Can An Arbitration Class Action Waiver Be Enforced If The Plaintiff Would Not Be Able To Effectively Vindicate Federal Statutory Rights Through Arbitration?
The United States Supreme Court will soon decide whether its holding in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), concerning the enforceability of a class action waiver through an agreement to arbitrate, can be extended, or is limited to the facts in AT&T Mobility. American Express Company v. Italian Colors Restaurant, Case No. 12-133, 2012 WL 3096737 (U.S. Nov. 9, 2012) (“Amex”). As reported by Debra Cassens Weiss in the ABA Journal on November 12, 2012, the Supreme Court granted cert to hear this case on November 9, 2012, with Justice Sonia Sotomayor recusing herself.
Concepcion ruled that the Federal Arbitration Act pre-empted the rule existing in California (Discover Bank v. Superior Court, 134 Cal.App.4th 886 (2005))allowing consumers to avoid the contractual waiver of class-action rights by means of an agreement to arbitrate. Concepcion involved contractual issues and consumers unhappy with their cell phone provider.
Amex involves merchants unhappy with terms of allegedly burdensome credit cards issued by Amex that don’t require full payment, and that the merchants feel have been foisted upon them, in violation of the Sherman Anti-Trust Act. The issue in Amex involves whether the class-action waiver found in the arbitration provision can be enforced when federal statutory rights are at stake and it would be prohibitively expensive to bear the costs of arbitrating anti-trust disputes in order to vindicate federal statutory rights.
We found it interesting to see just how Amex and Italian Colors Restaurant had framed the issue for the Supreme Court. As our law professors sometimes reminded us, “to ask the question is to answer it.” Without comment, we quote the questions presented to the Supreme Court below.
As framed by Amex:
“Whether the Federal Arbitration Act permits courts,
invoking the ‘federal substantive law of arbitrability,’
to invalidate arbitration agreements on the ground
that they do not permit class arbitration of a federal law
claim.”
As framed by respondent Italian Colors Restaurant:
“This Court has repeatedly recognized that federal
statutory claims may be appropriately resolved through
arbitration “so long as the prospective litigant effectively
may vindicate [its] statutory cause of action in the arbitral
forum.” Green Tree Fin. Corp.-Ala. v. Randolph, 531
U.S. 79, 90 (2000). The question presented—on which
there is no disagreement in the circuits—is whether an
arbitration clause should be enforced when there is no
dispute that a litigant has shown that it would be unable
effectively to vindicate its federal statutory rights in the
arbitral forum.”
For a concise statement of what is at stake, we recommend the blog post of David Horton, Acting Professor of Law at U.C. Davis.
We note that Deepak Gupta, who represented Concepcion, now represents Italian Colors Restaurant.
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