Jose Calderon, fluent in Spanish but with basic English only, was employed by Western Bagel Company (Western) at one of its retail stores. Calderon commenced a class action against Western for failing to provide employees with legally compliant meal and rest breaks. Western moved to compel arbitration, arguing that Calderon executed an agreement requiring all disputes arising out of his employment to be resolved by binding arbitration. The severability clause in the Spanish version of the arbitration agreement Calderon signed indicated the parties agreed to nonbinding arbitration, whereas the severability clause in the original English version indicated that parties consented to binding arbitration. Except for this discrepancy which Western attributed to a typographical error in translation, other provisions in both versions were nearly identical and strongly indicated the parties had agreed to binding arbitration.
Specifically, the agreement between the parties was titled “Mutual Agreement to Arbitrate Claims” (MAAC). Paragraph 1 of the Spanish MAAC provided in pertinent part:
To the maximum extent permitted by law, [Western Bagel] and I mutually agree to resolution through binding arbitration for all claims or causes of action . . . that [Western Bagel] may bring against me or that I may bring against [Western Bagel] . . . .
However, the severability provision in paragraph 10 of the Spanish MAAC stated in relevant part:
If any provision of this Agreement, apart from paragraph 4 is found to be unenforceable, whether in whole or in part, this finding will not affect the validity of the rest of this Agreement and the Agreement will be carried out to the fullest possible extent to ensure that the resolution of all disputes between the parties as described herein are resolved via neutral, non-binding arbitration. (Italics added.)
The English version is substantially the same differing only in that the severability provision refers to binding arbitration. Other provisions in both languages mention resolving differences through binding arbitration (MAAC Introductory Paragraph) (MAAC Par. 7 (c) “. . . arbitrators decisions…will be final and binding . . .”)(waivers of jury trial MAAC par 3). Additionally, the Spanish MAAC contained a disclaimer section stating that the Spanish translation is for informational purposes only and “any ambiguity or issue of interpretation will be resolved solely by the English version of this document.”
The trial court applied the Federal Arbitration Act (FAA), found ambiguity in the inconsistency, resolved it against Western based on contra proferentem, and ordered the parties to arbitration on a nonbinding basis. The appellate court reversed, holding that the FAA’s strong policy favoring binding arbitration trumped the trial court’s use of the contra proferentem rule of construction:
[The FAA] “provides that a contractual arbitration provision ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract[,]’” [and it also] “declare[s] a national policy favoring arbitration” of claims that parties contract to settle in that manner. “The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties. . . . The FAA precludes states from ‘requir[ing] a procedure that interferes with fundamental attributes of arbitration, even if it is desirable for unrelated reasons,’” citing Lamps Plus, Inc. v. Varela (2019) 139 S.Ct. 1407.
The appellate court held that “Contra proferentem ‘interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.’” Accordingly, it directed the trial court to send the parties to binding arbitration.
