GRAHAM v. SCISSOR TAIL (1980)

Graham appeals a superior court judgment confirming an arbitration award of $53,290 against him in favor of Scissor-Tail, Inc. At issue is the enforceability by union members against non-union members of an American Federation of Musicians' (AFofM) contract clause which requires all disputes arising out of the contract to be arbitrated before the International Executive Board of the AFofM under the union's by-laws, rules, and regulations.

Facts. Plaintiff Bill Graham is a promoter and producer of musical concerts. Defendant C. Russell Bridges, also known as Leon Russell (Russell), is a performer, recording artist, leader of a musical group, and member of the American Federation of Musicians. Defendant Scissor-Tail, Inc. is Russell's wholly-owned corporation used as the vehicle to market the artistic services of Russell's group. Defendant The David Forest Agency, Ltd. is Scissor-Tail's booking agent.

In June 1973 Scissor-Tail, Inc. undertook to organize Russell's 1973 summer tour, and, acting through its corporate officers Russell and Cordell and its booking agent The David Forest Agency, Ltd., it contracted with Graham for outdoor concerts at Ontario Motor Speedway and at Oakland-Alameda County Stadium. Scissor-Tail agreed to furnish the services of Russell and his group of seven musicians, and Graham agreed to promote the two concerts. Potential gross receipts were estimated at $450,000 for the Ontario concert and.$390,000 for the Oakland concert. For each concert a separate contract was executed. The contract provided that Scissor-Tail would receive union scale or 85 percent of the net profits (gross receipts less expenses and taxes), whichever was greater, but said nothing about who would bear possible losses. In accordance with the requirements of the AFofM's constitution and by-laws, each contract contained the following provision for arbitration:

“In accordance with the Constitution, By-laws Rules and Regulations of the Federation, the parties will submit every claim, dispute, controversy or difference involving the musical services arising out of or connected with this contract and the engagement covered thereby for determination by the International Executive Board of the Federation or a similar board of an appropriate local thereof and such determination shall be conclusive, final and binding upon the parties.”

The Ontario concert in July had gross receipts of $173,000 with expenses of $236,000 and lost money, but the Oakland concert in August made a profit. Following the second concert a dispute arose among the parties over who should bear the Ontario concert's loss and whether that loss could be offset against the Oakland concert's profits. In October 1973 Graham filed an action against defendants in the superior court for breach of contract, declaratory relief, and rescission. Scissor-Tail filed a cross-complaint to compel arbitration. In March 1976 the superior court, over Graham's objections, ordered the parties to arbitrate their dispute before the AFofM.

What happened next is described in declarations filed in the superior court by Graham's counsel:

“On or about March 17, 1976, this court entered an order compelling the parties to arbitrate their dispute before the American Federation of Musicians (‘A.F.ofM.’). This fact was relayed to the A.F.ofM. by a letter of Mr. Harvey Fierstein, counsel for Leon Russell, dated April 12, 1976.

“As of June, 1976, no arbitration date had yet been set in this matter. As a result, on June 24, 1976, Mr. Fierstein wrote to the A.F.ofM. requesting that a date be set. ( )

“During this time we, on Mr. Graham's side, were awaiting the setting of an arbitration date.

“Rather than set a date for an arbitration, on July 6, 1976, the A.F.ofM. simply entered an arbitration award against Mr. Graham in the amount of $53,290.32. ( ) This arbitration award was entered even though Mr. Graham had never been allowed to present any evidence to the A.F.ofM. and there had been, obviously, no arbitration hearing of any sort.

“As soon as I received a copy of the A.F.ofM.‘s award of July 6, 1976, I contacted the office of Thomas Nicastro, the Assistant Secretary of the A.F.ofM. and the office responsible for handling A.F.ofM. arbitration matters. I informed Ms. Titlebaum of that office of the foregoing facts. She, in turn, informed me that it was standard A.F.ofM. procedure to issue arbitration awards even though there had, in fact, not been any arbitration or any arbitration hearing unless the union member (the musician) requested a hearing. Since Mr. Russell, the union member, had not requested a hearing in this matter, the award was entered without a hearing. In other words, under A.F.ofM. procedures, only the union member is entitled to have an arbitration hearing and the other party to the arbitration (if he is a non-union member such as an employer) is left at the mercy of the union member and the union.

“As soon as I discovered these facts, I contacted Mr. Fierstein, counsel for Mr. Russell, and requested of him that he, as attorney for the union member, request that a real arbitration be had. I documented that request in my letter to Mr. Fierstein of July 9, 1976, ( ).

“Subsequent to my conversation with Ms. Titlebaum and my conversation and letter to Mr. Fierstein, on August 10, 1976, the A.F.ofM. purported to put Mr. Graham on its ‘defaulters list,’ for non-payment of the above-referenced arbitration award. ( ) This defaulter's list is a list of persons who(m) A.F.ofM. members are not allowed to deal with. Effectively, the placing of a concert promoter's name on that list puts a concert promoter out of business.

“Upon receipt of the A.F.ofM. letter of August 10, 1976, I again contacted the office of Mr. Nicastro, the Assistant Secretary of the A.F.ofM., and again reiterated my request for an arbitration hearing. In addition, on August 26, 1976, I wrote a letter to Mr. Nicastro setting forth the position of Mr. Graham in this regard. ( )

“Finally, on September 7, 1976, the A.F.ofM. agreed to reopen this matter and to allow an arbitration to take place.

