Monday, March 23, 2015
The case is DIRECTV, Inc. v. Imburgia. You can read all about it on SCOTUSblog.
The issue is:
Whether the California Court of Appeal erred by holding, in direct conflict with the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act requires the application of state law preempted by the Federal Arbitration Act.
The case involved a consumer contract with a class action waiver in Section 9. It also provided as follows: “if . . . the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.” However, Section 10 states that "Section 9 shall be governed by the Federal Arbitration Act."
The California Court of Appeal for the Second District affirmed the superior court's denial of DirectTV's motion to compel arbitration. Because the class action waiver violates California law, the entire arbitration clause is unenforceable. We'll see what SCOTUS (or at least five of its members) has to say about that!