Consumer Law & Policy Blog

Stipanowich Paper on the Struggle to Shape American Arbitration

Thomas Stipanowich of Pepperdine has written Revelation and Reaction: The Struggle to Shape American Arbitration in CONTEMPORARY ISSUES INTERNATIONAL ARBITRATION AND MEDIATION: THE FORDHAM PAPERS 2010, Martin Nijhoff, 2011.  Here's the abstract: 

In this article, Professor Stipanowich explores recent decisions by the U.S. Supreme Court and the implications for the respective domains of courts of law and arbitration tribunals regarding so-called “gateway” determinations surrounding the enforcement of arbitration agreements and the contracts of which they are a part. The decisions address the complex interplay between federal substantive law focusing on questions of arbitrability, a body of law defined and expanded by the Court under the Federal Arbitration Act (FAA), and the law of the states and bring into play competing judicial philosophies of contractual assent and contrasting views about the balance between policies promoting the autonomy of contracting parties and judicial policing of overreaching in the context of contracts of adhesion.

According to Prof. Stipanowich, the Court’s current jurisprudence, which may be seen as establishing and expanding a “second tier” of the “revealed” substantive law of arbitrability under the FAA first given shape and substance in the 1980s, is a flashpoint for special concerns associated with standardized contracts directing consumers and employees to arbitrate. Prof. Stipanowich believes that this will inevitably add momentum to current efforts to enact national legislation outlawing pre-dispute arbitration agreements in consumer, employment and other classes of contracts, with possible negative consequences for business-to-business arbitration.

In part I of his article, Prof. Stipanowich offers a short history of the evolution of Supreme Court decisions concerning the “revelation” and expansion of federal substantive law under the Federal Arbitration Act (FAA). Parts II and III then discuss recent Supreme Court cases reflecting the Court’s continuing reliance on the wellspring of divined federal law as a basis for promoting party autonomy in arbitration while limiting lower courts’ ability to police such agreements. Part IV briefly explores the dynamic political response to the extreme, non-nuanced pro-arbitration position developed in modern Court jurisprudence. Finally, Prof. Stipanowich concludes the article by calling for carefully crafted legislation or administrative regulations limiting the use of arbitration agreements in adhesion contracts or establishing due process standards for such agreements.

Letter to the Times on Consumer Class Actions

The Times recently published my letter to the editor.

Class-Action Lawsuits

To the Editor:

Re "The Arbitration War" (editorial, Nov. 27):

The legal issues before the Supreme Court in AT&T v. Concepcion may seem complex, but what's really at stake is the ability of people to band together and challenge fraud, discrimination and other wrongful practices.

AT&T wants the court to allow corporations to ban class actions through their contracts with consumers and employees. As your editorial correctly explains, AT&T is asking the court to second-guess state contract law, which protects the state's residents from such overreaching.

Although not without abuses, class actions have become an essential tool for resolving the common legal grievances of large groups of people. Brown v. Board of Education was a class action. The fate of class actions should be decided by our elected representatives, not by private legislation tucked into the fine print of take-it-or-leave-it contracts.

Deepak Gupta

Washington, Nov. 29, 2010

The writer, a lawyer with the advocacy group Public Citizen, recently argued on behalf of the consumers before the Supreme Court in AT&T v. Concepcion.

Paper on Capping the Costs of Consumer Arbitration

Michelle Eviston and Richard A. Bales, the latter of Northern Kentucky University - Salmon P. Chase College of Law, have written Capping the Costs of Consumer and Employment Arbitration, forthcoming in the University of Toledo Law Review.  Here's the abstract:

Arbitration agreements requiring arbitration but imposing costs of thousands of dollars can effectively make it impossible for consumers and employees to bring their disputes in any forum. The Supreme Court has stated that high costs can make an arbitration agreement unenforceable, but has not articulated clear standards. Lower courts are split two ways on the issue: some courts have adopted a per se approach and others a case-by-case approach. This article argues that the Federal Arbitration Act should be amended to take a third approach: arbitration fees paid by consumers or employees should be limited to what consumers or employees would pay if they litigated their claim.