“In my conversations with the office of Thomas Nicastro ( ) I asked for an explanation of the procedure followed by the A.F.ofM. in selecting a hearing officer. I was informed by Ms. Titlebaum of that office that the hearing officer was selected by the International Executive Board of the A.F.ofM. I asked if Mr. Graham would have any right to participate in this selection process or to consent to any hearing officer selected. I was informed by Ms. Titlebaum that Mr. Graham would have no say in this matter. I protested the unfairness of this procedure but was told that it was standard A.F.ofM. procedure.

“Upon being informed that Mr. Phil Fischer had been named the ‘arbitrator’ in this matter, I contacted Mr. Fischer to discuss the procedure to be followed with him. Mr. Fischer informed me that he was a former executive officer and long-time member of the A.F.ofM. He had acted as a hearing officer for the A.F.ofM. in many previous matters.”

Proceedings at the hearing itself were described by Graham's counsel as follows:

“A hearing was held before an A.F.ofM. hearing officer in this matter on Friday, October 12, 1976 at the western office of the American Federation of Musicians. The hearing officer was Phil Fischer, a member of the A.F.ofM. and, I believe, a retired officer of the A.F.ofM.

“I brought Mr. Donald Holcombe, a certified court reporter, with me to that arbitration. My purpose in bringing Mr. Holcombe was, obviously, to record the events which transpired at that hearing. Mr. Fischer, the hearing officer, refused to allow the court reporter to transcribe that hearing or to be present during that hearing, even though all costs for the court reporter were being borne by Mr. Graham.

“At the hearing, Mr. Graham testified that it was a very common and widely held custom and practice in the popular music concert industry that in so-called ‘85-15’ or ‘90-10’ arrangements, the promoter was understood to bear no risk of loss because of the fact that his potential share of profits is much lower than in a normal concert promotion. In addition to Mr. Graham's testimony on this point, Mr. Steve Wolf, a very well known Los Angeles promoter, also appeared and testified to precisely the same facts. In addition, it was stipulated that Barry Fey, another well known concert promoter, if called, would have testified to these same facts. Moreover, sworn statements of Frank Barcelona, Don Delsener and Jeff Franklin, all of whom are engaged in the popular music concert field and all of whom are well acquainted with the customs and practices in that industry, were admitted into evidence and reaffirmed the testimony given by Mr. Graham and Mr. Wolf.

“No promoters were called by Mr. Russell and, accordingly, absolutely no contrary evidence to this custom and practice was presented by Leon Russell to the hearing officer.”

Thereafter, the hearing officer submitted a report to the International Executive Board of the AFofM, and the board again decided in favor of The David Forest Agency, Scissor-Tail, and Russell in the same amount as before. In February 1977 its award of $53,290 was made known to Graham, who was directed to pay that amount through and to the AFofM. Graham did not receive a copy of the hearing officer's report until May 1977.

Defendants The David Forest Agency and Scissor-Tail petitioned the superior court to confirm the award, and Graham petitioned to vacate it. In August 1977 the superior court entered judgment confirming the award in favor of Scissor-Tail, and thereafter Graham appealed.

Contentions of the Parties. In support of the award defendant Scissor-Tail argues: (1) The Ontario contract was an employment contract for the rendition of musical services under which Graham was the employer and the seven musicians were his employees. (2) The contract was the product of labor-related collective bargaining authorized and carried on by the AFofM for the benefit of its members, who are entitled to enjoy the benefits of such collective bargaining agreements. (3) Section 301 of the Labor Management Relations Act (61 Stat. 156, 29 U.S.C. s 185) establishes federal jurisdiction over disputes arising from collective bargaining agreements in interstate commerce, and such causes, including this one, are governed by federal law. (4) Federal law permits a collective bargaining agreement to designate the agent of one of the parties as arbitrator of disputes arising out of the agreement. (5) California law does not require arbitration by an impartial arbitrator when the parties have voluntarily agreed to the contrary. (6) Even if California law should be construed to require an impartial arbitrator, the arbitration at bench is controlled by federal law, which does not require impartiality. From this series of propositions Scissor-Tail concludes the judgment confirming the arbitration award must be affirmed.

In opposition, Graham relies on the following: (1) The contract between the parties was neither an employment contract nor a collective bargaining agreement, but was a joint venture between two business entities, Graham as promoter and Scissor-Tail as purveyor of musical services, pursuant to which Graham agreed to furnish promotional and financial services and Scissor-Tail agreed to make available the services of the seven musicians it employed. (2) If the contract between the parties were to be construed as a labor contract, then Scissor-Tail was the employer and Graham the employee, in that Graham was hired to render promotional services for a concert held under the direction and control of Scissor-Tail and its agent, The David Forest Agency. (3) Arbitration before a partial arbitrator contravenes California and federal arbitration statutes. (4) Graham did not voluntarily waive his right to due process of law and to an impartial arbitration by signing a contract which placed arbitration of disputes under the control of the agent of the other party, in that the contract was one of adhesion, a non-negotiable, take-it-or-leave-it document he was required to sign if he wanted to continue to promote musical concerts. (5) Enforcement by the courts of a contract to compel arbitration before a partial arbitrator contravenes the due process of law guaranteed by the Fifth and Fourteenth Amendments. From these propositions he concludes that the arbitration agreement as written is unenforceable under both state and federal law, and therefore the judgment must be reversed.

