2015 has been a dry spell in arbitration decisions from the U.S. Supreme Court, but 2016 promises to be much more interesting. In addition to the California case being heard next week, SCOTUS just granted certiorari in another California-based arbitration decision. This one, MHN Government Services, Inc. v. Zaborowski, will review an unpublished 2-1 decision of the Ninth Circuit that affirmed a district court’s refusal to compel arbitration. The beautifully succinct question presented is “whether California’s arbitration-only severability rule is preempted by the FAA.”

In Zaborowski, counselors who provide services to members of the military alleged that MHN improperly classified them as independent contractors instead of employees, thereby violating federal and state labor laws. (The district court opinion is at 936 F. Supp. 2d 1145.) The relevant agreement had an arbitration clause which the counselors argued was unconscionable under California law. The court summarized the provisions that the plaintiffs objected to as including: “MHN shall choose three arbitrators, and the [counselor] shall choose one amongst them; each party may depose one individual and any opposing expert witness; arbitration must be initiated within six months of the claim’s occurrence; the arbitrator may not modify or refuse to enforce any agreements; the parties may not be awarded punitive damages; and the prevailing party or substantially prevailing party’s costs are borne by the other party.” 963 F. Supp. 2d at 1150. The district court found procedural unconscionability and determined that many of the provisions raised by plaintiffs were substantively unconscionable.

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