When the FAA Applies Because the Contract Says So: A Drafting Lesson from Tuufuli v. West Coast Dental
Arbitration fights often start with a familiar threshold question: does the Federal Arbitration Act (FAA) govern this agreement, or does state arbitration law control?
Many attorneys instinctively frame that question as a factual inquiry about interstate commerce — the “transaction involving commerce” language in FAA § 2. That framing is common, and it matters in many cases. But Tuufuli v. West Coast Dental Administrative Services, LLC highlights a different path to FAA governance that is easy to overlook and incredibly practical: the FAA can apply because the parties expressly chose it.
In other words, an arbitration clause is not automatically doomed to state-law-only treatment merely because the employment relationship (or other contract) seems purely intrastate. If the agreement states that it “shall be governed by the Federal Arbitration Act,” California’s Second District held that choice is enough — and the court did not even need to decide whether the underlying relationship involved interstate commerce.
The case in a nutshell
The setup. West Coast Dental hired Sinedou Tuufuli in 2017 and had her sign an arbitration agreement covering disputes relating to employment and termination. The agreement swept broadly (contract, tort, statutory claims) and included a class action waiver — no class, collective, or representative proceedings. Crucially, it also stated that it “shall be governed by the Federal Arbitration Act” and, to the extent permitted, California law.
The dispute. Tuufuli later filed a complaint asserting multiple individual and class claims for alleged Labor Code and Business & Professions Code violations. West Coast Dental moved to compel arbitration of the individual claims and dismiss the class claims.
The only appellate issue. On appeal, Tuufuli focused on one question: whether the trial court correctly concluded the arbitration agreement was governed by the FAA. She argued there was insufficient evidence of interstate commerce and that West Coast Dental operated “exclusively” in California.
The holding. The Court of Appeal affirmed. The reason is the headline: the FAA governed because the parties agreed it would.
The most important line: FAA coverage can be contractual
The opinion’s core move is straightforward and highly useful in practice. The court acknowledged the familiar interstate-commerce analysis, including the FAA’s broad understanding of “involving commerce.” But it ultimately rested its decision on a different doctrine: consent.
Relying on prior California authority, the court explained that “the presence of interstate commerce is not the only manner under which the FAA may apply” — the parties may “voluntarily elect” to have the FAA govern enforcement of their arbitration agreement.
That principle tracks the broader, contract-centered view of arbitration: parties are generally free to structure arbitration agreements as they see fit, and arbitration under the FAA is “a matter of consent, not coercion.”
Practical takeaway: In California, at least, a clear contractual statement selecting the FAA can be sufficient to place enforcement under the FAA — even if the opposing party argues the arrangement is purely intrastate.
Why this matters: the commerce fight is expensive and distracting
Anyone who has litigated motions to compel has seen how quickly FAA coverage arguments become mini-trials about:
corporate structure and out-of-state affiliates
supply chains and procurement
vendor relationships
payroll processors, benefits platforms, and multi-state HR policies
“contemplation” of interstate activity (even though courts often say contemplation is not required)
Those facts can matter — and sometimes must be developed. But Tuufuli offers a clean drafting-based off-ramp: make FAA governance explicit, then litigate the real issues (formation, scope, defenses, delegation, class waiver, etc.) instead of burning time on commerce proof.
“But can parties contract into federal preemption?”
Tuufuli argued that parties cannot “summon” the FAA’s preemptive force simply by stating the FAA applies. The Court of Appeal rejected that framing, emphasizing that the Supreme Court decision she relied on (Allied-Bruce) did not decide the issue presented here — namely, whether parties can choose FAA governance by contract.
The opinion’s approach is notably pragmatic:
FAA § 2 says arbitration agreements in contracts involving commerce are “valid, irrevocable, and enforceable.”
Nothing in § 2 says the FAA is forbidden when commerce is absent.
Arbitration is contractual; consent is central; parties can choose the procedural and legal framework that governs their arbitration.
Whether every jurisdiction would analyze it the same way is a separate question. But for California practitioners — and for national businesses drafting with California in mind — Tuufuli is a meaningful data point: an express FAA selection clause can do real work.