As we view the controversy, the somewhat convoluted syllogisms relied upon by the parties can be shortened to two comprehensive questions: (1) Did the judgment below comport with due process of law in the light of the composition of the arbitration tribunal, its mode of procedure, and its conduct of the arbitration? (2) If the arbitration did not comport with due process of law, was the protection of due process voluntarily waived by Graham, either in fact or in law, when he agreed to the terms of the contract?

I

DOES DUE PROCESS OF LAW REQUIRE IMPARTIAL ARBITRATION?

We have outlined in some detail the procedure followed in this arbitration. To summarize the course of events, the superior court in March 1976 ordered arbitration by the International Executive Board of the AFofM. Prior to any hearing the International Executive Board at its June meeting in Miami Beach, Florida, rendered a decision which awarded defendants $53,290, the full amount of their claim, and declared that Graham's failure to remit the full amount direct to the AFofM would result in his blacklisting. Graham was notified of the award in July, and his name was put on the AFofM blacklist in August for nonpayment of the award. When Graham protested the procedure, he was told a hearing could be held only at the request of the musician-party to the controversy. After Scissor-Tail's counsel agreed to a hearing, the International Executive Board reopened the arbitration and appointed as hearing officer a former executive officer of the AFofM. The hearing officer refused to permit Graham to have a stenographic court reporter present at the hearing. In January 1977 at its winter meeting in Palm Beach, Florida, the International Executive Board of the AFofM again decided the controversy in favor of defendants. Graham was notified of the award in February 1977, but he did not receive a copy of the hearing officer's report until May 1977.

It is difficult to imagine a greater disregard for due process of law than a procedure which contains all of the following elements: an arbitration wholly under the control of one party's representative, which selects the arbitrator and hearing officer and dictates the procedure; an Alice-in-Wonderland sequence award first, then hearing but hearing only at the member party's request; a demand for payment of the award directly to the arbitrator; a blacklisting of the losing party prior to the arbitration hearing and prior to court confirmation of the award; a ban against stenographic recording of the arbitration hearing; a hearing officer's report not made available to the losing party until three months after announcement of the award. Such a procedure, wholly at odds with any concept of due process and impartial arbitration, is little more than a caricature of due process. To demonstrate the invalidity of such procedure we need only refer to Commonwealth Corp. v. Casualty Co. (1968) 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301, a cause which reviewed the fundamental principle of impartial arbitration. The issue before the court was posed by Justice Black: “At issue in this case is the question whether elementary requirements of impartiality taken for granted in every judicial proceeding are suspended when the parties agree to resolve a dispute through arbitration.” That particular arbitration had been conducted pursuant to the United States Arbitration Act (9 U.S.C. ss 1-14), whose provisions, the court said, “show a desire of Congress to provide not merely for Any arbitration but for an impartial one.” (p. 147, 89 S.Ct. p. 338; italics in original.) In vacating the arbitration award because the supposedly independent arbitrator had had business dealings with one of the parties, the Supreme Court made the following observation: “Since in the case of courts (impartiality) is a Constitutional principle, we can see no basis for refusing to find the same concept in the broad statutory language that governs arbitration proceedings and provides that an award can be set aside on the basis of ‘evident partiality’ or the use of ‘undue means.’ (p. 148, 89 S.Ct. p. 339; italics in original.) . . . We should, if anything, be even more scrupulous to safeguard the impartiality of arbitrators than judges, since the former have completely free rein to decide the law as well as the facts and are not subject to appellate review.” (p. 149, 89 S.Ct. p. 339; italics added.) Additionally, the Supreme Court laid down the requirement that arbitration must not only be unbiased, but must be seen to be unbiased. “This rule of arbitration and this canon of judicial ethics rest on the premise that Any tribunal permitted by law to try cases and controversies not only must be unbiased but also must avoid even the appearance of bias. We cannot believe that it was the purpose of Congress to authorize litigants to submit their cases and controversies to arbitration boards that might reasonably be thought biased against one litigant and favorable to another.” (p. 150, 89 S.Ct. p. 340; italics added.)

The California law under which this arbitration was conducted (Code Civ.Code, ss 1280-1288.8) likewise requires arbitration compatible with due process of law, and it, too, contemplates arbitration by a neutral arbitrator. (Code Civ.Proc., ss 1280, 1282, 1286.2.) Obviously, an arbitrator who is the representative of a party to the arbitration, an arbitrator whose interests rise and fall with the prosperity of that party, is not a neutral, impartial arbitrator, free from the appearance of bias. Illustrative is Richards v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1976) 64 Cal.App.3d 899, 135 Cal.Rptr. 26, a breach-of-contract dispute between a stockbroker and its customer. The stockbroker sought arbitration under a clause in the customer's margin agreement, which provided for arbitration of disputes by the New York Stock Exchange's board of arbitration under the constitution and rules of the Exchange. The court refused to order such arbitration, pointing out that because Merrill Lynch was a member of the New York Stock Exchange application of such an arbitration clause to a reluctant non-member of the Exchange would be fundamentally unfair. The basic apparent unfairness, said the court, was the requirement that the non-member “submit to arbitrators, all of whom have been appointed by the Exchange of which Merrill Lynch is a member.” (p. 903, 135 Cal.Rptr. p. 28.)