 

Post-Argument Coverage of AT&T v. Concepcion

by Deepak Gupta

Because I don't have a crystal ball, I'll leave to others the task of making predictions based on yesterday's oral arguments before the U.S. Supreme Court in AT&T v. Concepcion.  (By the way, here's some of the latest scholarship on such prediction-making.)

If you want to play along at home, you can come up with your own prognostication based on the transcript, one of the excellent summaries by Professors Lawrence Cunningham or Jean Sternlight, or some of the press coverage:

• "Overall," according to SCOTUSblog, "post-argument predictions about the case’s outcome tilt toward a victory by respondents Vincent and Liza Concepcion, but not everyone was willing to make predictions based on the argument." 

• "Recent Supreme Court decisions have generally favored the enforcement of arbitration agreements and have been wary of aspects of class-action litigations. But it was hardly clear at Tuesday’s arguments that those two trends would continue in the latest case." Adam Liptak, Supreme Court Weighs Class-Action Suits, New York Times

• "A victory for consumers and class action litigators seemed possible on Tuesday as the Supreme Court heard arguments in a high-stakes dispute over clauses that block class actions as a way of resolving contract disputes." Tony Mauro, Class actions on the ropes? Not likely, National Law Journal

• "My sense tells me that the anti-consumer, anti-class action bias will win this one. Not so much on the merits, but because of the politics." Steve Berk, AT&T v. Concepcion: Almost live from the Supreme Court,The Corporate Observer

• "[I]t doesn't look as though there are too many votes at the high court to do away with the right of consumers to band together to sue the great American manufacturers of fine print." Dahlia Lithwick, Can You Hear Them Now? The Supreme Court reads the fine print on your cell phone contract, Slate

• "Based on what was said during the argument, I predict a 8-1 or 7-2 vote for the consumers and California, with Alito dissenting and Roberts a toss up. Thomas, who never speaks at oral argument, will vote for the consumers and state on federalism grounds, as he always does in FAA cases." Lawrence Cunningham, Argument in Class Waiver Case Favors Consumers, States, Concurring Opinions

• "The Supreme Court seemed disinclined to let companies use legal fine print to block class actions, with several justices suggesting they might defer to state courts that ruled in favor of consumers." Jess Bravin, Justices Question Contracts That Block Class Actions, Wall Street Journal

• "AT&T's odds are mixed: ... Justices Clarence Thomas and Antonin Scalia are sympathetic to these cases due to their states' rights ideology. But no one will be surprised if AT&T and its big business backers prevail." Stephanie Mencimer, Consumer Protection's Citizens United, Mother Jones

• "In sum, I think Respondents have to be pleased with how the argument went.  A significant number of Justices seemed to recognize that some arbitration provisions are unconscionable, and that second-guessing lower courts’ unconscionability rulings can raise some difficult federalism and administrative issues." Jean Sternlight, ADR Prof Blog

• "While Chief Justice John Roberts and Justice Samuel Alito appeared this morning to join Mr. Pincus in trying to come up with support for preemption in this case, it appears that they may come up a few votes short (with the usual caveat that it is always a risky business to predict how the Court will rule based on oral argument)." Elizabeth Wydra, ACSblog.

