DOJ Message To SCOTUS: Do Not Enforce Arbitration Agreements That Invalidate Federal Statutory Rights

by Stinson Leonard Street - Arbitration Nation
Contact

On January 29, the U.S. Dept. of Justice filed an amicus brief supporting respondents in AmEx III, arguing that to enforce the class arbitration waiver would be to create a large loophole for important federal laws.  The Solicitor General has also asked to argue at the hearing on February 27.  To my knowledge, DOJ has never previously weighed in on an arbitration case before the U.S. Supreme Court.

The issue in AmEx is whether American Express can enforce its arbitration agreement, which precludes any class or consolidated actions, against a class of plaintiffs who allege antitrust violations.  The Second Circuit has held, on remand and on reconsideration, that American Express cannot enforce that arbitration agreement.  The court held that the plaintiffs proved it was not economically feasible to pursue their cases on an individual basis and therefore precluding a class action meant precluding the enforcement of their antitrust rights, which is sufficient to invalidate the arbitration agreement under Green Tree Financial Corp.  v. Randolph, 531 U.S. 79 (2000).  

A few months ago, I was concerned that the only amici weighing in on this case seemed to be on the side of rigid enforcement of class action waivers.  I spoke too soon.  A host of knights in shining armor have appeared to argue on behalf of these antitrust plaintiffs, including 22 state attorneys general, Public Citizen, a group of professors, and the Solicitor General himself.  (Maybe this should not be surprising, after other federal agencies have taken stands against class waivers in arbitration agreements.  Also, maybe I am reading too much Game of Thrones…)

The brief of the Department of Justice works hard to strengthen the precedent supporting an affirmance of AmEx.  It argues that for decades the Supreme Court has refused to enforce arbitration agreements that prevent any “effective vindication” of federal statutory claims (citing Mitsubishi, Gilmer, Vimar Seguros y Reaseguros, and 14 Penn Plaza, as well as Randolph).  It argues that affirming the “effective-vindication rule” would not undermine the FAA,  that the standard is not unworkable for courts to apply, and that Concepcion does not dictate a reversal.

What I found most compelling in the Government’s brief, however, was its focus on how the Supreme Court’s decision will influence the drafting of arbitration agreements in the years to come:

“the effective-vindication principle, it should be emphasized, is not simply a sound rule of decision for the rare case in which a federal statutory claim cannot feasibly be pursued through the arbitration procedure specified in the parties’ agreement. . . . the [rule] creates a salutary incentive for companies that prefer arbitration to ensure that such cases remain rare, by adopting arbitration procedures that can feasibly be invoked even for small-value claims.”  In contrast, “under petitioners’ approach… companies could use a combination of class-action and joinder prohibitions, confidentiality requirements, and other procedural restrictions to increase the likelihood that a plaintiff’s cost of arbitration will exceed its projected recovery …That would deprive a range of federal statutes of their intended deterrent and compensatory effect, without promoting the actual use of arbitration as an alternative means of dispute resolution.”

Will that be enough to sway one of the usual conservative block of justices that votes for rigid enforcement of the FAA?  (Justice Sotomayor is recused from this case, so only eight justices will consider it.)  I hope so.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Stinson Leonard Street - Arbitration Nation | Attorney Advertising

Written by:

Stinson Leonard Street - Arbitration Nation
Contact
more
less

Stinson Leonard Street - Arbitration Nation on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.