Challenging Class Action Waivers Post-Concepcion

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Originally Published in Competition Law360.

As antitrust practitioners are no doubt aware, the Supreme Court recently ruled in AT&T Mobility v. Concepcion that “collective-arbitration waivers” (also called “class action waivers”) in AT&T’s consumer contracts – i.e. provisions which required all claims to proceed in arbitration but which prohibited classwide arbitration – could not be invalidated on the basis of the California public policy considerations as embodied in the so-called Discover Bank rule. 563 U.S. ___ (Slip Op. 3, 5). Of course, it will take some time for all implications of Concepcion to be determined by the lower courts. Practitioners handling antitrust class actions involving potential class action waivers, however, should be aware that recent decisions have continued to hold that federal common law provides a basis for invalidating such waivers under a “vindication of statutory rights” analysis, and that the Second Circuit may soon shed further light on the continued viability of this argument.

AT&T is already testing the boundaries of Concepcion in its attempt to ward off arbitration claims by private plaintiffs challenging its proposed merger with T-Mobile, which has just come under fire by the U.S. Department of Justice. DOJ Press Release Aug. 31, 2011. Reuters reported, for example, that AT&T customers have “filed 26 arbitration demands and more than 900 notices of dispute . . . oppos[ing] [AT&T’s proposed] merger” with T-Mobile. Reuters Aug. 17, 2011. In response, AT&T has filed several complaints in the Southern District of New York seeking declaratory judgments that plaintiffs’ injunctive relief claims may not proceed in arbitration because they are really “representative claim[s] seeking class-wide [injunctive] relief,” and are “beyond the scope” of their arbitration agreements. Complaint at ¶¶43, 46. AT&T’s lawyer is reported as stating that “Our arbitration agreement prohibits any form of class-wide relief. The Supreme Court upheld that.” Reuters Aug. 17, 2011. Of course, because AT&T’s contracts require that “all disputes” proceed through arbitration, the declaratory judgments AT&T seeks would appear to eliminate any possibility of obtaining class-wide injunctive relief. See AT&T Arbitration Provision, Section 2.2

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