Consumer Law & Policy Blog

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.

Top-Side Amicus Briefs Filed in AT&T v. Concepcion

In AT&T v. Concepcion, the Supreme Court will decide whether companies can use the fine print of contracts to ban class actions by consumers or employees for discriminatory, fraudulent, or deceptive practices. 

The amicus briefs in support of AT&T were filed today.  We're posting them below and are also adding them to the  new web page that we've created to help people follow the case:

American Bankers Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable, and California Bankers Association (Alan Kaplinsky)

Center for Class Action Fairness

Chamber of Commerce of the United States (Roy Englert)

CTIA -- The Wireless Industry Association (Paul Clement)

DirectTV, Comcast Corporation, and Dell Inc.

DRI -- The Voice of the Defense Bar (Kevin Newsom)

Equal Employment Advisory Council

Law Professors (Andrew McBride)

New England Legal Foundation

Pacific Legal Foundation

The States of South Carolina and Utah

[Disclosure: Deepak Gupta and Scott Nelson of Public Citizen Litigation Group are lead counsel for the respondents in AT&T v. Concepcion in the Supreme Court.]

Will the Supreme Court Issue a Wildly Activist Decision in AT&T Mobility v. Concepcion?

by Paul Bland, Claire Prestel, and Melanie Hirsch

The consumer and civil rights communities are closely watching AT&T Mobility v. Concepcion, a case that will be argued in the Supreme Court this November.  Depending on how broadly the Court reads the question presented in Concepcion, the case could decide the fate of consumer and employee class actions for years to come.

[Disclosure: Deepak Gupta of Public Citizen Litigation Group, which hosts this blog, is counsel of record for the respondents in Concepcion. The views expressed in this article are solely those of the authors.]

The Corporate Abuse at the Heart of Concepcion

The Concepcion case involves the widespread corporate practice of using standard-form contracts to ban class actions.  Many state courts have held such class-action bans unenforceable, but AT&T Mobility (“ATTM”) has asked the Supreme Court to find that at least some of that state law is preempted by the Federal Arbitration Act (“FAA”).  To understand why the Court’s holding in Concepcion could be so significant, it is important to understand how class-action bans come to be and why they are often disastrous for consumers and employees.

Class-action bans are contract terms that purport to prevent consumers and employees from ever participating in class proceedings.  As in Concepcion, they are often buried in companies’ standardized arbitration clauses. Class-action bans favor companies at consumers’ and employees’ expense, but companies can impose them unilaterally because they draft the contracts. Consumers and employees rarely have time to read the lengthy agreements companies send them, let alone the ability to understand their dense legalese. And even if they did, few consumers or employees could negotiate the contracts’ terms.

Companies love imposing class-action bans because they dramatically undermine enforcement of consumer- and employee-protection laws.  Unlike European countries which mostly rely on large and powerful government agencies to enforce consumer protection and civil rights laws, the U.S. has relatively small government agencies which handle relatively few cases.  Most enforcement of these laws in the U.S. is done by private parties.  We rely upon individual consumers or employees who’ve been cheated or discriminated against to bring cases enforcing these laws.  Many types of illegal behavior can be addressed through individual cases by a single consumer.  But the reality is that many types of illegal behavior that harm very large numbers of people – thousands, sometimes hundreds of thousands of individuals – can only be meaningfully addressed through class actions.

Petitioner's Brief Filed in AT&T v. Concepcion (Enforceability of Class-Action Bans)

by Deepak Gupta

We're previously mentioned AT&T v. Concepcion, a case in which the U.S. Supreme Court will decide whether class-action bans in consumer and employment contracts may be held unconscionable, and hence unenforceable, under generally applicable state contract law.  Because they have embedded these class-action bans in their standard arbitration agreements, corporate defendants have repeatedly argued that such state-law rulings are preempted by the Federal Arbitration Act of 1925. The lower courts, both state and federal, have uniformly rejected that preemption argument.  Public Citizen Litigation Group represents the respondents, Vincent and Liza Concepcion, the California consumers who seek to bring a consumer fraud class action against AT&T.

Yesterday, AT&T filed its opening brief. Read it here. 

