As readers of this blog know, prior to the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, the California Supreme Court (and a number of other state courts) had declared that waivers of class-wide arbitration were unenforceable as a matter of state law. But in Concepcion, the Supreme Court held that the Federal Arbitration Act (“FAA”) preempts state-law rules requiring the availability of class-wide arbitration.

How do the FAA and the Supremacy Clause of the U.S. Constitution affect the interpretation of arbitration clauses written prior to Concepcion? The Supreme Court may provide further guidance on that
Continue Reading Supreme Court Grants Certiorari To Address Interplay of Federal Arbitration Act And State-Law Savings Clause In Arbitration Agreement

Today is Halloween, an occasion when our thoughts turn to jack o’lanterns, ghosts, and zombies.  We are particularly fascinated by zombies—the dead returned to life. But we’re not the only ones.  In a decision earlier this week, a majority of the National Labor Relations Board voted to reanimate the dead.

The Board’s zombie of choice?  Its decision nearly three years ago in D.R. Horton (pdf), in which the Board sought to push back on arbitration agreements that require individual arbitration rather than class or collective actions.  As our readers know by now, most courts have accepted the Supreme Court’s clear
Continue Reading NLRB Refuses To Yield On Anti-Arbitration Ruling Despite Near-Unanimous Rejection By Courts

In the three years since AT&T Mobility LLC v. Concepcion, courts have largely been rejecting substantive attacks on arbitration agreements that waive class actions.  By contrast, in some cases plaintiffs have succeeded in avoiding arbitration by arguing that they never agreed to it in the first place.

The latest case to address such questions of contract formation comes from the Ninth Circuit, which held last week in Nguyen v. Barnes & Noble, Inc. that  plaintiff Kevin Nguyen had not agreed to arbitration because he and similarly situated consumers lacked sufficient notice of the company’s online “browsewrap” terms of use.  
Continue Reading Getting to “yes”: Ninth Circuit provides guidance on formation of “browsewrap” arbitration agreements

The hostility of some California courts to arbitration—and their resistance to preemption under the Federal Arbitration Act (FAA)—has produced nearly three decades of U.S. Supreme Court reversals. The most recent is AT&T Mobility LLC v. Concepcion, which held that the FAA preempted the Discover Bank rule, under which the California Supreme Court had blocked enforcement of consumer arbitration agreements that required individual rather than class arbitration. Last week’s decision in Imburgia v. DirecTV, Inc. (pdf) demonstrates that resistance to Concepcion lives on in the California courts, even at the cost of creating a split with the Ninth Circuit on
Continue Reading Another California Court Does Backflips to Thwart Arbitration and Elevate The Class-Action Device

Back in 2008, the Supreme Court held in Hall Street Associates, L.L.C. v. Mattel, L.L.C. that parties to an arbitration agreement subject to the Federal Arbitration Act (FAA) cannot agree to empower a federal court with more searching judicial review than section 10 of that Act specifies. According to the Ninth Circuit, just as the FAA doesn’t allow parties to contract for expanded judicial review of arbitral awards, it also forbids parties from contracting for narrower judicial review. The case therefore provides important guidance for parties crafting arbitration agreements.

Here’s some background. Section 10(a) permits a court to vacate an
Continue Reading Hall Street Runs Both Ways: Parties Can Neither Waive Nor Expand Judicial Review of Arbitration Awards, Says Ninth Circuit

The day after we released our study (pdf) of class action litigation, the Consumer Financial Protection Bureau issued some preliminary results in connection with its study of arbitration under the Dodd-Frank Act. (That statute gives the CFPB power to regulate or prohibit the use of arbitration agreements by the businesses it oversees, but requires the Bureau first to conduct a study of arbitration agreements.)

