Tag Archives: arbitration

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Arbitration Round Up: Some Courts Still Won’t Respect Voluntary Contracts

Cross-posted at WLF’s Forbes.com contributor site

Despite the Supreme Court’s recent affirmation that arbitration agreements must be enforced by their terms (AT&T Mobility v. Concepcion), some courts continue to go to great lengths to avoid them.  Take for instance the California Court of Appeal that recently held an arbitration agreement unenforceable because it wasn’t signed, despite that the employee was herself tasked with obtaining signed arbitration agreements from the other employees, she represented to the company that she had signed it, and the company had required she sign it as a condition of her employment.

Of course, the National Labor Relations Board (NLRB) made it easier for judges to flout the Supreme Court’s decision in Concepcion when it ruled in D. R. Horton Inc. that to include a mandatory class arbitration waiver in an employment agreement is to commit an unfair labor practice, as it violates the employees’ right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection..”.  Continue reading →

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1st Circuit Holds No Right to Remain Silent When it Comes to Arbitration Agreements

Cross-posted at WLF’s Forbes.com contributor site

In raising the bar for what’s required to avoid class action arbitration, the U.S. Court of Appeals for the First Circuit may not only have run afoul of the Supreme Court’s ruling in Stolt-Nielsen, but effectively limited the possibility that the case will apply in the future.  In Fantastic Sams Franchise Corp. v. FSRO Association Ltd., the court held that silence in an arbitration agreement as to whether class wide arbitration is permissible does not bar the imposition of class arbitration.  Following Stolt-Nielsen v. AnimalFeeds International Corp.–in which the Supreme Court had ruled that class arbitration could not be imposed on parties “who have not agreed to authorize class arbitration”–it was believed by some that class arbitration could only result if the agreement explicitly authorized it.  The First Circuit, however, factually distinguished Stolt-Nielsen, and in doing so limited its holding to the circumstances in that case.

In Fantastic Sams, plaintiff FSRO–an association of Fantastic Sams franchisees–brought suit against Fantastic Sams for alleged license agreement violations.  Because the license agreements of 25 of those franchisees explicitly provided for individual arbitration, the district court held that those parties could not move forward on a class-wide basis.  With respect to the remaining ten franchisees, whose license agreements were silent on the subject, Fantastic Sams argued that–pursuant to Stolt-Nielsen–collective arbitration similarly could not proceed.

The court, however, distinguished Stolt-Nielsen based on the fact that, in that case, not only was the contract silent as to class, but further both parties stipulated that they had reached no agreement as to the matter.  The determinative fact was not the contract’s silence, but rather that both parties agreed that they had not agreed as to class arbitration.  Thus, while in Stolt-Nielsen there was “no room for an inquiry regarding the parties’ intent,” in Fantastic Sams the agreements were merely silent, and the parties’ intent as to class arbitration was unclear. (After Fantastic Sams, one will be hard pressed to find a plaintiff willing to make the same stipulation.)  Subsequently it was for the arbitrator to determine if class arbitration was contemplated–as a matter of contract interpretation.  Continue reading →

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California Appeals Court Decision Upholds Class Action Arbitration Waiver

Guest Commentary

Katie Owens, a 2012 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

On June 4, 2012, the California Court of Appeal for the Second District issued a decision of great interest to businesses, upholding the use of class action waivers in employment arbitration agreements.

In Iskanian v. CLS Transportation Los Angeles, LLC the plaintiff, Arshavir Iskanian, was a driver for defendant CLS from March 2004 to August 2005. As part of his employment, Iskanian signed a “Proprietary Information and Arbitration Policy/Agreement,” an arbitration agreement providing that “any and all claims” arising from his employment be submitted to binding arbitration before a neutral arbitrator. In August 2006, Iskanian filed a class action complaint against CLS alleging several causes of action under California’s Labor Code and Unfair Competition Law, including failure to pay overtime, provide meal and rest breaks, and reimburse business expenses. CLS filed a motion to compel arbitration under the agreement signed by Iskanian, but then later withdrew it. The parties then proceeded to litigate the case.

Applying the California Supreme Court’s standard from Gentry v. Superior Court, where under certain circumstances a class waiver “would impermissibly interfere with employees’ ability to vindicate unwaivable rights and to enforce the overtime laws,” the trial court granted Iskanian’s motion to certify the case as a class action. Continue reading →

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Will Anti-Consumer Movement to Eliminate Arbitration Succeed?

