Ninth Circuit

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Abuse of the arbitration system by plaintiffs’ lawyers through the filing of mass arbitrations is by now well-documented, including in a paper we authored for the Chamber of Commerce’s Institute for Legal Reform. Companies have responded by revising arbitration agreements to address this abuse, and arbitral forums have adopted new default rules to govern mass arbitrations when the issue is not addressed in the arbitration agreement.

Not surprisingly, plaintiffs’ lawyers—hoping to retain the ability to coerce settlements through mass-arbitration filings—are challenging contract provisions and arbitral forum rules that address the issue.

A panel of the Ninth Circuit recently refused to enforce the arbitration agreement in Ticketmaster’s terms of service, rejecting the company’s attempt to address the problem of mass arbitration by incorporating the rules of a new arbitration provider (New Era). That decision—Heckman v. Live Nation Entertainment, Inc.—is flawed in several respects. But more important for most businesses, the decision is narrow and rests on the unique aspects of the New Era rules adopted in the Ticketmaster agreement. Plaintiffs’ lawyers are already arguing that Heckman sweeps more broadly, but that approach misreads the opinion and, in addition, contravenes Supreme Court precedent interpreting the Federal Arbitration Act (FAA).

A majority of the Heckman panel first concluded that the arbitration agreement’s use of New Era’s rules was unconscionable under California law. Second, the entire panel—both the majority and the concurring judge—held that New Era’s rules transformed mass arbitrations into a type of arbitration so unlike traditional individual arbitration that (in the panel’s view) the FAA no longer applies. And the panel went on to say that without the FAA, which (as the Supreme Court held in AT&T Mobility LLC v. Concepcion) preempts California’s Discover Bank rule against waivers of class arbitration, Ticketmaster’s arbitration agreement was invalid under Discover Bank.

This post first describes the relevant background and the Ninth Circuit decision. We then explain why that decision is limited to New Era’s unique approach to mass arbitration—and that any broader reading of the decision is barred by the Supreme Court’s holdings in Concepcion and subsequent cases.Continue Reading Ninth Circuit holds that arbitration agreement adopting New Era’s mass-arbitration rules is unconscionable—but the decision is narrow and limited to New Era’s unique rules

The Seventh Circuit’s recent decision in Wallrich v. Samsung Electronics America, Inc. is significant news in the world of mass arbitration. In recent years, businesses have faced an increasing risk of being targeted by abusive mass arbitration campaigns that seek to leverage the arbitration fees the business must pay, win or lose, to coerce a settlement of even meritless claims. In Wallrich, Samsung was facing a mass arbitration that it contended was based on meritless claims; among other things, Samsung said, some of the claimants were not really Samsung customers at all.Continue Reading Seventh Circuit reverses order forcing Samsung to pay arbitration fees for mass arbitration

Today the Supreme Court held that when a party files an immediate appeal of a federal district court order denying arbitration, the district court must stay its proceedings relating to the merits (including discovery) during the appeal. The decision in Coinbase, Inc. v. Bielski will have a significant impact in federal courts in California and New York in particular, where the prior regime had given district courts wide discretion over whether to grant full or partial stays pending appeal or to deny stays altogether.

As we anticipated from attending the oral arguments, the Justices were closely divided on the issue. In an opinion for the Court written by Justice Kavanaugh, the Court held, by a vote of 5-4, that “the district court must stay its proceedings” pending the outcome of the appeal.Continue Reading Supreme Court holds that district courts must stay proceedings pending appeals of orders denying arbitration

This morning we attended the Supreme Court’s oral arguments in Coinbase, Inc. v. Bielski. The issue presented in Coinbase is a procedural one, but of tremendous practical importance to defendants that seek to enforce arbitration agreements: does an appeal from an order denying a motion to compel arbitration automatically stay further proceedings in the district court during the appeal? Continue Reading Supreme Court hears oral argument in cases involving stays pending appeals of orders denying motions to compel arbitration

Earlier this week, a Ninth Circuit panel sided with a coalition of business groups to affirm a preliminary injunction that stopped California state officials from enforcing California’s AB 51, a 2019 law that would have effectively prevented the formation of employment arbitration agreements in California. (Mayer Brown lawyers filed the lawsuit on behalf of the U.S. Chamber of Commerce and the California Chamber of Commerce and led briefing and argument in the Ninth Circuit.) This decision eliminates the considerable uncertainty about the use of arbitration to resolve employment disputes that had been caused by the enactment of AB 51 and…

Continue Reading Ninth Circuit Upholds Injunction Blocking a California Law That Would Have Severely Limited Employment Arbitration Agreements

Most potential class actions are resolved before class certification.  Often courts dismiss cases at the pleadings stage or grant early summary judgment.  Sometimes plaintiffs choose to dismiss their cases rather than continuing to pursue them.  And often class actions settle on an individual basis at an early stage.

