CABLE CONNECTION, INC. v. DIRECTV, INC.

Filed 9/22/06

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from an order of the Superior Court of Los Angeles County, Judith C. Chirlin, Judge. Reversed.

Beatie and Osborn and Daniel A. Osborn for Plaintiffs and Appellants.

Reed & Smith and Andrew E. Paris; Kirkland & Ellis, Michael E. Baumann and Becca Wahlquist for Defendant and Respondent.

introduction

Plaintiffs and appellants Cable Connection, Inc., TV Options, Inc., Swartzel Electric, and Orbital Satellite, Inc., appeal from the trial court’s order in favor of defendant and respondent DIRECTV, Inc., vacating an arbitration award by which the majority of arbitrators determined that the parties’ arbitration agreement, though silent on the issue, nonetheless permitted classwide arbitration. (Code Civ. Proc., § 1286.2.) The trial court vacated the arbitration award on the grounds that the arbitrators exceeded their authority by writing terms into the parties’ agreement; the arbitrators refused to hear material evidence of intent offered by DIRECTV; and the arbitrators exceeded their powers by making errors of law and erroneously relying on California procedural law, even though the arbitration agreement specifically withheld from the arbitrators the power to make errors of law, and provided that errors of law were subject to judicial review.

We conclude that the provision in the arbitration agreement purporting to provide for judicial review of errors of law is void and unenforceable, and must be severed from the agreement. Accordingly, the trial court exceeded its authority when it reviewed the merits of the controversy. We further conclude that the arbitrators did not violate any express provisions of the parties’ agreement, and did not refuse to hear material evidence. We shall therefore reverse the order vacating the arbitration award, and shall direct the trial court to enter a new order confirming the award.

factual and procedural background

Appellants (hereafter, “the dealers”) are current and former DIRECTV dealers who sold and installed DIRECTV services and products. In 1996, the dealers were required to enter into DIRECTV’s “residential dealer agreement.” In 1998, the dealers were required to sign a new contract, the “sales agency agreement.”

Both the residential dealer agreement and the sales agency agreement contain a provision requiring arbitration of disputes arising out of the agreement. Both contracts are silent, however, on the issues of class action lawsuits and classwide arbitration.[1]

The arbitration provision in the sales agency agreement, which is set forth in section 18.12 of the contract, states as follows: “(a) Any dispute or claim arising out of the interpretation, performance, or breach of this Agreement, including without limitation claims alleging fraud in the inducement, shall be resolved only by binding arbitration, at the request of either party, in accordance with the rules of the American Arbitration Association, modified as herein provided. . . . The arbitrators shall apply California substantive law to the proceeding, except to the extent Federal substantive law would apply to any claim. . . . The arbitrators shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error. The decision of the arbitrators may be entered and enforced as a final judgment in any court of competent jurisdiction. The parties shall share equally the arbitrator’s fees and other costs of the arbitration.” (Italics added.)

Section 18.12, subsection (c), provides: “This Section and any arbitration conducted hereunder shall be governed by the United States Arbitration Act (9 U.S.C. Section 1, et seq.). The parties acknowledge that the transactions contemplated by this Agreement involve commerce, as defined in said Act. This Section 18.12 shall survive the termination or expiration of this Agreement.”

Appellants initially brought suit in Oklahoma state court, seeking to litigate claims on behalf of a nationwide class. The Oklahoma court apparently directed the dealers to file a demand for arbitration in California state court.

On March 11, 2004, the dealers filed a statement of claim and demand for class arbitration with the American Arbitration Association (AAA). The class is defined as DIRECTV dealers who sold, installed, repaired, or maintained home satellite service for DIRECTV from 1996 until the present. The dealers claimed that DIRECTV unilaterally reduced commissions and assessed “chargebacks,” in breach of the parties’ agreements. The dealers state claims for breach of contract, unfair business practices, breach of fiduciary duty, violation of California antitrust law, and conversion of commission payments.

DIRECTV served its answer and counterclaim on April 12, 2004.

In keeping with AAA rules, the arbitrators first addressed the issue whether the parties’ agreement to arbitrate permits or prohibits classwide arbitration. Those rules provide: “Upon appointment, the arbitrator shall determine as a threshold matter, in a reasoned, partial final award on the construction of the arbitration agreement, whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class (the ‘Clause Construction Award’). The arbitrator shall stay all proceedings following the issuance of the Clause Construction Award for a period of at least 30 days to permit any party to move a court of competent jurisdiction to confirm or to vacate the Clause Construction Award. . . . If any party informs the arbitrator within the period provided that it has sought judicial review, the arbitrator may stay further proceedings, or some part of them, until the arbitrator is informed of the ruling of the court.”

