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Wednesday, April 30, 2014

Was the Federal Arbitration Act Less About Enforcing Agreements and More About Procedural Reform?

Loyola Law Professor Hiro Aragaki is one of the most prolific arbitration scholars of the last few years.  His latest effort, "The Federal Arbitration Act as Procedural Reform," is characteristically thorough and ambitious.  It makes some good points but I won't quote them here because his draft asks that it not be quoted without permission.

Thursday, April 24, 2014

Class Waiver Voided in Securities Arbitration

Since the Supreme Court's Concepcion and Italian Colors cases, courts have generally enforced arbitration agreement provisions requiring individual, rather than classwide, adjudication.  In contrast, the Financial Industry Regulatory Authority (FINRA) ruled otherwise for securities arbitration.

Good lawyering by Pace Law Professor Jill Gross and Cincinnati Law Professor Barbara Black, who argued for this result in their article,  Investor Protection Meets the Federal Arbitration Act1 Stan. J. Complex Litig. 1 ­­(2012).

As Professor Gross explains at ADR Prof Blog, FINRA held that the Securities Exchange Act constituted a sufficient Congressional command to overcome the FAA’s mandate to courts to enforce arbitration agreements as written.  Since the Exchange Act delegated to the SEC, which in turn delegated to FINRA, the authority to regulate broker-dealers’ arbitration agreements for the protection of investors, FINRA’s rules barring class action waivers and mandating that investors be able to bring class claims in court were enforceable [notwithstanding the FAA].

Sunday, April 20, 2014

General Mills Abandons its Controversial Arbitration Clause

General Mills' April 19 announcement:

We rarely have disputes with consumers – and arbitration would have simply streamlined how complaints are handled. Many companies do the same, and we felt it would be helpful.
But consumers didn’t like it.
So we’ve reverted back to our prior terms.

New York Times article
Commentary by Bob Sullivan, Consumer Advocate

Saturday, April 19, 2014

NY Times Criticizes Class Waivers in Arbitration Agreements

Class Actions v. Payday Lenders Use of Arbitration

Emily Bazelon in the New York Times writes "Getting rid of predatory lenders was a victory for the citizens of North Carolina but the larger question of the right of companies to limit customers’ ability to sue for bad practices has not been rectified" due to the Supreme Court's AT&T v. Concepcion decision.

As Bazelon explains, "Only the Supreme Court can reverse one of its rulings, but Concepcion is based on a statute, which Congress can change. Senator Al Franken, of Minnesota, introduced a bill to bar mandatory arbitration, and even if Congress stalemates, the C.F.P.B. has the power to issue its own regulations on some arbitration claims." 

The phrase "mandatory arbitration" is worth attention.  As University of Kansas Law Professor Chris Drahozal writes:

A frequent criticism of arbitration in consumer contracts is that it is “mandatory.” The criticism is rhetorically powerful because viewing arbitration as “mandatory” is contrary to the whole idea of arbitration: that it is the product of an agreement between the parties. But as Richard Speidel explained, this label is “misleading because it connotes arbitration that is compelled by law regardless of consent.” Arbitration is mandatory when required by law, such as mandatory arbitration of public-employee grievances. No law requires that parties to consumer contracts arbitrate disputes.

Thursday, April 17, 2014

Agreeing to Arbitrate When you Download a Coupon

General Mills pushes arbitration in striking ways

Today's New York Times says “the maker of cereals like Cheerios and Chex … has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, ‘join’ it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.”  A fascinating case about assent to contract terms will arise when someone challenges a this website language: “Please note we also have new Legal Terms which require all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration.”

Wednesday, April 16, 2014

Ethics in Arbitration

University of Nebraska Law Professor Kristen Blankley has written three thoughtful articles on arbitration ethics.  Here is her latest, which argues  that arbitrators must take a more active role as an “ethics enforcer” given the limited judicial review and questionable applicability of perjury and similar criminal laws to the arbitral forum.

Monday, April 14, 2014

First Circuit Interprets Arbitration Clause Broadly

As Jeremy Telman reports at Contracts Prof Blog, the First Circuit recently interpreted a Verizon arbitration clause broadly to encompass claims that the district court thought could be litigated.  In Grand Wireless, Inc. v. Verizon Wireless, Inc. the First Circuit also held that Verizon's employee could compel arbitration of claims against her: " "Verizon and Grand certainly wished to have their disputes settled by arbitration. Since Verizon could operate only through the actions of its employees, it would have made little sense to have agreed to arbitrate if the employees could be sued separately without regard to the arbitration clause."  