The agency repeatedly describes the information that it reports as “preliminary” and subject to further review and revision, and states that the subjects covered are those as to which it has been able to gather information—and
Continue Reading CFPB Has Much More Work To Do On Arbitration Study

We have frequently chronicled the ongoing efforts of the plaintiffs’ bar to circumvent the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, which held that the Federal Arbitration Act (FAA) requires the enforcement of parties’ agreements to resolve their disputes through individual arbitration rather than class or collective proceedings. One of the most prominent efforts to evade Concepcion has been the National Labor Relations Board’s ruling in D.R. Horton (pdf), which declared that the right of employees to engage in “concerted activities” under Section 7 of the National Labor Relations Act (NLRA) trumps the FAA and requires that employees be allowed to bring class actions (either in court or arbitration). The Board also pointed to the Norris-LaGuardia Act, which provides that employees “shall be free from the interference, restraint, or coercion of employers” in “concerted activities.” In the NLRB’s view, any business subject to the Board’s jurisdiction (and that includes most private-sector businesses) that requires its employees to agree to resolve disputes through individual arbitration has engaged in an unfair labor practice and faces the threat of agency action.

Numerous plaintiffs seeking to invalidate arbitration provisions in employment agreements have claimed that the Labor Board’s D.R. Horton decision establishes the invalidity of arbitration provisions that include a class waiver, but virtually every court to consider the question has declined to follow the NLRB’s lead. Yesterday, in an important decision for employers nationwide, the Fifth Circuit invalidated the Board’s decision, holding in DR Horton, Inc. v. NLRB (pdf) that the NLRB’s position is inconsistent with the FAA. In overturning the Board’s order, the Fifth Circuit noted its agreement with “[e]very one of our sister circuits to consider the issue,” each of which “has either suggested or expressly stated that they would not defer to the NLRB’s rationale, and held arbitration agreements containing class waivers enforceable.” Slip op. at 25 (citing Richards v. Ernst & Young, LLP (9th Cir.), Sutherland v. Ernst & Young LLP (2d Cir.), and Owen v. Bristol Care, Inc. (8th Cir.)). (Our colleague Andy Pincus will be arguing this issue in the Ninth Circuit later this week in Johnmohammadi v. Bloomingdale’s, Inc. on behalf of the U.S. Chamber of Commerce; a PDF of our amicus brief in that case is available here.)

Continue Reading Fifth Circuit Overturns NLRB’s Anti-Arbitration D.R. Horton Ruling

Law Seminars International is once again holding its annual class actions conference in Chicago on December 9 and 10.  As in past years, the organizers have put together a great group of speakers to address the most recent developments affecting class actions .  For my part, I am looking forward to speaking on an issue we cover frequently on the blog:  the impact of arbitration on class-action litigation.

 A copy of the conference’s agenda is available here.  If any of the blog’s readers plan to attend the conference (or will be in Chicago during that time), I would love

Continue Reading Conference On Class Actions In Chicago on December 9 and 10, 2013

The California Supreme Court has a long history of inventing new rules—either from common law or as “glosses” on statutes—to invalidate arbitration agreements entered into by consumers and employees. For example, in 2005, that court announced a new unconscionability rule—the“Discover Bank” doctrine, which was named after one of the parties to the case—that effectively blocked enforcement of every consumer arbitration agreement that did not permit class procedures. The U.S. Supreme Court’s landmark decision in AT&T Mobility LLC v. Concepcion held that the Federal Arbitration Act (“FAA”) preempted the Discover Bank rule.

Will the California Supreme Court faithfully apply
Continue Reading Will California Strike Again? The Latest Word From the California Supreme Court On Enforcing Arbitration Agreements

We frequently help companies address how to manage dispute resolution with their customers and employees—and in particular, how to make use of arbitration as a fair alternative to litigation in court (including class actions).  As a result, we have a great deal of experience with drafting new arbitration agreements and helping companies fine-tune their existing agreements.  We provide some of our insights in  a recent article published in the Spring 2013 issue of the ABA’s Dispute Resolution Magazine called Getting Under the Hood: A Practical Guide to Drafting Consumer and Employee Arbitration Agreements (pdf).  We hope that readers
Continue Reading How to Draft Fair and Enforceable Consumer and Employee Arbitration Agreements