A preliminary conference was held in November 2004, and thereafter the parties submitted briefing on the issue of class arbitration. Oral argument was held in January 2005.

In March 2005, the three-member arbitration panel issued its “first amended clause construction award.” Two of the three arbitrators agreed that the arbitration clause was silent regarding the right to bring a class action. Recognizing that the arbitration agreement provided that California substantive law is to be applied, the majority construed the agreement as permitting class arbitration, pursuant to Blue Cross of California v. Superior Court (1998) 67 Cal.App.4th 42 (Blue Cross), and Keating v. Superior Court (1982) 31 Cal.3d 584 (Keating), reversed on other grounds in Southland Corp. v. Keating (1984) 465 U.S. 1, 11.[2] The majority made clear that they were “not yet requiring class arbitration and [we’re] not certifying a class. We are simply saying that the clause in question does not forbid class arbitration and therefore find it is permitted.”[3]

The third arbitrator dissented, finding that “[t]here is ample indication in the parties’ Agreement that they intended their disputes to be resolved by arbitration between them separately and individually, and not in a class-wide arbitration.” The dissenting arbitrator further opined that the jurisprudence established in the Keating and Blue Cross cases permitting classwide arbitration was inapplicable “as a procedural rule” in a case that is to be governed by the Federal Arbitration Act.

DIRECTV then filed in the trial court a petition to vacate the award. The parties submitted briefs, and oral argument was held in June 2005. After the California Supreme Court issued its decision in Discover Bank v. Superior Court (2005) 36 Cal.4th 148, the trial court sought additional briefing from the parties and held another oral argument.

The bases upon which DIRECTV sought vacatur were that (1) by writing terms into the parties’ silent agreements, the arbitrators exceeded their authority; (2) the arbitrators refused to hear material evidence of intent offered by DIRECTV; and (3) because the arbitration agreement specifically withheld from the arbitrators the power to make errors of law, the arbitrators exceeded their contractually-limited authority by making errors of law and legal reasoning.

On November 11, 2005, the trial court vacated the award, finding that the arbitrators exceeded their powers by rewriting the parties’ agreements to allow for classwide arbitration, by applying Keating, supra, 31 Cal.3d 584 and Blue Cross, supra, 67 Cal.App.4th 42 (finding them to be inapplicable because they establish procedural and not substantive law), and committed reversible error by failing to admit extrinsic evidence offered by DIRECTV.

This timely appeal followed.

discussion

This appeal is taken from the trial court’s order vacating the arbitrators’ partial final award establishing that the parties’ arbitration agreement permits classwide arbitration.[4] (Code Civ. Proc., § 1285 [party may petition court to confirm, correct or vacate arbitration award];[5] § 1294, subd. (c) [aggrieved party may appeal from order vacating an award].) The parties do not dispute that it was proper for the arbitrators to decide, in the first instance, whether classwide arbitration is permitted under their agreement. Rather, DIRECTV contends that the arbitrators wrongly decided that classwide arbitration is to be permitted even though they found the agreement to be silent on the issue and that, accordingly, the trial court properly vacated the award. An arbitration award may be vacated where the trial court determines that “[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.” (§ 1286.2, subd. (a)(4).)

The dealers contend that the trial court erred in vacating the arbitrators’ award because the arbitrators did not exceed their powers, and indeed, the trial court exceeded its jurisdiction by examining whether the arbitrators made errors of law. They argue that, despite the presence of language in the arbitration agreement purporting to allow for judicial review of errors of law by the arbitrators, such review is not permissible. As we shall explain, we agree.

We recognize that the dealers did not raise this argument in the trial court, and instead responded only on the merits of DIRECTV’s legal arguments against the award. However, we decline DIRECTV’s suggestion that we consider the issue as having been forfeited because it is being raised for the first time on appeal. This court has discretion to consider a new theory on appeal which presents an issue of law based on undisputed facts. (In re Santos Y. (2001) 92 Cal.App.4th 1274, 1303, fn. 15.) Because the issue involves whether the trial court exceeded its statutory authority to review arbitration awards under the California Arbitration Act (§ 1280, et seq.), and whether by contract the parties can expand the court’s authority under the Act--questions of continuing public concern and involving important public policy--we find forfeiture to be inappropriate, and shall consider the issue. (Neumann v. Melgar (2004) 121 Cal.App.4th 152, 164.)