When the amicus briefs supporting AT&T are filed next week, we'll post them here as well.

Forced Arbitration and the Kagan Hearings

by Deepak Gupta

 The forced arbitration of claims arising out of statutory protections for consumers and employees has become a hot topic at the Kagan hearings. The parade of comments by Senators started even before the hearings began, with a written statement by Senator Leahy criticizing the Supreme Court's 5-4 decision in Rent-a-Center v. Jackson, and similar remarks on the Senator floor by Senator Franken (video of which we've already posted here). The topic was raised again in Senator Whitehouse's opening statement on Monday and in an extended colloquy between Franken and Kagan this morning.

In his statement, Leahy called the Rent-a-Center decision "a blow to our nation’s civil rights laws and the protections that American workers have long enjoyed under those laws." He noted that "more than one hundred million Americans work under binding mandatory arbitration agreements" and that "most Americans are not even aware that they have waived their constitutional right to a jury trial when they accept a job to provide for their families."

Congress worked for years on a bipartisan basis to pass laws to protect workers from race discrimination, gender discrimination and age discrimination.  . . . Rent-a-Center is unfortunately just the latest in a line of divisive and devastating Supreme Court decisions where five justices have, in effect, gutted those statutory protections. ... Congress should now take a closer look at the way in which binding mandatory arbitration is creating a legal underground where American workers are left without protection. 

There is no rule of law in arbitration. There are no juries or independent judges in the arbitration industry. There is no appellate review. There is no transparency. And as a result of today’s divisive ruling, there will likely be no justice for millions of American workers and their families.  The courthouse doors have simply been closed to them.  Today’s opinion also gives big business a disincentive to treat their employees fairly and will no doubt lead to virtually all companies requiring their employees to sign one-sided arbitration agreements as a condition of employment.

Senator Whitehouse's opening statement at the Kagan hearings struck a similar chord:

Unfortunately, the conservative wing of the current Supreme Court has departed from [the Court's] great institutional traditions. Precedents, whether of old or recent vintage, have been discarded at a startling rate. Statutes passed by Congress have been tossed aside with little hesitation, and constitutional questions of enormous import have been taken up hastily and needlessly. Only last week, the Rent-A-Center decision concluded that an employee who challenges as unconscionable an arbitration demand must have that challenge decided by the arbitrator. And the Citizens United decision -- yet another 5-4 decision -- created a constitutional right for corporations to spend unlimited money in American elections, opening our democratic system to a massive new threat of corruption and corporate control. There is an unmistakable pattern. For all the talk of umpires and balls and strikes at the Supreme Court, the strike zone for corporations gets better every day.

Finally, Senator Franken this morning used the hearings as an opportunity to sharply critique not only the recent Rent-a-Center decision, but also the Court's 2001 decision in Circuit City v. Adams, which rewrote the Federal Arbitration Act to include most employee claims.  The relevant portion of the transcript form this morning's hearings is available after the jump.

NY Times Editorial on Forced Arbitration and the Supreme Court

Today's New York Times contains this terrific editorial, linking to Public Citizen's research on mandatory arbitration outcomes, criticizing the Supreme Court's recent decision in Rent-a-Center v. Jackson, and endorsing intervention by Congress:

Beware the Fine Print

Buried in the fine print of most contracts for cellphones, health insurance and credit cards is a clause requiring that all disputes be decided by binding arbitration, rather than a court. Businesses love these provisions, because arbitrators act quickly and almost always rule in their favor, and many employers are requiring new hires to sign similar agreements.

All of this sounds pretty unfair, but apparently not unfair enough for the Supreme Court, which has now made the arbitration process even more onerous. The court ruled last Monday there was nothing wrong with requiring that the fairness of an arbitration clause be determined by — an arbitrator. To appreciate the absurdity, consider the case at hand, which was brought by Antonio Jackson, a black account manager for Rent-A-Center in Nevada who tried to sue the company for racial discrimination after being denied repeated promotions.

Mr. Jackson had earlier signed an employment agreement saying that all employee discrimination claims had to be arbitrated but a host of claims brought by Rent-A-Center against employees could go before a judge. Any challenge to the fairness of the arbitration clause would also have to go before an arbitrator.