Wednesday, April 9, 2014

AT&T v. Concepcion: The Problem of a False Majority

Article by John Marshall Law Professor Lisa Tripp and Evan Hanson concludes "Concepcion should viewed as having created no rule of law outside its specific facts and should, ... be treated as not having a majority opinion for precedential purposes."

"waiting for Congress to address the quagmire of mandatory consumer arbitration"

"waiting for Congress to address the quagmire of mandatory consumer arbitration"

a phrase from Michelle L. Caton, Form over fairness: how the Supreme Court's misreading of the Federal Arbitration Act has left consumers in a lurch, 21 Geo. Mason L. Rev. 497-529 (2014), which notes "Of the 139 bills introduced into Congress between 1995 and 2010 that sought to restrict or eliminate various uses of mandatory arbitration, only five were eventually passed into law."


Tuesday, April 8, 2014

California Court Strikes Down Class Waiver Arbitration Clause

California Court of Appeal finds a way around Concepcion and declines to enforce class waiver clause in   Imburgia v. DIRECTV, Inc., B239361 (2nd Dist. Div. 1 April 7, 2014).  As the valuable blog, California Mediation and Arbitration summarizes, "Concepcion does not necessarily invalidate all class action waivers.  The objective of the FAA is to carry out the intent of the parties, and contract interpretation may lead to the conclusion that the parties intended to proceed under state law rules that allow for the invalidation of class action waivers."

Sunday, April 6, 2014

Collective Actions and Joinder of Parties in Arbitration

"Collective Actions and Joinder of Parties in Arbitration: Implications of DR Horton and Concepcion"

by UC Irvine Law Professor Catherine Fisk

Berkeley Journal of Employment and Labor Law, Vol. 35, No. 1, 2014, Forthcoming

Professor Fisk argues that employment agreements "to arbitrate individually are unenforceable under the National Labor Relations Act and the Norris LaGuardia Act."  She argues that such agreements are not covered by the Supreme Court’s reasoning in Concepcion and Italian Colors to the extent they prohibit joinder of fewer parties than would be required to bring a large class action and, therefore, remain protected by labor law.

Professor Fisk's article criticizes the Fifth Circuit’s Horton case and questions the practical wisdom of agreements requiring employees to pursue claims only as individuals. "State and federal courts universally allow liberal joinder of plaintiffs and defendants because it is more efficient and avoids some truly thorny issues about the preclusive effect of judgments."

Do Arbitration Organizations Comply with California Disclosure Laws?

Carolyn Said writes in the San Francisco Chronicle that while "a decade-old California law already requires arbitration companies to post data on their cases online. The problem is that many don't do it. A UC Hastings study found that only half post any data, and it's short of what's required."

"The vast majority of California consumer arbitrations, about 95 percent, are done by JAMS (formerly Judicial Arbitration and Mediation Services), the American Arbitration Association or Kaiser's independent administrator, and all of these organizations comply with the disclosure law," said Donne Brownsey, a lobbyist for the California arbitration industry.
"JAMS is compliant with California's consumer arbitration disclosure requirements," the organization's general counsel, John Walsh, said in a statement.

Saturday, April 5, 2014

Eleventh Circuit Enforces Class Waiver Clauses in Employment Arbitration Agreements

NLRB v. Courts

Class Action Waivers

While the NLRB says such clauses are unenforceable, courts disagree--including the now the Eleventh Circuit in Walthour v. Chipio Windshield Repair, LLC, 2014 WL 1099286 (11th Cir., March 21, 2014),

Thursday, April 3, 2014

Wednesday, April 2, 2014

The NLRB v. The Courts: Class Actions v. Arbitration

The NLRB holds for class actions

The National Labor Relations Board holds that individual employment agreements may not prevent employees from engaging in protected concerted activity in both union and nonunion environments.

The Board ruled in D.R. Horton that individual, as opposed to collectively bargained, arbitration agreements that are a condition of employment, may not bar collective action through both arbitral and judicial forums.

In contrast, most courts enforce arbitration agreements that foreclose class actions.

See for example, the Fifth Circuit.

This article "The NLRB v. The Courts: Showdown Over the Right to Collective Action in Workplace Disputes" by Boston College Professors Stephanie M. Greene & Christine Neylon O'Brien sides with the NLRB’s interpretation.   American Business Law Journal, Vol. 51, No. 4, 2014