AT&T Mobility LLC v. Concepcion

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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

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

The Supreme Court’s decision today in American Express Co. v. Italian Colors Restaurant (pdf), No. 12-133, eliminated the last significant obstacle to adoption of fair, efficient arbitration systems that increase access to justice for consumers while reducing transaction costs for everyone, particularly the huge legal fees of both plaintiffs’ lawyers and defense lawyers.

In AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the Supreme Court held that the Federal Arbitration Act (FAA) prohibits courts from refusing to enforce arbitration agreements on the ground that they do not provide for class actions. Today’s ruling in American Express makes clear that Concepcion’s determination applies to claims under federal law as well. Mayer Brown represented AT&T Mobility in Concepcion and filed an amicus brief (pdf) for the Chamber of Commerce of the United States of America and Business Roundtable in American Express.

American Express has significant implications both for courts’ consideration of attempts to invalidate arbitration agreements and for the policy debate over the enforceability of those agreements. We discuss both, after explaining the grounds for the Supreme Court’s ruling.Continue Reading Supreme Court Rejects Challenge to Arbitration Agreements

In the wake of AT&T Mobility LLC v. Concepcion, the California Supreme Court granted review in three cases involving significant arbitration issues, including key questions about whether the Federal Arbitration Act preempts California law concerning the enforceability of arbitration agreements.

My colleagues and I have filed amicus briefs on behalf of the Chamber of Commerce of the United States in all three cases, the most recent of which is Iskanian v. CLS Transportation, No. S204032.

In Iskanian, the Second District of the California Court of Appeal had affirmed an order compelling individual arbitration in a putative class/representative action alleging, among other things, that the defendant had failed to pay overtime and provide required meal and rest breaks. For more background on the grant of review and the decision below, please see our prior blog post here.

The Chamber’s amicus brief (pdf) to the California Supreme Court explains why the court of appeal was correct.Continue Reading U.S. Chamber of Commerce Files Amicus Brief On Arbitration Issues In Key California Supreme Court Case

Last Saturday marked the two-year anniversary of the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, a decision that has had an enormous impact on the world of class-action litigation.  To date, Concepcion has been cited in over 650 decisions, and (for the most part) has been applied broadly to enforce agreements to arbitrate on an individual basis.

On Wednesday (May 1), my colleagues Andy Pincus and Evan Tager will join me in presenting a one-hour webinar on arbitration and class actions after Concepcion.  The three of us represented AT&T before the Supreme Court in Concepcion, …
Continue Reading Webinar on Arbitration And Class Actions Two Years After Concepcion

Earlier today, the Ninth Circuit issued its en banc opinion in Kilgore v. KeyBank, N.A. The court had granted en banc review to decide whether the Federal Arbitration Act preempts California’s so-called “Broughton/Cruz” rule, which declares that claims for “public” injunctive relief under California consumer protection statutes are unsuitable for, and exempt from, arbitration.

As we have discussed in prior blog posts—and argued in an amicus brief on behalf of the U.S. Chamber of Commerce—the answer should be easy. The Supreme Court stated in AT&T Mobility LLC v. Concepcion that “[w]hen state law …
Continue Reading Ninth Circuit Narrows California Exception To Arbitration Agreements, But Puts Off Deciding Whether FAA Preempts The Exception Altogether

The Supreme Court heard oral argument earlier today in Oxford Health Plans LLC v. Sutter, No. 12-135, on whether the Federal Arbitration Act (“FAA”) allows an arbitrator to interpret an arbitration agreement that does not affirmatively authorize class arbitration to permit use of that procedure.

For some background on Oxford, please see our prior blog post.  My takeaway from the argument (transcript here) is that two competing principles under the FAA were in play.  On the one hand, class arbitration is highly disfavored:  The Supreme Court has previously explained—both in Stolt-Nielsen S.A. v. AnimalFeeds International Corp.…
Continue Reading Supreme Court Hears Argument In Class Arbitration Case, Oxford Health Plans v. Sutter

Since Concepcion, the plaintiffs’ bar has been exhorting courts to recognize exceptions to its holding that courts may not refuse to enforce an arbitration agreement on the ground that it precludes class actions.  In the employment context, the plaintiffs’ bar thought that it had a winner with Chen-Oster v. Goldman Sachs,  in which a magistrate judge concluded (and a district court agreed) that Title VII bars enforcement of such agreements when the named plaintiff seeks to rely on “pattern-or-practice” evidence of discrimination.  Last week, however, the Second Circuit reversed Chen-Oster and closed the loophole in Parisi v. Goldman, …
Continue Reading Second Circuit Reverses Denial Of Individual Arbitration In Title VII Class Action

