Kevin Breazeale v. Victim Services, Inc.
878 F.3d 759
| 9th Cir. | 2017Background
- California authorizes bad-check diversion programs (Cal. Penal Code §1001.60 et seq.) allowing district attorneys to defer prosecution and to contract with private administrators; participants must pay restitution and diversion fees and may avoid prosecution while completing program requirements.
- Victim Services, Inc. (VSI), a private contractor, sent letters on district-attorney letterhead notifying individuals they had been accused of violating Cal. Penal Code §476a and could avoid prosecution by enrolling in the Bad Check Diversion Program (BCDP), paying fees, and agreeing to program terms.
- The form letter included an arbitration clause (individual, binding arbitration via AAA; class-action waiver) and permitted a 60-day opt-out; one named plaintiff (Bonakdar) enrolled and became subject to the arbitration clause.
- Plaintiffs filed a putative class action alleging VSI violated the FDCPA, California Unfair Competition Law, and common-law fraud/negligent misrepresentation, and that VSI exceeded statutory authority by operating without required prosecutor review/probable-cause determinations.
- VSI moved to strike state-law claims under California’s Anti-SLAPP statute and separately moved to compel arbitration as to Bonakdar based on the FAA; the district court denied the Anti-SLAPP motion (finding the public-interest exception applied) and denied the motion to compel arbitration (holding the FAA does not apply). VSI appealed both rulings; the Ninth Circuit heard consolidated appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether this Court has jurisdiction to hear VSI’s interlocutory appeal of the district court’s denial of VSI’s Anti‑SLAPP motion | Plaintiffs argued the case is a public‑interest action exempting it from immediate Anti‑SLAPP appealability | VSI argued Batzel permits immediate appellate review of Anti‑SLAPP denials under the collateral‑order doctrine | No jurisdiction: California’s 2003 amendment creating a public‑interest exception (Cal. Civ. Proc. Code §425.17) removed immediate appealability for such cases, so the Ninth Circuit must dismiss the Anti‑SLAPP appeal |
| Whether the Anti‑SLAPP public‑interest exception applies | Plaintiffs contended the suit seeks relief for the public/class, enforces an important public right, and private enforcement is necessary | VSI argued plaintiffs lacked a reasonable possibility of prevailing and the case targeted communications made in connection with proceedings authorized by law | District court found the public‑interest exception applied; Ninth Circuit lacked jurisdiction to review that denial on appeal |
| Whether the FAA applies to compel arbitration of Bonakdar’s claims under the diversion agreement | Plaintiffs argued the agreement is not a private commercial contract and FAA should not apply; arbitration clause therefore unenforceable under federal law | VSI argued the arbitration provision is a written agreement affecting commerce and thus enforceable under the FAA | FAA does not apply: agreements resolving potential criminal liability with entities acting on behalf of the state are not the private commercial agreements the FAA was enacted to enforce; Ninth Circuit affirmed denial to compel arbitration |
| Whether state law would compel or prohibit arbitration if FAA does not apply | Plaintiffs argued California public policy bars using criminal‑resolution pressure to force arbitration and that the agreement is contrary to public policy | VSI argued California law does not prohibit arbitration here | District court and Ninth Circuit agreed that California public policy disfavors compelling arbitration in this context; VSI did not press a contrary state‑law compulsion argument on appeal |
Key Cases Cited
- del Campo v. Kennedy, 491 F. Supp. 2d 891 (N.D. Cal.) (context on prosecution overload prompting diversion programs)
- Batzel v. Smith, 333 F.3d 1018 (9th Cir. 2003) (prior Ninth Circuit collateral‑order jurisdiction ruling on Anti‑SLAPP appeals)
- Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (2009) (describes collateral‑order doctrine limits)
- Will v. Hallock, 546 U.S. 345 (2006) (requirements for collateral‑order jurisdiction)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA enforces privately negotiated arbitration agreements)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) (legislative history: FAA meant to enforce private arbitration agreements)
- Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989) (FAA requires enforcement of privately negotiated arbitration agreements)
- United States v. Barron, 172 F.3d 1153 (9th Cir. 1999) (plea bargains are instruments for enforcing criminal law, not commercial exchanges)
- Partida‑Parra, 859 F.2d 629 (9th Cir. 1988) (contract analogy to plea agreements is imperfect; criminal‑law safeguards govern)
- Neal v. LaRiva, 765 F.3d 788 (7th Cir. 2014) (FAA governs maritime and interstate‑commerce contracts; refused to apply FAA where contract did not involve commerce)