Wednesday, December 16, 2015

FAA Wins Again: DirectTV

Lise Gelernter of Buffalo sent out the following to the  National Academy of Arbitrators listserv. Although DirectTV is a consumer case, she thought it might be of interest to us employment types.

The Supreme Court just decided another consumer-related arbitration case (copy attached) -- DirecTV v. Imburgia.  In this case, the Court considered a class-action waiver in a 2007 contract that customers had with DirecTV in California.  The contract waived access to class action arbitration, EXCEPT " 'if the law of your state' does not permit agreements barring class arbitration, then the entire agreement to arbitrate becomes unenforceable." (Quoting from Justice Ginsburg's dissent).

The California Court of Appeal held that the "law of your state" language meant state law regardless of whether it was later preempted by the FAA (as it was in the Concepcion case). Since California law ruled out the banning of class arbitrations, the California court had held that the clause was unenforceable in California.

 The majority didn't buy it, in a 6-3 decision written by Justice Breyer.  Justice Thomas dissented on the basis that he does not believe that the FAA is applicable in state court.  Justice Ginsburg wrote another dissent, joined by Justice Sotomayor, in which she said the California court had correctly interpreted the clause and the meaning of the term "law of your state."

It's an interesting lineup -- in the Concepcion case, Scalia wrote the 5-4 decision, joined by Roberts, Alito, Kennedy and Thomas. Breyer wrote the dissent in Concepcion, joined by Sotomayor, Ginsburg and Kagan. In contrast, in the DirecTV case, Breyer wrote the majority 6-3 decision, joined by the same judges as in the Concepcion majority, except for Thomas, with the addition of Kagan.  It looks like Breyer and Kagan, although they dissented in Concepcion case, decided that parties had to adhere to  Concepcion as the law of the land.

In an interesting twist, DirecTV is now owned by AT&T, the company in the Concepcion case.

Keep in mind that class action arbitration is still a possibility in restricted circumstances, even under the recent Supreme Court apparent expansion of FAA preemption.  In Oxford Health Plans v. Sutter, 133 S. Ct 2064 (2013), the Supreme Court refused to vacate an arbitrator's decision that had construed ambiguous language in a contract to permit class action arbitrations. However, many corporations rewrote their arbitration clauses after Concepcion to be very unambiguous about prohibiting class arbitrations.

And I could add, from the employment side, that the NLRB's Horton rule is still being heavily litigated in the courts, although we have yet to see a circuit court decision upholding the principle that an agreement waiving all right to class relief violates the NLRA and Norris LaGuardia.


CAS 

https://lawprofessors.typepad.com/laborprof_blog/2015/12/faa-wins-again-directtv.html

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