A federal judge dismissed Mr. Jackson’s lawsuit because of the arbitration clause, but the Ninth Circuit Appeals Court revived it, saying courts could rule when arbitration agreements were “unconscionable.” That decision was reversed by Justice Antonin Scalia and the four other conservative members of the Supreme Court.

By challenging the entire arbitration agreement as lopsided and unfair, the majority said, Mr. Jackson triggered the need for arbitration and could not seek court relief. Justice John Paul Stevens, in one of his final fervent dissents, described that notion as “fantastic.” If a contract is invalid, he said, how can the arbitration clause it contains still be valid?

There are many ways in which an arbitration clause might be considered “unconscionable.” What if an employer inserts a provision that the employee has to pay all arbitration fees? Or that the employer gets to pick the arbitrator? In one famous case, a contract between the Hooters restaurant chain and its employees allowed the company to select two members of a three-arbitrator panel. That contract was struck down. Unless Congress changes the rules, these cases may never get back to the courts, where they have a chance for a fair resolution.

Senator Franken Condemns 5-4 Decision in Rent-a-Center v. Jackson

On the Senate floor, Senator Al Franken condemned the Supreme Court’s decision in Rent-A-Center v. Jackson (in which a 5-4 majority of the Court upheld the power of arbitration agreements to remove even threshold questions of validity from review by a court) and discussed how the case of Jamie Leigh Jones illustrates the effect of cases like Circuit City Stores v. Adams. 

“Clearly this is a ruling that Congress needs to fix and I look forward to working with my colleagues to do so,” said Franken. “Sometimes it’s easy to forget that Supreme Court matters to average people, to our neighbors and our kids."

 

Supreme Court Decides Rent-a-Center v. Jackson: Companies Can Delegate Unconscionability Challenges to the Arbitrator

A divided Supreme Court today dealt a major blow to consumers and employees seeking to challenge arbitration agreements on the ground that they are unfair or unconscionable. Public Citizen was co-counsel in the case, Rent-a-Center v. Jackson, and will be spearheading efforts in Congress to curtail its effects.

In a 5-4 decision by Justice Scalia, the Court held that if a company’s arbitration agreement includes a clause delegating fairness challenges to the arbitrator, a court must enforce that agreement and send the matter to arbitration. The Court's decision arose out of an employment discrimination claim brought by Antonio Jackson, an African-American Nevada man, against his former employer. When Mr. Jackson sued, the company invoked its arbitration agreement and claimed that, under the agreement, any challenges to the agreement had to be decided by the arbitrator.

Until today’s Supreme Court decision, consumers and employees had the right, under Section 2 of the Federal Arbitration Act, to go to court and ask a judge to find an arbitration agreement unconscionable or unfair and therefore unenforceable. Although most arbitration agreements are enforceable, court review weeded out the very worst abuses—like imposing exorbitant fees, forcing consumers or employees to travel great distances to arbitrate, or allowing a corporation to pick an arbitrator that is clearly biased in its favor.

Today’s Supreme Court decision will leave many challenges to the fairness of a corporate arbitration system entirely in the hands of arbitrators themselves. Nothing will stop companies from inserting clauses like the kind approved by today’s decision into standard-form arbitration agreements. Companies would then be free to impose one-sided terms or select clearly biased arbitrators with close ties to the company, secure in the knowledge that any challenge to the fairness of arbitration will be decided by the arbitrator whose very authority comes from the challenged arbitration agreement.

In a stinging dissent, Justice Stevens pointed out that neither party had urged the rule adopted by the Court and characterized the Court’s reasoning as “fantastic.”

Today’s decision will spur efforts in Congress to pass the Arbitration Fairness Act (H.R. 1020, S. 931), a measure that would ensure that any decision to arbitrate in a consumer, employment, or franchise dispute is made voluntarily and after a dispute has arisen, so that corporations cannot take advantage of their unfair bargaining power to force individuals into arbitration.

Public Citizen’s co-counsel in the case were the Hardy Law Group of Reno, Nevada, and Public Justice of Washington, D.C. Oral argument was presented by Ian Silverberg of the Hardy Law Group.