Basic to the idea of compulsory arbitration is access to an impartial arbitrator. (Johnston v. Security Ins. Co. (1970) 6 Cal.App.3d 839, 842, 86 Cal.Rptr. 133 (fire loss dispute between insurer and insured); Wheeler v. St. Joseph Hospital (1976) 63 Cal.App.3d 345, 369-72, 133 Cal.Rptr. 775 (malpractice dispute between hospital and patient).) Anything less does not comport with due process of law. (Commonwealth Corp. v. Casualty Co. (1968) 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301; Ward v. Village of Monroeville (1972) 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267; Tumey v. Ohio (1927) 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749; see Gibson v. Berryhill (1973) 411 U.S. 564, 579, 93 S.Ct. 1689, 1698, 36 L.Ed.2d 488; American Motors Sales Corp. v. New Motor Vehicle Bd. (1977) 69 Cal.App.3d 983, 987-92, 138 Cal.Rptr. 594; cf. Arrieta v. Paine, Webber, Jackson & Curtis, Inc. (1976) 59 Cal.App.3d 322, 130 Cal.Rptr. 534, where the stockbroker's customer could choose arbitration by the New York Stock Exchange Or the American Arbitration Association.) The principle has long been honored, and properly so, that no party shall act as judge in his own cause, and a party's agent who acts as arbitrator trespasses upon this principle. Metaphysical subtleties aside, an agreement to accept the other party's agent as arbitrator is “not a contract to arbitrate, but an engagement to capitulate.” (Cross & Brown Co. v. Nelson (1957) 4 App.Div.2d 501, 502, 167 N.Y.S.2d 573, 576.) The contract at bench appears to have been understood in these terms, for during early settlement discussions Graham was told by David Forest he should think carefully before refusing to pay, because in arbitration “the AFofM normally supports its member.” Absent a waiver of impartial arbitration, it is manifest that Graham did not receive the due process of law to which he was entitled.

II

DID GRAHAM WAIVE THE PROTECTION OF DUE PROCESS OF LAW AND AN IMPARTIAL ARBITRATOR BY SIGNING THE CONTRACT WITH KNOWLEDGE OF ITS PROVISIONS?

Our inquiry does not end with a determination that the arbitration procedure violated fundamental principles of due process, in that it is always possible for a party to voluntarily agree in advance to waive impartial arbitration of future controversy in the interest of speedy and economical resolution of disputes. Such a waiver of impartial arbitration may be voluntary in fact, or it may become voluntary by operation of law.

Was there a voluntary waiver in fact of an impartial arbitrator here? On this point the parties, who differ on all other points, are in agreement: there was no free and voluntary waiver in fact by Graham of his right to an impartial arbitrator. Graham declared he knew at the time of the execution of the contract it would be impossible to negotiate for an impartial arbitrator because the union would not permit changes in its form contract. Forest, the booking agent for Scissor-Tail, declared there could be no deviation from the AFofM form contract. Cordell and Hoyt, officers of Scissor-Tail, both declared that the AFofM required compliance by outsiders with its form contract as a prerequisite to appearance and performance by union members. The AFofM hearing officer identified the clause requiring arbitration by the International Executive Board as a standard provision of AFofM contracts. The by-laws of the AFofM state that members of the AFofM, on penalty of fine, are not permitted to sign any contract forms other than those issued by the AFofM. The evidence is overwhelming that the terms in the AFofM contract form were non-negotiable and non-modifiable. Patently, Graham's acceptance of these terms was involuntary in fact.

Scissor-Tail, however, while recognizing that Graham was compelled to accept the terms of the AFofM contract form if he wished to promote musical concerts, argues that Graham's acceptance of the contract was voluntary, in that he knew of the contract's terms and knew he would be unable to change them, yet nevertheless he went ahead and executed the contract with full knowledge of its terms, which included arbitration of future disputes with Scissor-Tail by the International Executive Board of the AFofM. A party to a contract may agree to arbitrate disputes before an arbitrator identified with the other party, the argument goes, and to the extent that due process of law requires a neutral arbitrator, a party may agree to waive due process. In rebuttal to this argument Graham asserts that he was compelled to sign the contract in the form presented in order to stay in business, that he signed as a matter of commercial necessity under the prod of economic compulsion exerted by a monopoly which gave him no choice of terms. Graham also characterizes the contract as one of adhesion, a form agreement whose terms are imposed by a stronger entity on a weaker entity without bargaining. In such a contract, he asserts, voluntary waiver of rights plays little part, for the contract is put into effect by a process of suasion akin to duress.

The facts at bench, as we view them, make it reasonably clear that the contract between Graham and Scissor-Tail qualified both as a contract executed under economic compulsion and as a contract of adhesion. The David Forest Agency letter transmitting the contract to Graham for execution stated that no alterations in the printed contract form should be made. The AFofM constitution and by-laws declared that members of the AFofM, under penalty of fine, were not permitted to sign any contract or agreement or engagement other than in the form issued by the AFofM. The AFofM possessed a monopoly over musical services. If Graham desired to continue in the business of promoting musical concerts he was compelled to agree to the imposed terms in the AFofM's contract form. His situation was comparable to that of the importer in Robertson v. Frank Brothers Co. (1889) 132 U.S. 17, 23, 10 S.Ct. 5, 7, 33 L.Ed. 236, a case in which the Supreme Court of the United States rejected the argument that a particular payment to a customs official to avoid an onerous penalty was voluntary.

“(T)he apprehension of being stopped in their business by non-compliance with the Treasury regulation was a sufficient moral duress to make their payments involuntary. . . . The parties were not on equal terms. The appellant had no choice. The only alternative was to submit to an illegal exaction, or discontinue its business. It was in the power of the officers of the law, and could only do as they required.”