Judicial Review of Arbitration Awards

In determining whether an arbitrator exceeded his powers, we review the trial court’s decision de novo, while giving substantial deference to the arbitrators’ own assessment of their contractual authority. (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376.)

The parties’ contract contained standard language regarding arbitration, that “[a]ny dispute or claim arising out of the interpretation, performance, or breach of this Agreement . . . , shall be resolved only by binding arbitration, at the request of either party.” (Italics added.) As is typically the case in arbitration agreements, the parties thus indicated their intent that the arbitration award would be final.

It is by now well-established that “both because it vindicates the intentions of the parties that the award be final, and because an arbitrator is not ordinarily constrained to decide according to the rule of law, it is the general rule that, ‘The merits of the controversy between the parties are not subject to judicial review.’ [Citations.] More specifically, courts will not review the validity of the arbitrator’s reasoning. [Citations.] Further, a court may not review the sufficiency of the evidence supporting an arbitrator’s award. [Citations.]

Thus, it is the general rule that, with narrow exceptions, an arbitrator’s decision cannot be reviewed for errors of fact or law.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11 [hereafter Moncharsh].)

DIRECTV points out, however, that Moncharsh also recognized that arbitration agreements are contracts, and that parties to such contracts may vary the terms of their agreement. The Moncharsh court stated: “In cases involving private arbitration, ‘[t]he scope of arbitration is . . . a matter of agreement between the parties’ [citation], and ‘”[t]he powers of an arbitrator are limited and circumscribed by the agreement or stipulation of submission.”’ [Citations.]” (Moncharsh, supra, 3 Cal.4th at pp. 8-9.) DIRECTV contends that the trial court was not bound to follow Moncharsh’s limitations on judicial review in light of the parties’ specific arbitration contract which required the arbitrators to follow the rule of law, and provided for judicial review of errors of law.

However, the Moncharsh court also made clear its view that the Legislature placed limits on the scope and availability of judicial review of arbitration awards, and that state courts and parties must abide by those statutory limits. Section 1280, et seq., the California Arbitration Act, “represents a comprehensive statutory scheme regulating private arbitration in this state. [Citation.]” (Moncharsh, supra, at p. 9.) The court “conclude[d] that an award reached by an arbitrator pursuant to a contractual agreement to arbitrate is not subject to judicial review except on the grounds set forth in sections 1286.2 (to vacate) and 1286.6 (for correction).” (Id. at p. 33.) The Legislature set forth various grounds for vacation and correction of arbitration awards, and “‘[a]n error of law is not one of the grounds.’ [Citation.]” (Id. at p. 14.)

The Moncharsh court further explained: “In light of the development of decisional law embracing as exclusive the statutory grounds to vacate an arbitration award, as well as the apparent intent of the Legislature to generally exclude nonstatutory grounds to vacate an award, we adhere to the . . . line of cases that limit judicial review of private arbitration awards to those cases in which there exists a statutory ground to vacate or correct the award. Those decisions permitting review of an award where an error of law appears on the face of the award causing substantial injustice have perpetuated a point of view that is inconsistent with the modern view of private arbitration and are therefore disapproved.” (Moncharsh, supra, at pp. 27-28, italics added.) In addition, the court made clear that arbitrators do not “exceed[ ] their powers” within the meaning of former section 1286.2, subdivision (d) (now subdivision (a)(4)), or section 1286.6, subdivision (b), by making errors of law in reaching their decision. “It is well settled that ‘arbitrators do not exceed their powers merely because they assign an erroneous reason for their decision.’ [Citations.] A contrary holding would permit the exception to swallow the rule of limited judicial review; a litigant could always contend the arbitrator erred and thus exceeded his powers.” (Id. at p. 28.)

