Court Opinion

ID: 9487648
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:23:02.01575+00
Date Added: 2024-06-11T17:52:24.736608
License: Public Domain

FERNANDEZ, Circuit Judge,
dissenting:
I agree with the majority that arbitration of PMPA disputes is appropriate. Where we part company is at the point where the majority decides to strike down the arbitration provision in its entirety because that provision purports to remove some remedies that would otherwise be available under the PMPA.
Graham suggests the court should evince a hostility to arbitration in eases of this type. The majority does not exactly acquiesce, but it does suggest that Graham should not be bound to arbitration at all. Why? The only reason, subliminal as it is, may be that arbitration is such a bad thing for companies like Graham that a few limitations of statutory rights (entirely satellite1 to any dispute) will taint the whole.
In the past that kind of argument has not carried the day. Neither the Supreme Court nor this court has accepted a negative view of arbitration. See, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 22-23, 111 S.Ct. 1647, 1651-56, 114 L.Ed.2d 26 (1991); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226-27, 107 S.Ct. 2332, 2337-38, 96 L.Ed.2d 185 (1987); Mago v. Shearson Lehman Hutton, Inc., 956 F.2d 932, 934-35 (9th Cir.1992); Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282, 286-87 (9th Cir.1988). When it adopted the broad language of the Federal Arbitration Act, Congress also rejected a negative view of arbitration proceedings. See 9 U.S.C. §§ 1-16. I do not think we should adopt a negative view at this time.
I will assume, without deciding, that the arbitration provision’s removal of attorneys fees and punitive damages and its changing of the date to bring a claim are all provisions which, as a matter of law, cannot be agreed to by these contracting parties. I will also assume that those questions should not be submitted to the arbitrator in the first instance, although I find that question to be a knotty one indeed. Even given those assumptions, I disagree with the conclusion that the arbitration provision should be stricken in its entirety.
Although we must descry the intent of the parties, I do not agree that we should determine that public policy considerations must lead to a conclusion that Graham (or Congress) would not have wanted arbitration in this case. Rather, we should ask if the improper requirements so permeate the arbitration provision that the whole of it must be stricken. See, e.g., Sheet Metal Workers’ Int’l Ass’n, Local 206 v. R. K. Burner Sheet Metal, Inc., 859 F.2d 758, 761 (9th Cir.1988); National Labor Relations Board v. Southern California Pipe Trades Counsel No. 16, 449 F.2d 668, 672-73 (9th Cir.1971); Plumbers and Steamfitters Union v. Dillion, 255 F.2d *1251820, 823 (9th Cir.1958). That is a much more appropriate index of the intent of the parties, or either of them, than some assumption about what one of the parties might or might not have obtained in some Panglossian world. Who knows what should be assemed in this would? I, for one, think that an assumption that there would have been no arbitration provision at all is unfounded. Reliance upon public policy to say that there should not be one is similarly unfounded.
Here the contract itself does not provide the specific severance clause that we find in many commercial contracts.2 Nevertheless, as I see it, the arbitration provision can and does stand up quite well without the offending provisions and would have been acceptable to both parties in that form. I have not the slightest doubt that to the extent arbitration is desirable it would have been just as desirable without those provisions. They are not a sine qua non of arbitral attractiveness and are not intertwined with the arbitration provision. If arbitration is a beauty, it is no less a one because it has lost a slipper. That indicates that arbitration should be required in this case.
Nor do I believe that this blinks at reality. Had the arbitration provision been offered without the offending provisions, Graham would surely have accepted it in that more favorable form. It would have been less favorable to ARCO, but that company would undoubtedly have still offered the provision, even without that which it could not have.
In fine, the parties agreed upon arbitration. Some of the terms they agreed to may not be possible. However, on the whole, arbitration is possible, and the real point of this litigation — should ARCO pay damages for breaching the agreement by mispricing its products — can and should be submitted to the arbitrators, as agreed. Thus, I do not agree that we should elide the arbitration provision and bring the whole of this contractual dispute into the federal courts based upon an idea that a picaresque oil company wronged its franchisee when it asked for arbitration of disputes between them. Arbitration is a favored procedure, and we should favor it here.
Therefore, I respectfully dissent.
ORDER
March 13, 1995
The opinion in this case filed December 16, 1994 shall be amended by deleting Section III.B, which begins on. page 15519 and ends on page 15521, and replacing it with the following:
In addition, the dissent, which begins on page 15524 and ends on page 15526, shall be deleted and replaced with the following:

. By "satellite" I mean that neither exemplary damages, attorney fees, nor statutes of limitations have anything to do with the arbitrable question — -was or was not there a breach of the agreement?

. The contract does have a rather ill-written paragraph that might be described as a severance clause. That paragraph provides that “[i]f the Agreement, or any procedure ... shall at any time be in conflict with any legal requirements ... then the Agreement shall immediately become inoperative and ineffective with respect thereto.” It then goes on to provide that should that event occur either party may terminate the agreement in its entirety. Para. 20. Whatever one is to think about that paragraph, I would feel somewhat disingenuous were I to assert that it resolved the issue in this case. I shall not do so.