Where commercial necessity is involved, courts have not hesitated to dismiss as sham claims of voluntary compliance with enforced demands. Compliance, said Holmes in Union Pacific Railroad Co. v. Public Service Comm. (1918) 248 U.S. 67, 70, 39 S.Ct. 24, 25, 63 L.Ed. 131 is the lesser of two evils.

“It always is for the interest of a party under duress to choose the lesser of two evils. But the fact that a choice was made according to interest does not exclude duress. It is the characteristic of duress properly so called.”

While these causes involve duress by government officials, their principles are of general application, in that the effect on the person exposed to economic coercion is the same, whether the source of coercion is public or private. The quintessential fact is that if one chooses to do business with a monopoly, governmental or otherwise, one must do so on the monopoly's terms. At bench, the terms of the contract did not reflect a true consensual agreement, but were terms presented on a take-it-or-leave-it basis by a monopolistic entity with which Graham was unable to bargain. Under such circumstances his acceptance of the terms was an act of commercial necessity induced by economic coercion amounting to duress. (Union Pacific Railroad Co. v. Public Service Comm. (1918) 248 U.S. 67, 70, 39 S.Ct. 24, 25, 63 L.Ed. 131; Robertson v. Frank Brothers Co. (1889) 132 U.S. 17, 22-24, 10 S.Ct. 5, 6-7, 33 L.Ed. 236; Young v. Hoagland (1931) 212 Cal. 426, 431, 298 P. 996; International Fishermen, etc. v. Stemland (1950) 97 Cal.App.2d Supp. 931, 934, 219 P.2d 554; Thompson Crane & Trucking Co. v. Eyman (1954) 123 Cal.App.2d 904, 910, 267 P.2d 1043; In re Air West (1977) 436 F.Supp. 1281, 1290.)

The record is also clear that use of the AFofM's contract form created a contract of adhesion, in that parity of bargaining strength between Graham and Scissor-Tail did not exist, and there was no opportunity to negotiate the terms contained in the contract form. While Scissor-Tail by itself may not necessarily have been the stronger contracting party, its strength was as the strength of ten because of the power and backing of the union. When conspicuous disparity of bargaining power between parties to a contract is present, a court will examine the contract's standardized terms to determine the degree of fairness with which they limit the rights of the weaker party. In Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710-11, 131 Cal.Rptr. 882, 889, 552 P.2d 1178, 1185, the Supreme Court recently summarized the rules applying to contracts of adhesion:

“The concept that a contract of adhesion should be interpreted and enforced differently from an ordinary contract has evolved from cases which have involved contractual provisions drafted and imposed by a party enjoying superior bargaining strength provisions which unexpectedly and often unconscionably limit the obligations and liability of the party drafting the contract. (p. 710, 131 Cal.Rptr. 882, 552 P.2d 1178.) . . . In the characteristic adhesion contract case, the stronger party drafts the contract, and the weaker has no opportunity, either personally or through an agent, to negotiate concerning its terms. . . . In many cases of adhesion contracts, the weaker party lacks not only the opportunity to bargain but also any realistic opportunity to look elsewhere for a more favorable contract; he must either adhere to the standardized agreement or forego the needed service. (p. 711, 131 Cal.Rptr. 882, 552 P.2d 1178.) . . .”

Judged under these rules the contract at bench is clearly one of adhesion, whose standardized terms must be carefully evaluated in order to assure fundamental fairness to the weaker party. (Gray v. Zurich Ins. Co. (1966) 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 419 P.2d 168; Madden v. Kaiser (1976) 17 Cal.3d 699, 710-712, 131 Cal.Rptr. 882, 552 P.2d 1178; Spence v. Omnibus Industries (1975) 44 Cal.App.3d 970, 974, 119 Cal.Rptr. 171; Fuentes v. Shevin (1972) 407 U.S. 67, 95, 92 S.Ct. 1983, 2001, 32 L.Ed.2d 556.) Fundamental fairness assuredly includes Justice Black's elementary due process (Commonwealth Corp. v. Casualty Co. (1968) 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301), and a party to an adhesory contract who has been required, as here, to forego the judicial process and accept compulsory arbitration is entitled to an arbitration tribunal which is disinterested and impartial. In the arbitration of a dispute over profits and losses between a group of union-member musicians on the one hand and a non-union member promoter of concerts on the other, the International Executive Board of the AFofM does not constitute a disinterested and impartial tribunal. (Richards v. Merrill Lynch, etc. (1976) 64 Cal.App.3d 899, 903, 135 Cal.Rptr. 26; Wheeler v. St. Joseph Hospital (1976) 63 Cal.App.3d 345, 371, 380, 133 Cal.Rptr. 775.)