For you ultrawonks out there, here's even more coverage:

• David Savage, Supreme Court weighs whether consumers' small suits can be combined, Los Angeles Times
• Robert Barnes, Justices hear case on class-action arbitration, Washington Post
• Jeremy Hobson, Is banning class action lawsuits unconstitutional?, NPR Marketplace (interviewing David Lazarus of the L.A. TImes)
• Ashby Jones, Class-Action Lawyers Breathing Easier After High Court Argument, Wall Street Journal
• Bill Mears, High court to decide dispute over taxes on 'free cell phone,' CNN
• Mark Sherman, Court hears dispute over 'free' phone, Associated Press
• Joan Biskupic, Supreme Court hears sales tax case on 'free' phone, USA Today
• Jon Hood, The End of Class Actions?, Consumer Affairs
• Greg Stohr, Consumer Arbitration case divides U.S. Supreme Court, Businessweek
• Lawyers USA, Supreme Court hears AT&T class action waiver dispute, Daily Record
• Brendan Fischer, Supreme Court Considers Corporate Right to Mandatory Arbitration, Center for Media and Democracy
• David Heath, High Court Ponders If Companies Can Force Consumers to Sign Away Right to Class-Action Suits, Center for Public Integrity
• Erika Morphy, A lot hinges on SC's ruling in $30 cellphone sales case, E-Commerce Times
• Scott Lemieux, Consumer Protection at the Supreme Court, The American Prospect
• Nan Aron, Will the Supreme Court Grant Big Business a License to Steal
• Ian Milhiser, The Supreme Court's One Thousandth Cut Against Consumers, Center for American Progress

We posted some of the pre-argument coverage here -- most notably these columns by David Lazarus in the LA Times and Prof. Brian Fitzpatrick (Vanderbilt Law) in the SF Chronicle.  An archive, including all of the briefs, is available here.

Times Coverage of AT&T Mobility Oral Argument

Here.

Pre-argument commentary on AT&T Mobility v. Concepcion

by Deepak Gupta

Here's a roundup of some of the latest commentary on the the Concepcion case, which I'll be arguing tomorrow before the U.S. Supreme Court: 

• Brian Fitzpatrick, Supreme Court case could end class-action suits, San Francisco Chronicle
  

• David Lazarus, Consumers' right to file class actions is in danger, Los Angeles Times

• Amanda Becker, Supreme Court case involving class actions could affect waitresses' suit against Hooters, The Washington Post
  

• Matthew Hathaway, Plenty at Stake in Class Action Case Before Supreme Court, St. Louis Post-Dispatch
  

• Alliance for Justice, AT&T v. Concepcion: Will the Supreme Court Give AT&T A License to Steal?
  

• Ed Mierzwinski, Next Up For the Supreme Court That Brought You Unlimited Corporate Campaign Cash: Do Consumers Have the Right to Band Together To Fight Corporate Crime?, Huffington Post

• Stephen C. Webster, AT&T pushes Supreme Court to demolish right to join class action lawsuits, The Raw Story

• David Horton, AT&T v. Concepcion, PrawfsBlawg

• American Constitution Society, 'The Stakes are High' in AT&T V. Concepcion, ACSblog

ACS Briefing on Concepcion

Here's the video of the American Constitution Society's panel discussion on AT&T v. Concepcion held on Tuesday at the National Press Club. If you want to hear some fireworks, skip forward to the presentation by Paul Bland (scroll down on the right). For more restrained academic commentary, listen to the presentations by Nina Pillard (providing an overview of the case) and Steve Ware (flagging what he takes to be AT&T's two key arguments, both having to do with the contours of state contract law).

Some Commentary on Concepcion

Here's a roundup of some recent commentary on AT&T v. Concepcion.  You can find more commentary, briefs, and other information on the case at this page.

• Bonnie Robin-Vergeer, at the Making Justice Real blog, discusses an amicus brief filed on behalf of a big coalition of legal aid and national consumer groups. She says that [t]he case has the potential to be a blockbuster for consumer rights. . . . . [I]f the Court accepts AT&T’s position, businesses could effectively strip consumers of their right to pursue small claims in any forum because, for small individual claims, classwide proceedings often offer the only effective means for consumers to obtain redress and to force businesses to halt illegal practices." 

