DIRECTV, INC. v. IMBURGIA ET AL. Supreme Court Decision
First, we do not believe that the relevant contract language is ambiguous. The contract says that “[i]f . . . the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 [the arbitration section] is unenforceable.” App. 129. Absent any indication in the contract that this language is meant to refer to invalid state law, it presumably takes its ordinary meaning: valid state law. Indeed, neither the parties nor the dissent refer us to any contract case from California or from any other State that interprets similar language to refer to state laws authoritatively held to be invalid. While we recognize that the dissent believes this phrase to be “ambiguous,” post, at 7, 9, or “anomalous,” post, at 10, we cannot agree with that characterization. Second, California case law itself clarifies any doubt about how to interpret the language. The California Supreme Court has held that under “general contract principles,” references to California law incorporate the California Legislature’s power to change the law retroactively. See Doe v. Harris, 57 Cal. 4th 64, 69–70, 302 P. 3d 598, 601–602 (2013) (holding that plea agreements, which 8 DIRECTV, INC. v. IMBURGIA Opinion of the Court are governed by general contract principles, are “‘“deemed to incorporate and contemplate not only the existing law but the reserve power of the state to amend the law or enact additional laws”’” (quoting People v. Gipson, 117 Cal. App. 4th 1065, 1070, 12 Cal. Rptr. 3d 478, 481 (2004))). And judicial construction of a statute ordinarily applies retroactively. Rivers v. Roadway Express, Inc., 511 U. S. 298, 312–313 (1994). As far as we are aware, the principle of California law announced in Harris, not the Court of Appeal’s decision here, would ordinarily govern the scope of phrases such as “law of your state.” Third, nothing in the Court of Appeal’s reasoning suggests that a California court would reach the same interpretation of “law of your state” in any context other than arbitration. The Court of Appeal did not explain why parties might generally intend the words “law of your state” to encompass “invalid law of your state.” To the contrary, the contract refers to “state law” that makes the waiver of class arbitration “unenforceable,” while an invalid state law would not make a contractual provision unenforceable. Assuming—as we must—that the court’s reasoning is a correct statement as to the meaning of “law of your state” in this arbitration provision, we can find nothing in that opinion (nor in any other California case) suggesting that California would generally interpret words such as “law of your state” to include state laws held invalid because they conflict with, say, federal labor statutes, federal pension statutes, federal antidiscrimination laws, the Equal Protection Clause, or the like. Even given our assumption that the Court of Appeal’s conclusion is correct, its conclusion appears to reflect the subject matter at issue here (arbitration), rather than a general principle that would apply to contracts using similar language but involving state statutes invalidated by other federal law. Fourth, the language used by the Court of Appeal fo- Cite as: 577 U. S. ____ (2015) 9 Opinion of the Court cused only on arbitration. The court asked whether “law of your state” “mean[s] ‘the law of your state to the extent it is not preempted by the [Federal Arbitration Act],’ or ‘the law of your state without considering the preemptive effect, if any of the [Federal Arbitration Act].’” 225 Cal. App. 4th, at 344, 170 Cal. Rptr. 3d, at 195. Framing the question in such terms, rather than in generally applicable terms, suggests that the Court of Appeal could well have meant that its holding was limited to the specific subject matter of this contract—arbitration. Fifth, the Court of Appeal reasoned that invalid state arbitration law, namely the Discover Bank rule, maintained legal force despite this Court’s holding in Concepcion. The court stated that “[i]f we apply state law alone . . . to the class action waiver, then the waiver is unenforceable.” 225 Cal. App. 4th, at 344, 170 Cal. Rptr. 3d, at 195. And at the end of its opinion it reiterated that “[t]he class action waiver is unenforceable under California law, so the entire arbitration agreement is unenforceable.” Id., at 347, 170 Cal. Rptr. 3d, at 198. But those statements do not describe California law. See Concepcion, 563 U. S., at 344, 352; Sanchez, 61 Cal. 4th, at 923–924, 353 P. 3d, at 757. The view that state law retains independent force even after it has been authoritatively invalidated by this Court is one courts are unlikely to accept as a general matter and to apply in other contexts. Sixth, there is no other principle invoked by the Court of Appeal that suggests that California courts would reach the same interpretation of the words “law of your state” in other contexts. The court said that the phrase “law of your state” constitutes “‘a specific exception’” to the agreement’s “‘general adoption of the [Federal Arbitration Act].’” 225 Cal. App. 4th, at 344, 170 Cal. Rptr. 3d, at 195. But that tells us nothing about how to interpret the words “law of your state” elsewhere. It does not answer the relevant question: whether those words encompass laws 10 DIRECTV, INC. v. IMBURGIA Opinion of the Court that have been authoritatively held invalid. Cf. Prouty, 121 Cal. App. 4th, at 1235, 18 Cal. Rptr. 3d, at 185–186 (specific words govern only “when a general and a particular provision are inconsistent”). The court added that it would interpret “‘ambiguous language against the interest of the party that drafted it,’” namely DIRECTV. 225 Cal. App. 4th, at 345, 170 Cal. Rptr. 3d, at 196 (quoting Mastrobuono, 514 U. S., at 62). The dissent adopts a similar argument. See post, at 7–9. But, as we have pointed out, supra, at 8, were the phrase “law of your state” ambiguous, surely some court would have construed that term to incorporate state laws invalidated by, for example, federal labor law, federal pension law, or federal civil rights law. Yet, we have found no such case. Moreover, the reach of the canon construing contract language against the drafter must have limits, no matter who the drafter was. The fact that we can find no similar case interpreting the words “law of your state” to include invalid state laws indicates, at the least, that the antidrafter canon would not lead California courts to reach a similar conclusion in similar cases that do not involve arbitration. * * * Taking these considerations together, we reach a conclusion that, in our view, falls well within the confines of (and goes no further than) present well-established law. California’s interpretation of the phrase “law of your state” does not place arbitration contracts “on equal footing with all other contracts,” Buckeye Check Cashing, Inc., 546 U. S., at 443. For that reason, it does not give “due regard . . . to the federal policy favoring arbitration.” Volt Information Sciences, 489 U. S., at 476. Thus, the Court of Appeal’s interpretation is pre-empted by the Federal Arbitration Act. See Perry v. Thomas, 482 U. S. 483, 493, n. 9 (1987) (noting that the Federal Arbitration Act pre- Cite as: 577 U. S. ____ (2015) 11 Opinion of the Court empts decisions that take their “meaning precisely from the fact that a contract to arbitrate is at issue”). Hence, the California Court of Appeal must “enforc[e]” the arbitration agreement. 9 U. S. C. §2. The judgment of the California Court of Appeal is reversed, and the case is remanded for further proceedings not inconsistent with this opinion. It is so ordered.
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