In final analysis, Scissor-Tail does not seriously dispute the fact that execution of the contract on the AFofM's form qualifies as a dictated condition rather than a voluntary agreement, but it seeks to justify compulsory arbitration before a partial arbitrator as a permissible product of collective bargaining protected by federal law. Its right to compel a waiver of impartial arbitration, says Scissor-Tail, is one guaranteed by the laws that sanction labor's right to organize. Scissor-Tail's argument develops along the following lines. Statutes and court decisions have recognized labor's lack of bargaining equality with management and as a consequence have exempted labor unions from the prohibitions against monopolies and combinations in restraint of trade. (15 U.S.C., ss 1, 2, 17; 29 U.S.C., ss 52, 113.) Workers have been allowed to combine with one another in unions to fix wages, hours, and conditions of employment, and such combinations, even when monopolistic or economically coercive, are not legally proscribed as monopolies or restraints on trade. (Federation of Musicians v. Carroll (1968) 391 U.S. 99, 106, 88 S.Ct. 1562, 1567, 20 L.Ed.2d 460, and cases there cited.) Workers' combinations, i. e. unions, may demand arbitration by private tribunals of disputes between employers and employees over wages, hours, and conditions of employment, and may bargain for a system of private law to supersede law applied by the courts. (United Steelworkers v. Warrior & Gulf Co. (1960) 363 U.S. 574, 580-81, 80 S.Ct. 1347, 1351-52, 4 L.Ed.2d 1409.) An employer who agrees with a union to arbitrate disputes is bound by his agreement. (United Steelworkers v. American Mfg. Co. (1960) 363 U.S. 564, 568, 80 S.Ct. 1343, 1346, 4 L.Ed.2d 1403.) The rule that contracts of adhesion must be fair to the weaker party, Scissor-Tail asserts, does not apply to a collective bargaining agreement between an employer and a union acting on behalf of his employees, in that the union possesses a historic mission recognized and sanctified by federal law to redress the grievances of employees as the traditionally weaker party in the employment relationship. As an element of collective bargaining, the argument concludes, a union may require arbitration by the union of disputes between union members and their employers.

Scissor-Tail's assertion that it may dictate the mode of arbitration despite general limitations placed on other contracts of adhesion advances two dubious but irrelevant propositions first, that for the Ontario and Oakland concerts Graham was the employer and the musicians were his employees, and, second, that the contracts for those concerts were collective bargaining agreements controlled by the provisions of the National Labor Relations Act (29 U.S.C. s 151 ff.) We think the first proposition is highly speculative in that the transaction memorialized by the contracts appears to involve a joint venture whose profits were to be divided between the ventures, 15 percent to Graham and 85 percent to Scissor-Tail. It is logical to assume that Scissor-Tail, the recipient of the lion's share of the profits, and not Graham, was the employer of the seven musicians who performed in a series of specific business ventures on a tour arranged by Scissor-Tail and its agent Forest. (Cf. Federation of Musicians v. Carroll (1968) 391 U.S. 99, 105, 88 S.Ct. 1562, 1566, 20 L.Ed.2d 460.) Scissor-Tail's second proposition, that the contracts were collective bargaining agreements, appears equally farfetched. The usual collective bargaining agreement involves a contract negotiated between an employer or association of employers and a union or joint council of unions for the benefit of workers in a particular employment trade, or business. So far as appears here, the contract provision naming the union's executive board as arbitrator of disputes under the contract was never a subject of bargaining at all, but merely a provision unilaterally inserted by the union in all form contracts for musical services. Such was the conclusion reached by the United States Supreme Court in reviewing a comparable AFofM contract. (Federation of Musicians v. Carroll, supra, at p. 104, 88 S.Ct. at p. 1566.) Yet because Scissor-Tail is a labor-affiliated group entitled to partial, although not total, exemption from the antitrust laws (29 U.S.C., s 113; Federation of Musicians v. Carroll, supra, at pp. 105-06, 88 S.Ct. at pp. 1566-67), controversies over which party is the employer and whether the contract is a collective bargaining agreement are red herrings which distract us from the real issue whether partial exemption of a labor-affiliated group from the antitrust laws excuses compliance with due process in the establishment of a compulsory tribunal to arbitrate contract disputes. To put the question another way, can a union with monopoly power over particular services compel a non-member who contracts with a group of union members to accept the union as arbitrator of future disputes under the contract? Scissor-Tail asserts the union can so act, because a labor union is authorized to establish procedures to settle disputes between members and non-members, and these procedures may include compulsory arbitration with the union as arbitrator.

To the validity of Scissor-Tail's argument we see two fundamental objections. First, is the union's disregard of the correlative responsibility for fairness that necessarily accompanies its exercise of monopoly power. We deal here with a provision for compulsory arbitration unilaterally adopted and imposed on non-members by the union. Under this provision Graham was compelled to relinquish his right to bring disputes with Scissor-Tail to the courts and to accept compulsory arbitration as a substitute. This the union possessed authority to do. (Textile Workers v. Lincoln Mills (1957) 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972; United Steelworkers v. Warrior & Gulf Co. (1960) 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409.) But the exercise of this authority must comport with the fundamental fairness we require from those who have been given monopoly power to compel others to do their bidding. The principle that exercise of monopoly power by a union must be fair has been the law in California since the decision in James v. Marinship Corp. (1944) 25 Cal.2d 721, 155 P.2d 329. There, an argument was made comparable to the one made here, that the union, operating under the protection of special precedents and special legislation, could maintain a closed shop and at the same time maintain an arbitrarily closed, or partially closed, union. The court rejected this argument and enjoined maintenance by the union of its closed shop at the expense of black workers, who had been denied membership in the union and relegated to an auxiliary. A union may use various forms of concerted action to enforce an objective reasonably related to any legitimate interest of organized labor, said the court, but the objective of concerted labor activity must be proper and must be sought by lawful means (pp. 728, 729, 155 P.2d 329.). A state court has the power to protect against abuse of rights by labor unions, and the fundamental question is whether a closed shop coupled with a closed union can constitute a legitimate objective for organized labor. It cannot, said the court, pointing out that when a union attains a monopoly over particular services by collective labor action which results in a closed shop, it occupies a quasi-public position similar to that of a public service business and acquires corresponding obligations which a court will enforce. (p. 731, 155 P.2d 329.) The holders of monopoly power may not exercise their power in an arbitrary, unreasonable manner to bring injury to others, and autocracy is as inimical to American ideals when practiced by many as when practiced by one. (pp. 732, 733, 155 P.2d 329.) In the years that have followed the decision in James v. Marinship, supra, the scope of the doctrine that monopoly power must be fairly exercised under fair procedures has been steadily expanded to include craft and trade associations, professional societies, and public and private hospitals. (Ezekial v. Winkley (1977) 20 Cal.3d 267, 271-73, 142 Cal.Rptr. 418, 572 P.2d 32, and cases there cited.)

