Arbitrator Should Decide Whether NY Or CA Law Should Apply

A California court has ruled that an arbitrator (not a judge) should decide on the applicability of California Labor Code Section 925 to a dispute between a law firm partner and his former law firm. Zhang v. Superior Court, 2022 WL 16832570 (Cal. Ct. App. 2022). This ruling potentially undermines the protections of Labor Code Section 925, which permits an employee to void a contractual provision that requires the employee to adjudicate a claim outside of California that arose in the state.

Jinshu ("John") Zhang was an equity partner at Dentons U.S. LLP. After Dentons terminated Zhang's service over a dispute about his compensation related to a multi-million dollar contingency fee, the parties brought dueling actions in New York and California. Dentons initiated an arbitration in New York pursuant to the arbitration clause in the partnership agreement, while Zhang brought a wrongful termination action in Los Angeles Superior Court.