Bloomberg Businessweek published an article yesterday with the hopeful title, Consumers May See New Limits on Mandatory Arbitration. The article parroted and quoted the perspectives of activists and former government regulators like Elizabeth Warren and Public Citizen’s Deepak Gupta that arbitration is deeply unfair to consumers and deprives them of their day in court.

For another view on how arbitration clause challenges have fared in court in federal agencies, we encourage you to view Washington Legal Foundation’s Web Seminar program, Arbitration after AT&T Mobility v. Concepcion: Judicial, Regulatory, and Strategic Legal Responses to High Court’s 2011 Ruling. Mayer Brown LLP partners Andy Pincus and Evan Tager, who argued on behalf of AT&T Mobility in the case in the Supreme Court and in the Ninth Circuit, respectively, were our speakers.

This hour-long program requires free registration, and the video and audio broadcast must be viewed using Internet Explorer.

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Three Federal Courts Ignore NLRB’s Controversial Ruling On Arbitration

Millions of parties enter into arbitration agreements each year, and those parties expect courts to honor those agreements.  Congress enacted the Federal Arbitration Act (FAA) to protect this very freedom of contract.  And the Supreme Court has consistently reaffirmed that arbitration is a matter of consent, and that private agreements to arbitrate should be enforced according to their terms.

Plaintiffs’ attorneys, on the other hand, hate arbitration agreements because they deprive them of having contingency fee clients.  Resolution under mandatory arbitration is often swifter than trials, and plaintiffs’ attorneys often get little or no money out of them.

The National Labor Relations Board (NLRB) recently ruled against home builder D.R. Horton, holding that a class action waiver was unenforceable under the National Labor Relations Act (NLRA).  At issue was D.R. Horton’s mutual arbitration agreement and class action waiver that the company entered into with its employees.  The NLRB held that an agreement proscribing class and representative actions violates the NLRA, which gives employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

Continue reading →

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Hot Coffee, The Movie: Cup-Half-Full Propaganda on Legal Reform

Cross-posted by Forbes.com at On the Docket

The Merriam Webster Dictionary’s definition of the word “propaganda” is “ideas, facts, or allegations spread deliberately to further one’s cause or damaging an opposing cause.”  That definition fits a spare-no-expense 90-minute documentary movie titled Hot Coffee.  The purpose of the movie’s dedicated producer, Susan Saladoff, a Oregon plaintiffs’ lawyer, is to undermine the purpose and credibility of the United States’ civil justice reform movement.  While the movie’s pro-plaintiff’s transparency may elude some, it is more likely to be the center of a ruckus cheering section for the plaintiffs’ bar.  Four of their biggest pet peeves are the movie’s focus.  

The Infamous Spill. Although it occurred over twenty years ago, plaintiffs’ lawyers despised the publicity that surrounded the so-called “hot coffee case.”  The “hot coffee case” spotlights Stella Liebeck, an elderly woman who in the early 1990s, while sitting in the passenger seat in a car at a McDonald’s restaurant in New Mexico, spilled a cup of coffee on herself.  This spill resulted in very serious third degree burns which are shown graphically in the movie.  While Ms. Liebeck’s injury is indeed tragic, the fundamental fact remains that, however terrible her injuries, a McDonald’s employee did not spill the coffee on Ms. Liebeck, she spilled the coffee on herself.  The automobile in which she was a passenger did not have a coffee cup holder.  That fact had not been well publicized until the movie.  Under the movie’s thesis that others are to blame for one’s own conduct, one might wonder why Ms. Liebeck did not bring a design liability claim against the manufacturer of the automobile because it lacked cup holders.  If there had been a coffee cup holder, she might not have spilled the coffee on herself.  Perhaps her lawyers thought that McDonald’s was an easier target. Continue reading →

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Supreme Court Observations: AT&T Mobility v. Concepcion

Guest Commentary

Andrew McBride and Thomas McCarthy, Wiley Rein LLP*

The Supreme Court’s Wednesday ruling in AT&T v. Concepcion is a resounding win for freedom of contract principles.  It is also a great victory for both businesses and consumers.  

The Court reaffirmed that arbitration is a matter of consent and held that “class arbitration, to the extent that it is manufactured by [state law] rather than consensual,” is preempted by the Federal Arbitration Act (FAA).  The Court thus ensures that private agreements to arbitrate will be enforced according to their terms.  The Court’s ruling is quite broad; under the majority’s reasoning, it does not matter how a state might attempt to strike at class-arbitration waivers (through statute, regulation, or common law ) or on what rationale (e.g., unconscionability doctrine or amorphous concepts of public policy).  Any state law “[r]equiring the availability of class wide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” Continue reading →

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Supreme Court Should Protect Contract Rights in AT&T Mobility Case

Guest Commentary

Charles Moore, White & Case LLP

Tomorrow the U.S. Supreme Court will hear oral argument in an arbitration case with implications for federal preemption, AT&T Mobility v. Concepcion.  In addition to this Guest Commentary, WLF has published a paper in its newest release format, “On the Merits” on the Concepcion case, available here.