The language in the arbitration agreement at issue here, that the arbitrators “shall not have the power to commit errors of law or legal reasoning,” has no effect on the availability of judicial review for errors of law. While the agreement varied in this respect from the typical arbitration agreement contemplated by the Moncharsh court, in which the arbitrators are not constrained to follow the rule of law, still the review which may be conducted by the courts is limited by statute. An argument similar to the one DIRECTV makes here was rejected in Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal.App.4th 576. The court stated: “[Appellant] argues that this case lies within exceptions to the general rule. Its most far-reaching claim is that an arbitration award predicated upon a qualified submission, by which the arbitrator is directed to apply the law as would a court, is reviewable for errors of law. [Appellant] impliedly locates this exception in [former] section 1286.2, subdivision (d) [now subdivision (a)(4)], which directs the vacation of an award when ‘the arbitrators exceeded their powers . . . .’ The argument simply put is that if the arbitrators are directed to apply the law and fail to do so they exceed their powers. The claim is not persuasive. It confuses the mode of decision with its finality.” (Pacific Gas & Electric Co. v. Superior Court, supra, 15 Cal.App.4th at p. 587, italics added, fn. omitted; abrogated on other grounds by Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at pp. 376-377. Accord Baize v. Eastridge Companies (2006) 142 Cal.App.4th 293.)

The court in Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082 agreed. “Arbitrators do not ‘exceed[ ] their powers’ within the meaning of [former] section 1286.2, subdivision (d) ‘merely by rendering an erroneous decision on a legal or factual issue, so long as the issue was within the scope of the controversy submitted to the arbitrators. “The arbitrator’s resolution of these issues is what the parties bargained for in the arbitration agreement.” (Moncharsh, supra, at p. 28.)’ (Moshonov v. Walsh (2000) 22 Cal.4th 771, 775-776, italics added.) In short, ‘[h]aving submitted the . . . issue to arbitration, [plaintiff] cannot maintain the arbitrator[ ] exceeded [his] powers, within the meaning of section 1286.6, subdivision (b), by deciding it, even if [he] decided it incorrectly.’ (Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782, 787.)” (Alexander v. Blue Cross of California, supra, 88 Cal.App.4th at p. 1089.) The Alexander court continued: “Even where an arbitration agreement requires the arbitrator to apply a particular law or body of law, ‘an arbitrator’s failure to apply such a law is not in excess of an arbitrator’s powers within the meaning of section 1286.2, subdivision (d).’ (Marsch v. Williams (1994) 23 Cal.App.4th 238, 244 [arbitrator did not exceed power by failing to apply California Corporations law even though agreement stated that California law was to control].)

A different conclusion would unduly extend the scope of judicial review of arbitration proceedings. ‘The fact that the parties restrict the arbitrator to a decision of the issues in the manner of a court of law does not mean that they expect that the decision is reviewable. The mode of decision and its reviewability are separate questions.’ (Pacific Gas & Electric Co. v. Superior Court, [supra], 15 Cal.App.4th [at p.] 589, italics added.)”[6] (Alexander v. Blue Cross of California, supra, 88 Cal.App.4th at p. 1090.)

In addition, of course, the arbitration agreement at issue here provided that “the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error [of law or legal reasoning].” Suffice it to say, however, that we are in accord with the appellate courts that have previously considered the effect of similar language and concluded that parties cannot contractually expand the jurisdiction of the trial courts to permit review of arbitration awards for legal error.

In Crowell v. Downey Community Hospital Foundation (2002) 95 Cal.App.4th 730 (hereafter Crowell), the plaintiff’s complaint sought a declaration of rights as to the enforceability of an arbitration provision explicitly requiring that the arbitrator make findings of fact and conclusions of law, that the award be supported by law and substantial evidence, and that the merits of the award be subject to court review. Specifically, the arbitration agreement stated that “‘upon the petition of any party to the arbitration, a court shall have the authority to review the transcript of the arbitration proceedings and the arbitrator’s award and shall have the authority to vacate the arbitrator’s award, in whole or in part, on the basis that the award is not supported by substantial evidence or is based upon an error of law.’” (Crowell, supra, at pp. 732-733.)

Relying on Moncharsh, supra, and its conclusion that the statutory bases for vacating and correcting arbitration awards are exclusive, the Crowell court held that the contractual language quoted above was void and unenforceable. (Crowell, supra, at pp. 735-737.) It concluded that, because the Legislature clearly set forth the trial court’s jurisdiction to review arbitration awards when it specified the grounds for vacating or correcting awards in sections 1286.2 and 1286.6, parties cannot expand that jurisdiction by contract to include a review on the merits.[7]

The Crowell court further noted, as did the court in Moncharsh, that the Legislature specifically provided in section 1296, governing public construction contract arbitration agreements, that the parties may agree to judicial review of an arbitrator’s award.[8] (Crowell, supra, at pp. 737-738; Moncharsh, supra, 3 Cal.4th at pp. 25-26.) Section 1296 also specifies that, if the parties’ agreement so provides, a court shall vacate the award if upon review the court finds the award to be unsupported by substantial evidence, or to be based on an error of law.

