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Posts Tagged ‘federal common law’

On May 1, we received the following comment in response to a post from last May entitled Will AT&T v. Concepcion Really Kill the Consumer Class Action?

Melissa 

It has been almost a year. Could someone tell me, in their opinion, what effect Concepcion has had on consumer class actions over the last 11 months?

According to a recent New York Times article by David Segal titled A Rising Tide Against Class Action Suits, the effect has been significant.  The article cites a report from the consummer advocacy group, Public Citizen, which found 76 opinions relying on Concepcion as a reason to prevent class actions from “moving ahead.”

I have no reason to doubt the accuracy of the number of opinions cited in the Public Citizen report, and there is no doubt that Concepcion has had an impact on class action litigation, both in consumer class actions and in other subject matter areas.  However, I would caution that simply looking at the number of class actions that have been unsuccessful due to class arbitration waivers does not tell the whole story.   Here are a few observations to consider in assessing the impact of Concepcion:

  • Concepcion has not been treated by the lower courts as foreclosing all arguments for declaring an arbitration clause invalid.  A case in point is the Second Circuit’s recent decision in In re Amex III., which relied on the federal common law of arbitrability in declaring a class arbitration waiver invalid.
  • Class action litigation has been on the decline in substantive areas that are not impacted by arbitration clauses, such as in securties class actions.
  • There are many areas of consumer class action litigation that remain unaffected by arbitration clauses because they either involve claims where there may be no contractual relationship between the plaintiff and the defendant, including statutory penalty class actions such as TCPA class actions class actions and certain data privacy class actions, or they involve areas of the law where arbitration clauses are prohibited, including many insurance class actions.  A careful review of the data may show that consumer class action litigation has simply shifted to these areas.
  • Recognizing that arbitration clauses do not necessarily provide a magic talisman against class action litigation and that implementing an overly consumer-friendly arbitration clause may actually encourage litigation, not all companies have rushed to adopt arbitration clauses into their consumer contracts.

In summary, I would say that while Concepcion‘s ban on state laws invalidating arbitration clauses has become an important consideration in litigating consumer class actions, it has not brought about their end.

I’d love to hear what readers have to say about their own perspectives on this issue.  Please feel to comment below.

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The Baker Hostetler Employment Class Action Blog is constantly putting out quality content, but they have two new recent posts that I would especially recommend to my readers.  They include:

  • This February 6 post from John Lewis discussing the impacts, both on employment cases and otherwise, of the Second Circuit’s recent Amex III decision.
  • This February 6 Post from Greg Mersol discussing a recent federal court decision holding that the pleading standards articulated in Iqbal and Twombly do not apply to affirmative defenses in class actions.
  • This January 20 post from John Lewis discussing the U.S. Supreme Court’s most recent pro-arbitration opinion in CompuCredit Corp v. Greenwood.

Even if you aren’t an employment lawyer, I would strongly suggest adding www.employmentclassactionreport.com to your list of favorites!

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Class action news has slowed a bit over the Summer months, at least compared to the non-stop action we witnessed this Spring.  But one area that has seen continued development in the past few months has been the area of class arbitration waivers, where several lower court decisions have been issued in the wake of AT&T Mobility LLC v. Concepcion.  A view of the decisions shows that class actions are far from dead, despite the dire predictions of many experts following the decision.  As my partner, John Lewis, noted in a recent interview with the AmLaw Daily, “While many people thought Concepcion was the end of the line, now we’re seeing the reaction to Conception with district courts distinguishing it on various grounds.”  Here is a quick summary of several key decisions that have interpreted or applied Concepcion:

Chen-Oster v. Goldman Sachs, Inc. (link courtesy of Justia.com) – U.S. District Court for the Southern District of New York – July 7, 2011 – applying the federal common law of arbitrability in rejecting the argument that Concepcion required enforcement of class arbitration waiver in a gender discrimination pattern and practice case, holding that enforcement of the arbitration clause at issue would interfere with the enforcement of a federal substantive right.

Brown v. Ralphs Grocery Company (link courtesy of Impact Litigation Journal, which also has a  summary of the decision here) – California Court of Appeal – July 12, 2011 – holding that representative actions for state labor code violations under California’s Private Attorney General Act (PAGA) were not preempted by the FAA because Concepcion did not address preemption in cases involving PAGA’s statutory procedure and because the procedure did not involve many of the attributes of class action procedure that the Supreme Court had held were inconsistent with the purposes of arbitration.

Kanbar v. O’Melveny & Myers (link also courtesy of the AmLaw Daily) – U.S. District Court for the Northern District of California – July 21, 2011 –  holding in an employment discrimination case that notwithstanding Concepcion, an arbitration provision was unconscionable under California state law and that state law was not preempted under the FAA, but nonetheless compelling arbitration on the grounds that the plaintiff had waived her right to object to enforceability of the arbitration clause.

Cruz v. Cingular Wireless LLC – Eleventh Circuit Court of Appeals – August 11, 2011 – holding that Concepcion compelled the conclusion that arbitration clause was enforceable in a case involving the same exact arbitration clause that was at issue in Concepcion (the clause in AT&T’s mobile phone contract).

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