Updated May 2: The Reaction to AT&T Mobility--Are Class Actions Next? (April 28).
April 28, 2011While reaction to last week's U.S. Supreme Court arbitration decision reflects an expected split between business and consumer interests, at least one academic is asking a bigger question: Will the Court’s view that businesses can now bar class arbitration lead to a wipeout of class actions generally?
The decision in AT&T Mobility v. Concepcion, No. 09-893 (details here), is strictly about the Federal Arbitration Act’s preemption effect. It doesn’t analyze litigation class action issues arising under the Federal Rules of Civil Procedure or the hot-button class certification issue.
But that hasn’t stopped speculation that Associate Justice Antonin Scalia’s majority opinion will eliminate not only class arbitration but also lead to the end of litigation class actions.
The Wall Street Journal Law Blog on Wednesday, April 27, and the April 28 New York Times (registration needed) featured the analysis of Brian T. Fitzpatrick, an associate professor of law at Vanderbilt University in Nashville. His thesis is simple: Businesses can use arbitration agreements in their consumer agreements, which won’t permit a move to class arbitration under AT&T Mobility.
And since an arbitration agreement once established is favored—in a concurrence yesterday, Associate Justice Clarence Thomas says even public policy shouldn’t invalidate an arbitration contract—there will be no class litigation filed against the business using the arbitration clause.
Fitzpatrick—a former Scalia clerk who is a civil procedure expert, not an arbitration professor—told the Times, “The decision basically lets companies escape class actions, so long as they do so by means of arbitration agreements.”
Late on April 29, the WSJ Law Blog examined whether the new Bureau of Consumer Financial Protection, headed by former Harvard Law School Prof. Elizabeth Warren, could move to preserve class actions. Details here.
The April 28 edition of Democracy Now said that AT&T Mobility could have a ripple effect on the Court's decision in Wal-Mart Stores v. Dukes, No. 10-277. The case, argued March 29, involves a sexual discrimination complaint by about half a million women Wal-Mart employees. The issue before the Court, however, is not arbitration, but certification--that is, whether the complaints have enough in common to be joined under civil procedure rules in a class-action case.
The Los Angeles Times also invokes the Wal-Mart case, here.
The National Law Journal on the day of the decision the opinion with business and consumer leaders, and provides the reactions. See Marcia Coyle, “Court deals potentially fatal blow to class action arbitrations,” National Law Journal (available here)(free with registration).
Scotusblog provided a comprehensive roundup of all the coverage the day after the opinion was released, here, and followed it up on May 2, here and here.
Meantime, AT&T Mobility talk is firing up message boards and blogs. Speculation is moving to a Congressional remedy--likely to be a harder sell with a Republican House. The Concepcions' attorney, Deepak Gupta, who is at Public Citizen, a Washington, D.C., public interest group, said in a statement that the decision "makes it all the more essential for Congress to take up legislation ending forced arbitration in consumer and employment contracts." (See his full statement here.)
Georgia Democratic Rep. Hank Johnson acted immediately, vowing soon after the decision was released to reintroduce his Arbitration Fairness Act, sometime this week. The act would bar mandatory predispute arbitration in employment and consumer contracts. (See his press release here.)
Johnson's Senate-side sponsor was Russ Feingold, a Wisconsin Democrat voted out of office last November. The reintroduction will be sponsored by Minnesota Sen. Al Franken, and Connecticut Sen. Richard D. Blumenthal, both Democrats.
Franken sponsored a bill signed into law in 2009 that restricts the use of mandatory arbitration by defense contractors in Title VII employment cases, sparked by a case involving the sexual assault of a contractor's employee in Iraq.
A good discussion of AT&T Mobility can be found at the ADR Prof Blog, which features multiple posts on the case, including one that says the case can be viewed as another nail in the coffin of the use of “manifest disregard of the law” as a ground for striking an arbitration award.
--Russ Bleemer, Editor, Alternatives