The benefits are obvious.  Early settlements offer individual plaintiffs relatively quick payments.  They allow defendants the opportunity to end cases early without the need to pay the high costs—including often burdensome discovery-related costs—to defend against class litigation.  And they benefit the court system by avoiding needless litigation that can clog court dockets. …
Continue Reading Judicial review of pre-certification settlements: it’s time to put some district courts’ continued reliance on the Ninth Circuit’s Diaz rule to rest

Last Friday, the Supreme Court reversed the class-wide judgment in TransUnion LLC v. Ramirez (pdf), concluding that the lower courts had not properly applied the Court’s holding in Spokeo Inc. v. Robins and that the vast majority of the class members failed to satisfy the injury-in-fact requirement for Article III standing.  (Our firm, including the three of us, represented the petitioner in Spokeo, and we filed an amicus brief (pdf) in support of TransUnion.)

The Court’s holding has enormous practical significance for defendants facing class actions seeking statutory damages.  The Court reinforced Spokeo’s core holding that Congress’s creation…
Continue Reading Supreme Court adopts robust view of Article III standing limitations in TransUnion, reaffirming and fortifying Spokeo

It’s pretty common in consumer class actions in California for the plaintiffs to assert causes of action seeking damages as well other causes of action for various equitable remedies (such as restitution).  Sometimes, plaintiffs abandon the damages claims in order to get a bench trial on the equitable claims or in an effort to improve their chances of certifying a class.  In Sonner v. Premier Nutrition, the Ninth Circuit affirmed the dismissal of consumer-protection claims seeking solely equitable relief because legal damages were available in the same amount for the same alleged harm.
Continue Reading Ninth Circuit holds that California consumers who abandon damages claims can’t get restitution

In a very big deal for TCPA class actions, the Supreme Court granted review today in Facebook, Inc. v. Duguid. The petition (pdf) raises the most significant issue in litigation under the Telephone Consumer Protection Act (TCPA): what kind of equipment constitutes an “automatic telephone dialing system” (ADTS) triggering the TCPA’s restrictions on calls and texts? (The other question presented by the petition—the constitutionality and severability of the exception for government debts—was decided by the Court earlier this week.)

As we have reported, there is a deep circuit split over how to read the statutory language defining…
Continue Reading Supreme Court to decide what constitutes an autodialer under the TCPA

One of the most hotly-contested issues in litigation under the Telephone Consumer Protection Act (TCPA) is what equipment counts as an “automatic telephone dialing system” (ATDS) triggering the TCPA’s restrictions.  In 2018, the D.C. Circuit threw out the FCC’s interpretation of the statutory definition of an ATDS—which was so broad as to encompass smartphones—as arbitrary and capricious.  (See our report on the D.C. Circuit’s ACA International v. FCC decision.)  In the wake of that decision—while parties await the FCC’s new rule—courts around the country have been weighing in how best to interpret the statutory text.

The issue is now the subject of a deep circuit split.  In recent months, both the Seventh Circuit in Gadelhak v. AT&T Services, Inc. and the Eleventh Circuit in Glasser v. Hilton Grand Vacations Co. (pdf) have concluded that equipment that dials from a pre-selected list of phone numbers does not qualify as an ATDS.  (Disclosure: Mayer Brown represented AT&T in Gadelhak; Archis was on the briefs in the Seventh Circuit.) The Seventh and Eleventh Circuits thus rejected the Ninth Circuit’s more expansive interpretation of ATDS in Marks v. Crunch San Diego, LLC.  (See our report on Marks.)  The Second Circuit, in contrast, recently followed the Marks interpretation in Duran v. La Boom Disco.

In light of this growing divide, lawyers on both sides of the “v.” are waiting for the Supreme Court to step in.Continue Reading Seventh and Eleventh Circuits Reject, But Second Circuit Follows, Ninth Circuit’s Expansive Autodialer Definition in Marks