Regarding section 1296, the Moncharsh court observed: “By specifically providing in that provision for judicial review and correction of error, but not in section 1286.2, we may infer that the Legislature did not intend to confer traditional judicial review in private arbitration cases. ‘”’Where a statute, with reference to one subject contains a given provision, the omission of such provision from a similar statute concerning a related subject . . . is significant to show that a different intention existed.’” [Citation.]’ (People v. Drake (1977) 19 Cal.3d 749, 755.)” (Moncharsh, supra, 3 Cal.4th at p. 26, italics added. See also Crowell, supra, 95 Cal.App.4th at p. 738: [“No such review is authorized for other forms of arbitration in the Act. This suggests the legislative intent that parties cannot agree to a review on the merits. If that were not the case section 1296 would be superfluous.”].)[9]

Crowell was followed in Oakland-Alameda County Coliseum Authority v. CC Partners (2002) 101 Cal.App.4th 635 (CC Partners), in which the parties’ license agreement contained a provision purporting to allow for de novo judicial review of questions of law decided by the arbitrator.[10] The CC Partners court agreed with the holding in Crowell, “that the parties to an arbitration agreement cannot contractually expand the scope of judicial review beyond that provided by statute.” (CC Partners, supra, at p. 645, citing Crowell, supra, 95 Cal.App.4th at p. 739.)

DIRECTV further contends that because the parties specified that the Federal Arbitration Act (FAA) would govern the arbitration proceedings, we are constrained to enforce the arbitration agreement according to its terms, including the provision that allows for judicial review of legal error. DIRECTV cites the case of Volt Info. Sciences v. Leland Stanford Jr. U. (1989) 489 U.S. 468, 479 (Volt), as authority for the proposition that “the ‘primary purpose’ of the FAA is to ‘ensur[e] that private agreements to arbitrate are enforced according to their terms’ in order to ‘give effect to the contractual rights and expectations of the parties.’” However, numerous federal circuit courts have considered the precise issue whether private parties may contract for an expanded standard of judicial review of arbitral decisions under the FAA. The circuits are currently split on whether to extend the ruling in Volt to permit enforcement of such provisions.

The Ninth Circuit Court of Appeals has held that federal courts may only review an arbitrator’s decision on the grounds set forth in the FAA (which grounds are admittedly broader than those set forth in the California Arbitration Act), and that private parties have no power to alter or expand those grounds. (Kyocera Corp. v. Prudential-Bache (9th Cir. 2003) 341 F.3d 987 (en banc) (Kyocera), overruling LaPine Technology Corp. v. Kyocera Corp. (9th Cir. 1997) 130 F.3d 884 [see discussion thereof in Crowell, supra, 95 Cal.App.4th at pp. 738-739].) “[W]e conclude that Congress has explicitly prescribed a much narrower role for federal courts reviewing arbitral decisions. The [FAA] enumerates limited grounds on which a federal court may vacate, modify, or correct an arbitral award. Neither erroneous legal conclusions nor unsubstantiated factual findings justify federal court review of an arbitral award under the statute, which is unambiguous in this regard. Because the Constitution reserves to Congress the power to determine the standards by which federal courts render decisions, and because Congress has specified the exclusive standard by which federal courts may review an arbitrator’s decision, we hold that private parties may not contractually impose their own standard on the courts.” (Kyocera, supra, 341 F.3d at p. 994.)

To be continue as Part II ...

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[1] For purposes of this discussion, we refer to the sales agency agreement as the applicable contract.

[2] The majority also noted that the award was “issued pursuant to” American Arbitration Association Rule 3 of the Supplementary Rules for Class arbitration, and Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444.

[3] The majority further noted: “The determination of whether this action is maintainable as a class arbitration will be the subject of a further hearing to determine if the prerequisites to a class arbitration as set forth in rule 4 of the Association’s Supplementary Rules of Class arbitration are met.”

