Brice v. Plain Green, LLC, No. 19-15707 (9th Cir. 2021)Annotate this Case
Plaintiffs obtained short-term, high-interest loans from lenders owned by the Tribes. The standard loan contracts contained an agreement to arbitrate any dispute arising under the contract and a delegation provision requiring an arbitrator—not a court—to decide “any issue concerning the validity, enforceability, or scope of [the loan] agreement or [arbitration agreement].” The contracts stated that they were governed by tribal law and that an arbitrator must apply tribal law. Plaintiffs filed class-action RICO complaints against the Tribal Lenders. The district court denied the defendants’ motion to compel arbitration, reasoning that the arbitration agreement as a whole in each contract was unenforceable because it prospectively waived plaintiffs’ right to pursue federal statutory claims by requiring arbitrators to apply tribal law.
The Ninth Circuit reversed. Rather than asking first whether the arbitration agreement was enforceable as a whole, the court must consider first the enforceability of the delegation provision specifically. The delegation provision was enforceable because it did not preclude plaintiffs from arguing to an arbitrator that the arbitration agreement was unenforceable under the prospective-waiver doctrine. The general enforceability issue must, therefore, be decided by an arbitrator. The choice-of-law provisions were not to the contrary because they did not prevent plaintiffs from pursuing their prospective-waiver enforcement challenge in arbitration.