The guardrail: the FAA’s transportation-worker exemption cannot be waived into existence
The opinion also addresses an important limit by comparison. FAA § 1 exempts certain transportation-worker employment contracts. And California courts have held that an exempt worker’s agreement does not become subject to the FAA merely because it says the FAA applies.
That guardrail matters in drafting and motion practice:
If the contract falls into a statutory exemption (like FAA § 1), a choice-of-FAA clause cannot override the exemption.
Tuufuli was not a § 1 case, so the contractual FAA selection remained effective.
Drafting implication: FAA selection language is powerful, but it is not magic. Screen for FAA § 1 risk in employment contexts where transportation work is in play.
How to draft for this result: make the FAA choice unmistakable
Tuufuli turned on simple words: the agreement “shall be governed by the Federal Arbitration Act.”
To strengthen that concept in real-world agreements, consider drafting that does three things:
Governing law for enforcement:
“This Agreement, and any arbitration conducted pursuant to it, shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) for purposes of interpretation, enforcement, and preemption.”State law as gap-filler only where consistent:
“To the extent not inconsistent with the FAA, the arbitrator may apply otherwise applicable state substantive law to the merits of the parties’ claims.”Severability and fallback:
“If any portion of this FAA-governance provision is found unenforceable as applied to a particular claim or party, the remainder shall be enforced to the fullest extent permitted, and the arbitration shall proceed under the applicable arbitration law that most closely effectuates the parties’ intent to arbitrate.”
This is not about being verbose. It is about removing oxygen from the inevitable argument that “intrastate equals state law only.”
Motion practice implications for attorneys
If an agreement includes an express FAA clause like the one in Tuufuli, it can reshape the briefing and the evidentiary burden:
Lead with contract interpretation and consent. Put the FAA selection clause on page one.
Use commerce evidence as a backup, not the headline. West Coast Dental did present some interstate facts (corporate organization, prior Washington offices, out-of-state materials), but the appellate court did not need to reach them after finding contractual FAA governance.
Frame the intrastate argument as a red herring. The point is not that interstate commerce is irrelevant; it is that it is not the only route to FAA application where the agreement expressly chooses the FAA.
Business takeaway: the clause choice can change leverage
For businesses (and for counsel advising them), Tuufuli underscores a quiet truth: arbitration clauses are not just “arbitrate or litigate” switches. They also determine:
what law governs enforcement
how aggressively state rules can limit arbitration
whether class procedures are barred and how that bar is enforced
When the clause is drafted with intention, it reduces uncertainty, lowers the cost of threshold litigation, and can make outcomes more predictable.
Where Nationwide ADR fits into the picture
Even well-drafted arbitration agreements still produce real disputes — about scope, carve-outs, class waivers, arbitral authority, and how to efficiently manage high-stakes employment and business claims. When those disputes land in arbitration, outcomes often turn less on rhetoric and more on process discipline: realistic case framing, early issue identification, and a hearing plan that fits the dispute.
Nationwide ADR’s work is built for that. With a national practice focused on arbitration and mediation — and additional experience with Early Dispute Resolution, Early Neutral Evaluation, mock trials, mini trials, and Special Master roles — Nationwide ADR helps parties move from clause litigation and procedural friction to resolutions that are both fair and durable.
A quick checklist for counsel
Does the arbitration clause explicitly state the FAA governs?
Is there any plausible FAA § 1 transportation-worker issue?
Does the clause clearly address class/collective/representative procedures?
Is state law identified as a gap-filler only to the extent consistent with the FAA?
Does severability preserve arbitration even if one component is challenged?
Bottom line
Tuufuli is a reminder that arbitration is contractual. In California, when the parties expressly agree that their arbitration agreement is governed by the FAA, courts may enforce that choice without requiring a separate showing that the dispute involved interstate commerce.
For attorneys, the lesson is drafting-forward: a clean FAA governance clause can prevent an avoidable detour and keep the case focused on the merits (or, ideally, on early resolution).