The Supreme Court of the United States has the opportunity in AT&T Mobility LLC v. Concepcion, No. 09-893, to continue its encouraging recent trend of protecting arbitrating parties’ freedom of contract.  Several states — California in particular — have determined that traditional, bilateral arbitration should be modified in the consumer context, requiring parties to follow courtroom-style class action procedures even where they bargained those rights away.  This dispute raises a question regarding the availability of class arbitration.  Specifically, the matter presents the following question for the Court’s resolution:

Whether a state may condition enforcement of an arbitration agreement on the availability of certain procedures—here, class-wide arbitration—where those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims and were never agreed to by the parties. Continue reading →

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Five Questions for . . . Glen Nager on the U.S. Supreme Court Term

On Monday, the U.S. Supreme Court returns from a two-week hiatus from oral arguments and begins a busy month where the Justices will hear arguments in 17 cases.  The Legal Pulse asked two leading Supreme Court advocates (both of whom serve on Washington Legal Foundation’s Legal Policy Advisory Board) – Glen D. Nager of Jones Day and Thomas C. Goldstein of Akin Gump Strauss Hauer & Feld LLP – for their views on the October 2010 term as it enters its second month.  We will hear from Mr. Nager today, and Mr. Goldstein on Monday.

Glen D. Nager is the chair of the law firm Jones Day’s Issues & Appeals Practice and serves on WLF’s Legal Policy Advisory Board.

The Legal Pulse: Can you extract a general theme or jurisprudential approach that this group of justices takes toward business-oriented cases from the cases in that area accepted for review this Term?

 Glen Nager:  In a word, no.  Under the Court’s rules, the Court grants review of cases that implicate conflicts among the courts of appeals or otherwise present issues of nationwide importance.  In my experience, applying these general criteria, each individual Justice evaluates petitions for certiorari on a case-by-case basis rather than with an overriding theme for a particular Term in mind.  Specific cases this Term may reflect the changing view of the Court on discrete issues.  For example, the Court’s grant of review in AT&T v. Concepcion – a case that will decide whether businesses can enforce contract provisions waiving the right to a class action in favor of individual arbitration – may reflect the Court’s growing approval of arbitration as an alternative to litigation.  However, the Court’s docket over the course of a Term is shaped mostly by the issues that are litigated in the Courts of Appeals rather than by any choice by the Justices to address particular issues in a systematic fashion.  Continue reading →

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WLF Focuses Inaugural Editon of New Publication Format on Key SCOTUS Arbitration Case

This week, Washington Legal Foundation introduced a new publication format, On the Merits, which will enhance WLF’s ability to communicate our public interest perspective.  This publication can be downloaded here.

Authored by leading practitioners and legal experts, On the Merits is a concise, timely, and substantive analysis of important pending litigation.  WLF will distribute each edition of On the Merits to major print and electronic media, judges, the public, government officials, law professors and students, and business leaders.

The format takes the innovative approach of offering distinct and opposing views of pending litigation through majority and dissenting “opinions.”

WLF’s first On the Merits focuses on an important arbitration case that will be argued before the U.S. Supreme Court on November 9, AT&T Mobility LLC v. Concepcion.  The case requires the Court to decide whether the Federal Arbitration Act (FAA) preempts states from nullifying an arbitration agreement on the grounds that an agreement not to proceed as part of a class is “unconscionable” and therefore unenforceable.

Jerrold Ganzfried, chairman of the appellate practice group at Howrey LLP, explains in our majority opinion why, consistent with the overriding federal policy favoring arbitration as an alternative method of dispute resolution, state law is preempted by the FAA.   Mr. Ganzfried elaborated on his thoughts about AT&T Mobility at WLF’s annual Supreme Court Preview briefing on September 16, which can be viewed here.

Offering a dissenting view, Scott Nelson, a staff attorney with the Public Citizen Litigation Group, argues that states are entitled in the first instance to decide which agreements are enforceable, irrespective of the FAA.

We invite readers of The Legal Pulse to suggest important pending court cases and expert participants to be featured in future editions of On the Merits.