp. v. Transport Indem. Co. (1997) 17 Cal.4th 38, 50, fn. 4; Frontier Oil 

Corp. v. RLI Ins. Co. (2007) 153 Cal.App.4th 1436, 1463; Mission Nat'l Ins. Co. v. 

Coachella Valley Water Dist. (1989) 210 Cal.App.3d 484, 496-497.) Those decisions 

are unhelpful because the courts were not presented with an insurance arrangement 

similar to here that required the use of two policies, the second of which amends and/or 

supplants the first.

C. Arbitration Clause and Delegation Provision are Unenforceable

Having found that the arbitration and delegation provisions were prohibited 

because they were not properly filed with the Insurance Commissioner, we determine 

these provisions are unenforceable. Generally, " ' "a contract made in violation of a 

regulatory statute is void." ' " (Malek v. Blue Cross of California (2004) 121 

Cal.App.4th 44, 70; see Lewis & Queen v. N.M. Ball Sons (1957) 48 Cal.2d 141, 150; 

American Zurich, supra, 2015 WL 4163008, at p. *6.) Although there are exceptions to 
28

this rule if the unenforceability would result in unjust enrichment, forfeiture, or other 

form of unfair outcome (see Malek, at pp. 70-71), none of these factual circumstances 

are present here.

Section 11658, subdivision (b) expressly states it is "unlawful" for an insurer to 

issue any policy or endorsement or form that is not approved by the Insurance 

Commissioner, and the regulations implementing this law made clear that collateral 

agreements must be filed to be effective. (See Regs., § 2268.) These prohibitions 

would have no meaning if the insurer could enforce contracts despite having violated 

the disclosure and approval requirements. Allowing the insurer to make material 

modifications to the filed and approved dispute resolution mechanism without the 

knowledge of the Rating Bureau or the Insurance Commissioner would effectively 

remove any regulatory oversight of this process.

In California, workers' compensation insurance (or an adequate substitute) is 

mandatory, and the Insurance Commissioner is charged with closely scrutinizing 

insurance plans to protect both workers and their employers. (See American Zurich,

supra, 2015 WL 4173009, at p. *17.) To accomplish this objective, the Legislature 

mandated that the Commissioner have full access to insurance information through 

mandatory filing requirements. (Regs., § 2268.) It follows that a violation of these 

requirements prevents crucial regulatory oversight and thus renders the unfiled 

agreement unlawful and void as a matter of law.
29

Defendants contend the arbitration provisions were not void and unenforceable 

because section 11658 and Regulations section 2268 do not specifically provide for this 

remedy, citing Gonzales v. Concord Gardens Mobile Home Park, Ltd. (1979) 90 

Cal.App.3d 871.) In Gonzales, a building contractor violated a statute requiring the 

contractor to give a notice describing lien laws to a client (a homeowners' association) 

before starting work. (Id. at pp. 873-874.) When the contractor sued the homeowners'

association for payment, the association argued the contractor had forfeited his rights to 

compensation by failing to provide this notice. (Ibid.) The court disagreed, 

emphasizing that the association's argument would impose "a forfeiture upon the 

contractor," which is disfavored. (Id. at p. 873.) The court also noted that because the 

statute did not include a penalty for noncompliance, and another provision in the 

contractor's license law expressly required a forfeiture (for working without a license), 

the maxim of " 'expressio unius est exclusio alterius' " applied to support a conclusion 

that no forfeiture was required for the violation of the lien law notice. (Id. at p. 874.)

This case is distinguishable. First, by not enforcing the unfiled delegation and 

arbitration provisions, there is no forfeiture. The parties will still have their day in 

court, and all parties will have the opportunity to present evidence, arguments, and 

defenses. Second, unlike the statutory notice requirement at issue in Gonzales, the 

statutes here specifically provide that an agreement that has not been appropriately filed 

is "unlawful." (§ 11658, subd. (b).)
30

Relying on section 11658.5, defendants contend the Legislature specifically 

rejected the rule that an unfiled arbitration or delegation clause is void as a matter of 

law. Section 11658.5 states in relevant part:

"(a)(1) An insurer that intends to use a dispute resolution or 

arbitration agreement to resolve disputes arising in California out 

of a workers' compensation insurance policy or endorsement issued 

to a California employer shall disclose to the employer, 

contemporaneously with any written quote that offers to provide 

insurance coverage, that choice of law and choice of venue or 

forum may be a jurisdiction other than California and that these 

terms are negotiable between the insurer and the employer. The 

disclosure shall be signed by the employer as evidence of receipt 

where the employer accepts the offer of coverage from that insurer.