• At its Text & History blog, the Constitutional Accountability Center discusses its amicus brief, focusing on federalism. “Concepcion will test whether the Court’s federalism principles are trumped by its favoritism toward corporate America,” says Doug Kendall. “Concepcion should be an easy case,” Kendall said, “because state courts are vital in protecting the rights of American consumers, and the Federal Arbitration Act specifically preserves a critical role for state law."

• In a masthead editorial in Sunday's paper, The New York Times mentioned the case as part of a broader discussion of the Roberts Court and the battle over preemption. A win for the respondents in Concepcion, the Times opines, "would be good for consumers."

• Ian Millhiser at the Center for American Progress observes that "Class-action lawsuits enable many people with small dollar losses to join together in a single suit, and they make sure that corporate America cannot continuously break the law a few dollars at a time. Yet Concepcion could allow corporations to force consumers to sign both a forced arbitration agreement and a no-class-action agreement—a step that would further erode ordinary Americans’ power to hold big-moneyed interests accountable for lawbreaking."

• At the ADR Prof Blog, Richard Reuben of Missouri Law, an expert on arbitration law, observes that "if the 9th Circuit is reversed, one may reasonably question what is left of Section 2’s savings clause. After all, all Discover Bank did was apply general unconscionability law to the class arbitration context ... If that’s preempted, then how would any application of general contract law to arbitration be able to withstand preemption?"

Amicus Briefs in AT&T v. Concepcion

by Deepak Gupta

The amicus briefs supporting our side in AT&T v. Concepcion are due today.  As they come in, we'll post them here and add them to the case webpage.  (As most readers of this blog are probably aware, the case concerns the enforceability of class-action bans in consumer and employment agreements.)

American Antitrust Institute

American Association for Justice

Constitutional Accountability Center

Lawyers' Commiteee for Civil Rights Under Law, Employee Rights Advocacy Institute for Law & Policy, National Employment Law Project, National Employment Lawyers Association, National Partnership for Women & Families, and National Women's Law Center

Legal Aid Society of D.C., AARP, Center for Responsible Lending, Center for Science in the Public Interest, Consumer Action, Consumer Federation of America, National Association of Consumer Advocates, National Consumer Law Center, National Consumers League, National Legal Aid and Defender Association, Public Good, U.S. Public Interest Research Group

Mary Grace Coneff, et al. (Named Plaintiffs in Related Case)

NAACP Legal Defense & Education Fund, Inc.

National Academy of Arbitrators

National Workrights Institute

Professors of Arbitration

Professors of Civil Procedure and Complex Litigation

Professors of Contract Law

Professors of Federal Jurisdiction

States of Illinois, Maryland, Minnesota, Montana, New Mexico, Tennessee, Vermont, and the District of Columbia

Class-Action Bans in the Supreme Court: Respondents' Brief in AT&T v. Concepcion

by Deepak Gupta

Today we filed our merits brief for the respondents in the U.S. Supreme Court in AT&T v. Concepcion.  The question in Concepcion is whether companies can use the fine print of take-it-or-leave-it contracts to strip consumers and employees of the opportunity to bring or participate in a class action.  Companies accomplish this by embedding class-action bans in mandatory arbtiration clauses, thereby precluding classwide proceedings in any forum (court or arbitration).  Thus, the case isn't really about arbitration at all; it's about whether stronger parties can use contracts of adhesion to exempt themselves from accountability for systemic wrongdoing.

In our brief, we argue that the Federal Arbitration Act does not trump state-law rulings holding that class-action bans, where they would have the effect of exculpating the defendant from liability, are unconscionable and unenforceable.  The amicus briefs on our side are due next Wednesday, October 6.

In related news, those of you in the Washington area may be interested in attending an event hosted by the American Constitution Society on October 19 at noon, at the National Press Club, at which participants will discuss the case.  I won't be speaking, nor will my opposing counsel.  But you'll get to hear what I expect will be some spirited debate between Paul Bland, Nina Pillard, Alan Kaplinsky, and Steve Ware. Lunch will be served. 

You can read more about the Concepcion case, including all of the briefs filed so far, here.