In our last column, we discussed a comparative case study analyzing outside counsel fees, lifecycle and total costs. In this article—as part of our continuing analysis into the most effective arbitration practices—we analyze the latest court decisions regarding the enforceability of consumer and employment arbitration agreements. Our goal is to provide a brief overview of the relevant legal issues, the current state of the law and how to take advantage of the favorable environment. We start with the U.S. Supreme Court, and then we’ll turn to the federal circuit courts and the state of California.
The Supreme Court
With the exception of the 2nd Circuit, the circuit courts have adopted the Concepcion rationale. The 3rd Circuit in Antkowiak v. TaxMasters vacated a finding of unconscionability of a class action waiver in an arbitration clause and remanded the case to be retried consistent with the Concepcion holding. The 3rd Circuit has since relied upon AT&T Mobility to strike down state prohibitions on class action waivers in New Jersey (see Litman v. Cellco P'ship) and in Pennsylvania (see Quilloin v. Tenet HealthSystem Philadelphia, Inc.). Similar results have been upheld in the 8th Circuit(in Green v. SuperShuttle Intern., Inc., the court relied upon Concepcion to dismiss an appeal of the district court’s holding that a class action waiver clause was enforceable); in the 9th Circuit (in Coneff v. AT&T Corp., the court ruled that the FAA preempted a state statute based on Concepcion and reversing the lower court’s finding of unconscionability in an arbitration clause with a class-action waiver); and the 11th Circuit (in Cruz v. Cingular Wireless, LLC, the court held that the FAA preempted a Florida statute and upheld an arbitration clause a with collective arbitration waiver that had previously been ruled unconscionable). The 2nd Circuit in In re American Exp. Merchants’ Litigation has distinguished Concepcion in cases where class action waivers have not been ruled unconscionable on state law but instead are invalidated based upon the plaintiff’s ability to vindicate a federal statutory right.