SUPREME COURT UPHOLDS CLASS ARBITRATION WAIVERS -

With its ruling on December 14, 2015, the Supreme Court continues to protect arbitration as a means of dispute resolution by cracking down on attempts to circumvent the Federal Arbitration Act (“FAA”). In DIRECTV v. Imburgia, the Supreme Court overturned the California Court of Appeal and held that California’s law against class arbitration waivers does not invalidate arbitration clauses in agreements even if the governing law of the agreement references the California law. The decision flows from the 2011 Supreme Court ruling in AT&T Mobility LLC v. Concepcion that the FAA preempts California’s protective laws against class arbitration waivers. 563 U.S. 333 (2011).

The decision sends the important message that the Supreme Court will not allow states to limit the scope of the FAA and will generally uphold the terms of an arbitration agreement, even if the arbitration agreement is between a large corporation and customer.