Stay up to date on everything mediation!

Subscribe to our free newsletter,
"This Week in Mediation"

Sign Up Now

Already subscribed No subscription today
Mediate.com

Arbitration of Criminal Plea Bargains? A Step Too Far Says Ninth Circuit

by F. Peter Phillips
January 2018

Business Conflict Blog by Peter Phillips

F. Peter  Phillips

Thanks to Loyola Prof. Imre Szalai for bringing to our attention the interesting Ninth Circuit decision in Breazeale v. Victim Services, Inc., holding that disputes between a putative criminal defendant and a private company contracted by a prosecutor pursuant to a criminal diversion process are not subject to arbitration.

Victim Services Inc. (VSI), a Delaware corporation, is contracted by the offices of various California District Attorneys to resolve suspected violations of California’s Bad Check Statute, which criminalizes the writing of bad checks with an intent to defraud.  The putative violator is contacted by mail on District Attorney stationery and offered the opportunity to avoid criminal prosecution by entering into a program of restitution and fees that is administered by VSI.  The letter also provides that any dispute between the violator and the program administrator VSI would be subject to arbitration pursuant to AAA rules.  That “agreement” (really, an announcement) also provides that “no arbitrator or court can permit or certify a class action, representative action, private attorney-general action or consolidated arbitration in connection with [the] arbitration agreement.”

Plaintiffs brought this action in federal district court,  alleging “that VSI’s use of official district attorney letterhead conveys the false impression the letters were sent by law enforcement, that the letters contained the false threat that failure to pay would result in arrest or imprisonment, and that the initial form letter failed to contain statutorily required notices, all in violation of” state law.  VSI moved to compel arbitration.  The district court denied the motion and the Ninth Circuit affirmed the denial, on the ground that the putative arbitration provision of the letter was not a “contract evidencing a transaction involving commerce” within the meaning of the Federal Arbitration Act.

The holding: An agreement between an individual and a state prosecutor addressing criminal liability is not a private commercial contract and therefore not arbitrable pursuant to the FAA.  “A plea bargain is not a commercial exchange.”

It will be interesting to see the convoluted logic that the Supreme Court will employ if and when this question is before them and, consistent with its ever-broadening interpretation of arbitration law, the Ninth Circuit is reversed.

Biography


F. Peter Phillips is a commercial arbitrator and mediator with substantial experience providing consultation on the management of business disputes to companies around the globe.

A cum laude graduate of Dartmouth College and a magna cum laude graduate of New York Law School, Mr. Phillips served for nearly ten years as Senior Vice President of the International Institute for Conflict Prevention and Resolution (CPR Institute). During that time, he earned a reputation as an author, teacher, industry liaison, and systems designer for the avoidance, management and resolution of complex and sophisticated business conflicts.

In 2008, Mr. Phillips formed Business Conflict Management LLC (BCM) in order to offer his direct services as a neutral and a consultant. Through BCM, Mr. Phillips also continues his career as a highly sought-after public speaker, facilitator and instructor.



Email Author
Author Website

Additional articles by F. Peter Phillips

Comments