We think the parallel between James v. Marinship, supra, and the cause at bench is close, and that the same result obtains. Supersession of impartial court adjudication of disputes by an arbitration tribunal beholden to and affiliated with one of the contracting parties substitutes an unfair process for the judicial process. Arbitration of disputes by a partial tribunal is not a proper labor objective entitled to special protection of the law. Although arbitration is a favored procedure for the settlement of labor controversies, implicit in the encouragement of arbitration as a settlement device is the legitimate expectation that its tribunals will be fair and impartial. As the court observed in upholding a contractual requirement for arbitration of labor disputes in Charles Rounds v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888, 95 Cal.Rptr. 53, 484 P.2d 1397, the provision in the contract for compulsory arbitration specified boards “composed of an equal number of representatives from both management and labor,” provisions which would lead both the union and the employer to expect “fair consideration of complaints which either might lodge against the other.” (p. 893, 95 Cal.Rptr. p. 56, 484 P.2d p. 1400.) In our view an arbitration tribunal under the absolute control of the representative of one of the parties does not constitute a fair and impartial tribunal.

The second fundamental objection to a union's use of its monopoly power to compel a non-member to arbitrate contractual disputes with union members before the union is the existence in all persons of a constitutional right of access to the courts. (Ex parte Merryman (1861) 17 Fed.Cas. 144, 150 (No. 9487); Ex parte Milligan (1866) 71 U.S. 2, 122, 126, 130-31 (4 Wall) 18 L.Ed.2d 281; Boddie v. Connecticut (1971) 401 U.S. 371, 374-76, 91 S.Ct. 780, 784-85, 28 L.Ed.2d 113; Payne v. Superior Court (1976) 17 Cal.3d 908, 914, 132 Cal.Rptr. 405, 553 P.2d 565.) Since the time of Magna Carta, the right of access to the courts has been part of the law of the land. This right has been summarized in Blackstone's Commentaries on the Laws of England (4th Cooley ed. 1899), Book I, p. 141, in a chapter dealing with rights of persons:

“Right of redress in courts. A third subordinate right of every Englishman is that of applying to the courts of justice for redress of injuries. Since the law is in England the supreme arbiter of every man's life, liberty, and property, courts of justice must at all times be open to the subject, and the law be duly administered therein. The emphatical words of Magna carta, spoken in the person of the king, who in judgment of law (says Sir Edward Coke, is ever present and repeating them in all his courts, are these: Nulli vendemus, nulli negabimus, aut differemus rectum vel justitiam (to none will we sell, to none deny, to none delay either right or justice): ‘and therefore every subject,’ continues the same learned author, ‘for injury done to him In bonis, in terris, vel persona (either in his goods, lands, or person), by any other subject, be he ecclesiastical or temporal, without any exception, may take his remedy by the course of the law, and have justice and right for the injury done to him, freely without sale, fully without any denial, and speedily without delay.’ ”

As the United States Supreme Court said in Boddie v. Connecticut (1971) 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113, in defining the importance of courts in the rule of law:

“It is to courts, or other quasi-judicial official bodies, that we ultimately look for the implementation of a regularized, orderly process of dispute settlement. Within this framework, those who wrote our original Constitution, in the Fifth Amendment, and later those who drafted the Fourteenth Amendment recognized the centrality of the concept of due process in the operation of this system. . . . Only by providing that the social enforcement mechanism must function strictly within these bounds (due process of law) can we hope to maintain an ordered society that is also just.” (p. 375, 91 S.Ct. p. —-.)

When a person subject to a contract of adhesion agrees to relinquish his right of access to the courts and accept a substitute, the substitute must not only comport with fundamental fairness but must satisfy the due process clause of the Fifth and Fourteenth Amendments to the Constitution. The compulsory arbitration that can serve as a substitute for access to the courts must be arbitration that comports with due process of law. (Hines v. Anchor Motor Freight (1976) 424 U.S. 554, 564, 567, 571, 96 S.Ct. 1048, 1056, 1057, 1059, 47 L.Ed.2d 196.) Procedural due process requires a fair process of decision making (Fuentes v. Shevin (1972) 407 U.S. 67, 80, 92 S.Ct. 1983, 1994, 32 L.Ed.2d 556), and alternatives to the courts for private resolution of disputes must conform to due process of law. (Boddie v. Connecticut (1971) 401 U.S. 371, 375-76, 91 S.Ct. 780, 784-85, 28 L.Ed.2d 113.) The heart of due process consists in adjudication by an impartial adjudicator. Compulsory use of the AFofM's governing board as arbitrator of disputes between union members and nonmembers makes the arbitration clause at bench vulnerable to the impact of this constitutional guaranty. It is difficult to take at face value defendants' argument that a contracting labor-affiliated group is justified in foreclosing access by the other contracting party to the courts by requiring advance acceptance of a substitute which does not conform to elementary due process.

