After denying the defendants’ petitions for panel and en banc rehearing in the Blair v. Rent-a-Center appeals, the Ninth Circuit has granted their motions to stay the issuance of the Court’s mandates for 90 days pending the filing of petitions for certiorari with the U.S. Supreme Court. If petitions for certiorari are filed, the stays will continue until final disposition by the Supreme Court. We expect the certiorari petitions to be filed on or around April 16, 2020 (unless extended).

The defendants will ask the Supreme Court to rule that the Federal Arbitration Act (FAA) preempts the McGill Rule. Under the McGill Rule, an arbitration agreement that precludes a consumer from pursuing claims for “public” injunctive relief in court or in arbitration is unenforceable under California law. They contend that the McGill Rule is preempted because the FAA protects the right of parties to choose individualized resolution of their claims, notwithstanding contrary state law, and because the McGill Rule is not a ground “at law or in equity for the revocation of any contract” (the FAA’s savings clause), but instead impermissibly singles out arbitration for special treatment.

According to the defendants’ stay motions, there is a reasonable probability that the Supreme Court will grant review given its 35-year history of declaring numerous California laws preempted by the FAA. In particular, in Epic Systems Corp. v. Lewis and AT&T Mobility, LLC v. Concepcion, the Supreme Court reversed the Ninth Circuit in cases that validated the use of class action waivers in employment and consumer arbitration contracts. Most recently, the Court overturned the Ninth Circuit in Lamps Plus, Inc. v. Varela, holding that under the FAA, the fact that a contract is ambiguous on the issue of class arbitration is not a legally sufficient ground for requiring classwide arbitration.

We will continue to update you on further developments in these important arbitration law matters.