[4] “An arbitrator may utilize multiple, incremental, or successive award process as a means, in an appropriate case, of finally deciding all submitted issues.” (3 Oehmke, Commercial Arbitration (3d ed. 2004) § 122:1.) “An interim award can be confirmed by the court and enforced judicially, just as a final arbitral award.” (Ibid.) “As a general rule, partial or interim awards are confirmable when they resolve with finality a severable issue in arbitration according to terms of the contract.” (Id. at § 122:4.)

[5] All undesignated section references are to the Code of Civil Procedure.

[6] DIRECTV also argues that the arbitrators exceeded their powers by relying on the AAA supplementary rules for class arbitrations in rendering their decision, when those rules indicate that in construing the applicable arbitration clause, the arbitrators are not to consider the supplementary rules to be a factor in favor of or against permitting classwide arbitration. Whether the arbitrators did in fact consider the supplementary rules in favor of permitting classwide arbitration, such an inquiry into purported legal error on the part of the arbitrators is not subject to judicial review.

[7] We disagree with the suggestion made by the court in Baize v. Eastridge Companies, supra, 142 Cal.App.4th 293, footnote 5, that the holding in Crowell appears to challenge the assumption made by the Supreme Court in Moncharsh and also Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at page 375, that parties could, in their arbitration agreement, set restrictions on the scope of the arbitrator’s powers, and that the powers of an arbitrator are derived from the agreement to arbitrate. As we understand Moncharsh, the parties to an arbitration agreement may agree to alter the scope of the arbitrator’s powers, but judicial review may not be expanded beyond the statutory grounds set forth by the Legislature. We do not understand the opinion in Crowell to be “rais[ing] a basis for a reconsideration of the rule of Moncharsh.” (Ibid.) In any event, the Baize court’s comments about Crowell in this regard constituted dicta. As the Baize court noted, “We have no need to express an opinion on the viability of the majority’s conclusion in Crowell because it involved a contractual provision different that that before us.” (Ibid.)

[8] Section 1296 provides: “The parties to a construction contract with a public agency may expressly agree in writing that in any arbitration to resolve a dispute relating to the contract, the arbitrator’s award shall be supported by law and substantial evidence. If the agreement so provides, a court shall, subject to Section 1286.4, vacate the award if after review of the award it determines either that the award is not supported by substantial evidence or that it is based on an error of law.”

[9] DIRECTV notes that the AAA Supplementary Rules for Class Arbitrations “provide for review by a court of competent jurisdiction at several stages during the process of determining whether a contract permits class arbitration procedures, whether a class can and should be certified, and whether a certified class is entitled to judgment in its favor.” DIRECTV contends that “[t]he AAA appears to be basing its process on the assumption that such review would ensure that class-related decisions are made properly by arbitrators. But an application of Crowell here would eliminate such appellate review, and would thus disallow the applicable AAA procedures.” We disagree with the initial premise that the AAA rules for class arbitration contemplate judicial review that is different in kind or scope from the review ordinarily applicable to arbitral decisions. We express no intention or purpose to disallow these AAA rules.

[10] Specifically, the agreement stated: “‘The decision of the arbitrator shall be final and binding upon the parties without appeal or review except as permitted by California law, . . . provided, however, that either party may file an application to correct or vacate the arbitration award or an application for de novo review on all questions of law based on the arbitrator’s finding of fact (which are deemed for such purpose to be stipulated by the parties), in either case under California Code of Civil Procedure Section 1285 et seq.’” (Italics added.) (CC Partners, supra, 101 Cal.App.4th at p. 645, fn. 3.)

Likewise, in Crowell the arbitration agreement stated that “‘upon the petition of any party to the arbitration, a court shall have the authority to review the transcript of the arbitration proceedings and the arbitrator’s award and shall have the authority to vacate the arbitrator’s award, in whole or in part, on the basis that the award is not supported by substantial evidence or is based upon an error of law.’” (Crowell, supra, at pp. 732-733.)

DIRECTV attempts to draw a distinction between the language in the agreements in Crowell and CC Partners and that in the arbitration agreement before us on the basis that the arbitration provisions in the former cases “did not contain language defining the powers of arbitrators to restrict them from committing errors of law or legal reasoning.” We conclude that this is a distinction without a difference because the contract language in both Crowell and CC Partners implicitly but definitively presupposes that the arbitrators would be expected to follow rules of law, given that in each case the arbitration award was subject to de novo review on all questions of law.