Ferguson v. Corinthian Colleges, Inc.

Case Updates

The Ninth Circuit panel held that the Federal Arbitration Act preempts the Broughton-Cruz rule, affirming the enforceability of certain types of arbitration agreements.

The U.S. Chamber urged the Ninth Circuit Court of Appeals to reverse a district court decision, which upheld a state public policy exception to the Federal Arbitration Act (FAA). The Chamber argued in its amicus brief that the FAA preempts California's Broughton-Cruz Rule, which holds that public injunctions are non-arbitrable as a matter of state policy. The Chamber argued that the Broughton-Cruz rule conflicts with, and is therefore preempted by, the FAA on two separate grounds, each of which independently precludes enforcement of that rule. First, the FAA flatly forbids States to prohibit arbitration of any particular type of claim. Second, the Boughton-Cruz rule impedes the accomplishment of the two fundamental purposes of the FAA: ensuring enforcement of arbitration agreements according to their terms, and fostering the benefits of simplicity, informality, and expedition that flow from use of the arbitral process.