As we previously reported, the Ninth Circuit granted rehearing en banc in Kilgore v. KeyBank, NA, to determine whether the Federal Arbitration Act preempts a California public-policy rule that declares claims for so-called “public injunctive relief” off-limits to arbitration. On October 26, 2012, my colleagues and I, working with the National Chamber Litigation Center, filed an amicus brief on behalf of the Chamber of Commerce of the United States supporting KeyBank. As we discuss in the brief, California’s rule conflicts with the FAA for three principal reasons:
- First, the FAA flatly forbids States from “prohibiting arbitration of a particular type of claim”—as the Supreme Court reiterated earlier this year in Marmet Health Care Center, Inc. v. Brown, relying on AT&T Mobility LLC v. Concepcion. That is precisely what California’s rule does.
- Second, California’s prohibition of the arbitration of public-injunction claims rests on the impermissible assumption that arbitrators are not competent to enter or administer injunctive relief. That assumption reflects the same unfounded suspicions of and judicial hostility to arbitration that the FAA was enacted to override.
- Third, California’s rule impedes the accomplishment of the two fundamental purposes of the FAA: ensuring enforcement of arbitration agreements according to their terms and fostering the benefits of simplicity, informality, and expedition that flow from use of the arbitral process. Under the Supremacy Clause, states lack the power to override federal law, and cannot avoid the FAA’s requirement that arbitration agreements be enforced according to their terms simply by attempting to deputize plaintiffs (or their lawyers) as private attorneys general bringing claims on behalf of the general public.
The amicus brief also comprehensively refutes the plaintiffs’ argument that Supreme Court precedent authorizes courts to refuse to enforce arbitration agreements whenever they conclude that, for one reason or another, it is not possible for a plaintiff to “vindicate” a state statutory right—in this case the right to pursue a public injunction—in arbitration. The Ninth Circuit is expected to hear oral argument in Kilgore during the week of December 10. We’ll be watching.