"(2) After compliance with paragraph (1), a dispute resolution or 

arbitration agreement may be negotiated by the insurer and the 

employer before any dispute arises.

"(b) Nothing in this section is intended to interfere with any 

authority granted to the Insurance Commissioner under current law.

"(c) Failure by the insurer to observe the requirements of 

subdivision (a) shall result in a default to California as the choice 

of law and forum for resolution of disputes arising in California."

Defendants contend this statute shows "the Legislature knows how to impose 

penalties for non-compliance with statutory requirements, and could have included a 

provision rendering all unfiled arbitration agreements void if that were the Legislature's 

intention. Because it did not do so, this penalty may not be inferred."

The argument is unpersuasive. Based on the statute's plain language, it is 

apparent the Legislature enacted section 11658.5 in 2011 to address a specific issue—

the circumstances when an insurance contract designates the controlling law or the 
31

forum/venue to be a jurisdiction other than California. The Legislature did not prohibit 

these terms, but wanted to ensure employers were fully informed of the existence and 

consequences of such provisions. The statute thus requires that the insured be made 

aware of these extra-territorial provisions, be informed that they are negotiable, and sign 

a disclosure form "as evidence of" the receipt of this information. (§ 11658.5, subd. 

(a)(1).)

In the proceedings below, Nielsen did not challenge the choice-of-law or 

forum/venue provisions; it asserted that the delegation and arbitration clause are 

unenforceable because they were not filed and approved by the Insurance Department as 

required under section 11658 and Regulations section 2268. Because section 11658.5 

does not concern or address the filing requirement issue, it does not govern the remedies 

for an insurer's intentional failure to file and obtain approval of a modified dispute 

resolution provision.

Defendants rely on legislative history materials underlying section 11658.5. 

However, on the issue before us (whether the unfiled arbitration provision is 

enforceable), section 11658 and Regulations section 2268 are clear and unambiguous, 

and therefore resort to legislative history regarding a separate code section is 

inappropriate. (See Microsoft Corp. v. Franchise Tax Bd. (2006) 39 Cal.4th 750, 758.)

Moreover, on our review of the proffered committee reports and the evolution of 

the statutory language, we do not discern any clear intent to eliminate or modify the 

filing requirement for endorsements or collateral agreements as it pertains to arbitration-
32

related provisions or to limit the remedies for an unfiled arbitration agreement. The 

proposed bill that was eventually enacted as section 11658.5 changed many times and 

its final language appears to have been the result of a compromise. Because (as here) a 

bill's committee and floor analysis reports are often fragmented and unclear, "the wisest 

course is to rely on legislative history only when that history itself is unambiguous." 

(J.A. Jones Construction Co. v. Superior Court (1994) 27 Cal.App.4th 1568, 1578, fn. 

omitted.)

Under this principle, the legislative materials relating to section 11658.5 do not 

support that the Legislature was intending to create rules applicable to section 11658's 

filing requirements with respect to an arbitration agreement or a delegation clause. This 

is particularly true given the recent regulatory clarification that arbitration agreements 

must be filed and approved under section 11658 and Regulations section 2268. (See 

Regs., § 2268 (as amended 2016), § 2250, subd. (f).) Defendants do not challenge the 

validity of this amendment or suggest it is inconsistent with section 11658.5.

We also find unhelpful defendants' reliance on decisions reached by courts 

interpreting other states' insurance statutes. (See e.g. McCullough Transfer Co. v. 

Virginia Sur. Co. (6th Cir. 1954) 213 F.2d 440, 442; Ritter v. Shotwell (1964) 63 Wash. 

2d 601, 606-607 [388 P.2d 527].) These statutes are different from here, and none of 

these decisions involved the question whether an unfiled arbitration provision is 

enforceable under California law.
33

Based on our conclusion, we do not reach Nielsen's alternate argument (not 

raised below) that the FAA is reverse-preempted under the McCarran-Ferguson Act (15 

U.S.C. §§ 1011-1015.) (See Citizens of Humanity, LLC v. Applied Underwriters, Inc. 

(2017) 17 Cal.App.5th 806, 812-821; Monarch Consulting, supra, 26 N.Y.3d at pp. 

670-674.)5

DISPOSITION

Order affirmed. Appellants to bear respondents' costs on appeal.

HALLER, J.

WE CONCUR:

McCONNELL, P. J.

HUFFMAN, J.

 

5 We emphasize that in resolving the parties' contentions on the "who decides" and 

the arbitration/delegation clause enforceability issues, we base our determinations solely 

on the limited factual record presented in the motion to compel proceedings. These 

determinations do not preclude the parties from litigating the merits of Nielsen's causes 

of action and requested relief at trial based on a more complete evidentiary record.