Yesterday, my colleagues and I attended oral arguments before the Supreme Court in American Express Co. v. Italian Colors Restaurant, No. 12-133, in which we submitted an amicus brief on behalf of business groups.   As readers of the blog know, the issue in American Express is whether plaintiffs may avoid their agreements to arbitrate on an individual rather than class-wide basis by contending that they cannot “effectively vindicate” their federal claims without the use of the class device.   The Second Circuit held that a plaintiff who can prove that that it would be “economically irrational” to pursue his or her federal antitrust claims without resort to class actions may avoid arbitration.  From the oral arguments, a majority of the Supreme Court appears prepared to reject the Second Circuit’s conclusion.

(Update: An audio recording of the argument is available here.)

American Express had a bit of a head start in light of AT&T Mobility LLC v. Concepcion, in which the Court held two terms ago that the Federal Arbitration Act preempts state-law rules that would condition the enforceability of arbitration agreements on the availability of class procedures.  (We represented AT&T in Concepcion).  In our American Express amicus brief, we explained that Concepcion’s “holding rested on this Court’s conclusion that class arbitration is ‘not arbitration as envisioned by the FAA,’ ‘lacks its benefits,’ and is therefore ‘inconsistent with the FAA.’ There is no basis for believing that the FAA views the fundamental—and therefore protected—characteristics of arbitration differently when a plaintiff’s claim arises under federal law.”

At oral argument, the Justices and parties seemed to take it as given that plaintiffs could not invoke the FAA or the Sherman Act to attack their arbitration agreements solely because they forbid class procedures.  Instead, the argument focused on the meaning and breadth of the language in prior Supreme Court decisions referring to whether a litigant may “effectively vindicate her federal statutory rights in the arbitral forum.”Continue Reading Supreme Court Appears Poised To Reject Second Circuit’s Articulation of “Effective Vindication Of Federal Statutory Rights” Defense For Avoiding Class Arbitration Waivers

Some academics and commentators have been reading the tea leaves in Wal-Mart Stores, Inc. v. Dukes (pdf) and AT&T Mobility LLC v. Concepcion (pdf) as spelling doom for consumer and employment class actions. That’s overwrought; Dukes rejected an extremely adventuresome application of the class action rules by the Ninth Circuit, and Concepcion merely reminded courts that they can’t get around the Federal Arbitration Act by insisting that arbitration agreements permit expensive aspects of judicial litigation that are completely alien to arbitration in its traditional form. The continuing flood of class action filings is proof that the spigot hasn’t been shut off. But companies should pay attention to where the plaintiffs’ bar thinks they should move next if filing class actions stops being a viable business model.

In a recent article—After Class: Aggregate Litigation in the Wake of AT&T Mobility v. Concepcion (pdf), 79 U. Chi. L. Rev. 623 (2012)—law professor Myriam Gilles and plaintiffs’ lawyer Gary Friedman shine the spotlight on state attorneys general:

In our view, the “private attorney general” role assumed by class action lawyers over the past several decades should give way to a world in which state attorneys general make broad use of their parens patriae authority—far greater use than they have in the past—to represent the interests of their citizens in the very consumer, antitrust, wage-and-hour, and other cases that have long provided the staple of class action practice.

And to tackle complex cases, we would hope to see underfunded AG offices making use of the lawyers who have acquired expertise in originating, investigating, and prosecuting class actions, as well as financing them.

The linchpin of this strategy is, of course, the money. If a state AG can’t give the deputized class action lawyers a big chunk of the money recovered for citizens, the model falls apart. Of course, money was one of the main problems with the biggest experiment with deputizing private lawyers as state AGs—the states’ lawsuits against the tobacco industry. Then-Texas AG Dan Morales was sentenced to four years in prison for attempting to steer millions of dollars from the proceeds of the tobacco settlement to a Houston lawyer.

So what should businesses do if they face one of these parens patriae lawsuits from a faux “acting AG”? Here are a few thoughts:
Continue Reading What’s Next for the Class Action Plaintiffs’ Bar? Getting Deputized by State Attorneys General