Waiver Of Right To Arbitrate: To Move or Not to Move: Calculating the Risk Of Waiving the Right to Arbitrate in a Shifting Judicial Landscape

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The U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 2011 BL 110648, 79 U.S.L.W. 4279 (U.S. 2011), has been characterized as a ‘‘game changer’’ in the arbitration arena. Concepcion overturned California’s ‘‘Discover Bank’’ rule, which had held that arbitration provisions that waived the consumer’s right to a class-wide arbitration in certain consumer contracts of adhesion were unconscionable. In overruling the California practice, the Supreme Court held that the rule was ‘‘an obstacle to the accomplishment and execution of the full purposes and objections of the Federal Arbitration Act.’’ Before Concepcion, a motion to compel challenging state court precedent would have been summarily denied. After the decision, case law from both state and federal courts suggests that the same motion will likely be granted.

These motions are not simply pro forma in the post-Concepcion world, however. The FAA’s ‘‘savings clause,’’ which provides that common law contract defenses may invalidate an arbitration provision, may still permit a party to try its case in court so long as those defenses are not ‘‘applied in a fashion that disfavors arbitration.’’ Since Concepcion, some courts — although few — have cited this language in support of their findings that the arbitration provision at issue is unconscionable.

Originally published in The United States Law Week, 81 U.S.L.W. 1318, 03/19/2013.

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