Defendants in effect seek to supersede the yellow-dog contracts of an earlier era, under which an employee was required by his employer to sign a contract not to join a union (Coppage v. Kansas (1915) 236 U.S. 1, 7, 35 S.Ct. 240, 59 L.Ed. 441), with its own version of yellow-dog contract, under which an employer is required by a union to agree not to resort to the courts but to accept the union as arbitrator of disputes between union members and their employers. We recognize that parties may voluntarily enter one-sided contracts, as for example, a spouse who agrees that all future financial differences will be arbitrated by a mother-in-law, and we recognize that if a party does not protest such a contract in advance of arbitration, the courts will not interfere. (Federico v. Frick (1970) 3 Cal.App.3d 872, 84 Cal.Rptr. 74.) But where, as here, a party asserts the agreement was involuntary and protests in advance the fairness and impartiality of the arbitration procedure, a court which is asked to confirm the arbitration award must examine the arbitration procedure to determine if its circumstances comport with due process of law. If they do not, the court will not permit its facilities to be used to enforce an award which is the product of an unconstitutional procedure specified in a contract executed under economic compulsion. (Cf. Shelley v. Kraemer (1948) 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161.)

Finally, as in James v. Marinship Corp. (1944) 25 Cal.2d 721, 155 P.2d 329, the union claims that the substance and procedure of the dispute are exclusively determinable by federal labor law and therefore a state court is powerless to apply its own law. This proposition, meritorious when state and federal law conflict, becomes immaterial when state and federal law are one, when both legal systems constitutionally require elementary due process of law in arbitration procedures. (Code Civ.Proc., ss 1281, 1286.2; 9 U.S.C., ss 2, 10; Chattanooga Mailers Union v. Chattanooga News-Free Press (1975) 524 F.2d 1305, 1315.) A labor union which demands compulsory arbitration by a partial tribunal is presenting a demand which is incompatible with due process of law, both state and federal, and is pursuing an illegal objective. (Commonwealth Corp. v. Casualty Co. (1968) 393 U.S. 145, 148, 89 S.Ct. 337, 339, 21 L.Ed.2d 301; Associated General Contractors v. N. L. R. B. (7 Cir. 1972) 465 F.2d 327, cert. denied (1973) 409 U.S. 1108, 93 S.Ct. 907, 34 L.Ed.2d 689 (union demand for partisan arbitration board an unfair labor practice); Bethlehem Mines Corp. v. United Mine Workers (3 Cir. 1974) 494 F.2d 726 (union strike to enforce selection of its desired arbitrator enjoined as unlawful).

In support of its position Scissor-Tail cites two federal district court cases, unreported in the Federal Reporter system: Musicians, Local 336 v. Bonatz (1974) 90 LRRM 2956, and JOT Corp. v. GCS, Inc. (1976) 94 LRRM 2038. In the Bonatz case, as in Federico v. Frick (1970) 3 Cal.App.3d 872, 84 Cal.Rptr. 74, the losing party did not challenge the fairness of the arbitration procedure until the arbitration had gone against him. A party to a controversy cannot gamble on a favorable outcome in arbitration, and then challenge the legitimacy of the arbitration tribunal after he has lost on the merits. At bench, Graham timely challenged the validity of the arbitration tribunal by seeking declaratory relief before arbitration. Scissor-Tail's other cited case, JOT Corp. expresses views that are seemingly contradictory to ours, but that case merely involved a preliminary order directing that arbitration be held, an order similar to the one issued earlier in this cause by the superior court. The JOT Corp. court did not possess the opportunity we have had to evaluate the actual course of arbitration by the governing board of the AFofM, a course wholly at variance with the fundamental principle of arbitration set out in Commonwealth Corp. v. Casualty Co. (1968) 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301.

To sum up, the concepts of economic coercion, of contracts of adhesion, of a monopoly's duty of fairness, and of the state's responsibility not to enforce contracts incompatible with constitutional rights, are all relevant here, and together they coalesce into the broader concept of a personal right to due process of law. Graham did not waive that right, and he is entitled to have it protected by the court. We conclude, therefore, that the contract clause which requires arbitration by the International Executive Board of the AFofM as arbitrator is unenforceable. But we are also of opinion that the provision for arbitration itself is severable and enforceable with a disinterested and impartial arbitrator. (Richards v. Merrill Lymch, Pierce, Fenner & Smith, Inc. (1976) 64 Cal.App.3d 899, 906, 135 Cal.Rptr. 26; Erving v. Virginia Squires Basketball Club (1972) 349 F.Supp. 716, 719, affirmed, 468 F.2d 1064, 1067.) Apparently all parties now consent to arbitrate their dispute, about whose merits we express no opinion.

The judgment of the superior court confirming the arbitration award is reversed, and the cause is remanded to the superior court with directions to appoint a neutral arbitrator under the procedure specified by California law (Code Civ.Proc., s 1281.6). Scissor-Tail's cross-appeal for attorneys' fees is dismissed as moot. Costs in both appeals are awarded to Graham.

FLEMING, Acting Presiding Justice.

COMPTON and BEACH, JJ., concur.