## Facts

- Sharon McGill opened a Citibank credit-card account and enrolled in a “Credit Protector” plan that promised certain account credits or deferrals upon specified events, for a monthly premium based on the account balance.
- After account opening, Citibank added a binding arbitration provision allowing either party to elect arbitration for disputes.
- The provision required individual arbitration and barred class, representative, and private-attorney-general proceedings; it also barred the arbitrator from awarding relief for nonparties.
- In 2011, after a dispute over plan benefits following McGill’s job loss, McGill sued Citibank under the CLRA, UCL, and FAL, seeking damages and public injunctive relief aimed at preventing future harm to the public.
- Citibank moved to compel individual arbitration and to enforce the provision as barring public injunctive relief in any forum.
- The trial court compelled arbitration of non-injunctive claims but kept the requests for public injunctive relief in court; the Court of Appeal held the FAA required enforcement of the arbitration provision as written.
- The California Supreme Court granted review to decide the enforceability of a waiver of public injunctive relief “in any forum” and whether the FAA preempts a state-law invalidation rule.

## Issues

1. Whether a predispute arbitration agreement term that waives the right to seek public injunctive relief in any forum under the CLRA, UCL, or FAL is enforceable under California law.
2. If such a waiver is invalid under California law, whether the FAA preempts that rule and requires enforcement of the waiver.

## Decision

- The court held that a term waiving the right to seek public injunctive relief in any forum under the CLRA, UCL, or FAL is contrary to California public policy and unenforceable.
- The court held the FAA does not preempt this California rule because it is a generally applicable contract principle and does not target arbitration.
- The court reversed the Court of Appeal and remanded for further proceedings consistent with the holding that the public-injunctive-relief waiver is invalid and unenforceable.

## Legal Principles

- Public injunctive relief under the CLRA, UCL, and FAL is forward-looking injunctive relief whose primary purpose and effect is to stop unlawful practices that threaten future injury to the general public.
- A contract may not eliminate a substantive statutory remedy by waiving the right to seek public injunctive relief “in any forum”; such a waiver is unenforceable under California law.
- The invalidity arises from remedy elimination, not from selecting arbitration as a forum; a clause may channel claims to arbitration but may not extinguish the statutory right to pursue public injunctive relief.
- The FAA does not preempt a generally applicable rule that bars waivers of public injunctive relief in any forum, where the rule applies to contracts whether or not they involve arbitration and does not require procedures inconsistent with arbitration (such as class arbitration).

## Conclusion

The California Supreme Court held that predispute agreement terms barring a party from seeking public injunctive relief anywhere under the CLRA, UCL, or FAL are unenforceable as against public policy, and that the FAA does not require enforcement of such waivers.


McGill v. Citibank, N.A., 393 P.3d 85 (Cal. 2017)