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Posts Tagged ‘unconscionability’

I’m a few weeks behind in reporting this, but I still thought it was worth noting that the Florida Supreme Court held oral argument last month in a case that could test the the reach of the U.S. Supreme Court’s 2011 decision on class arbitration waivers in AT&T Mobility v. Concepcion.  In McKenzie Check Advance of Florida LLC v. Wendy Betts, SC11-514, the plaintiff relied on factual evidence in an attempt to prove that the lack of a class action device has made it impossible for her to obtain legal representation to pursue her claims in arbitration.  The case thus potentially raises the question of whether a case-specific finding of unconscionablility, as opposed to a statewide policy invalidating class arbitration waivers more generally, is permissible despite the Court’s holding in Concepcion (I say potentially because it appears that there are factual questions about whether the evidence really supports the proposition that there would be no lawyer willing to take the plaintiff’s case in an individual arbitration).  Recall that the arbitration provision at issue in Concepcion contained several consumer-friendly features, which could have supported the conclusion that it did not actually deprive a consumer of any opportunity to vindicate his or her rights, although Justice Scalia’s majority opinion did not turn on the existence of these features.

This AP article by Bill Kaczor has a good summary of the arguments on both sides and some of the key questions posed during oral argument.  A link to the video feed of the oral argument can be found here (although the server was not responding when I tried to play it).

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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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The U.S. Supreme Court will hear oral argument next week in a case involving one of the hottest issues in class action law these days, the enforceability of class arbitration waivers.  Class arbitration waivers are contract clauses that require arbitration, combined with an agreement to waive the right to pursue any dispute as a class action. 

AT&T Mobile LLC v. Concepcion, docket no. 09-893, is an appeal of the Ninth Circuit’s opinion in Laster v. AT&T Mobile LLC, No. 08-56394 (9th Cir. Oct. 27, 2009), which held that a class arbitration waiver in a mobile phone terms of service agreement was unconscionable as a matter of California law. 

The Ninth Circuit opinion was in line with a trend among state and federal courts in striking down class arbitration waivers in consumer contracts on unconscionability grounds.  However, the case involved what the Ninth Circuit called a “new wrinkle”.  The clause at issue had provided for a “premium” payment of $7,500 to a consumer who obtained an arbitrator’s award higher than the company’s last settlement offer.  This provision arguably provided the incentive to pursue an individual suit that courts had found to be lacking in previous cases involving class arbitration waivers.  Despite the wrinkle, the court found that the case was not distinguishable from an earlier case in which it had found a class arbitration waiver unconscionable, and it rejected the defendant’s argument that the Federal Arbitration Act preempted the application of state law in determining the enforceability of the waiver.

The supreme Court granted certioriari to consider:

Whether the Federal Arbitration Act preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures-here, class-wide arbitration-when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.

SCOTUS Blog has this preview of the upcoming oral argument.

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