One of my favorite scenes from the movie My Cousin Vinny (1992) is Vincent Laguardia Gambini’s (a/k/a “Vinny’s”) opening statement in the criminal trial of his cousin and cousin’s friend, both of whom were arrested and mistakenly charged for murder and robbery while driving through Alabama. Vinny (played by Joe Pesci) — a native New Yorker who is as out of place in a rural Alabama courtroom as I suppose anyone could be — dozes off during the prosecution’s opening statement only to be jarred awake by his cousin — who is facing the death penalty — so that he can deliver an opening statement. He saunters over to the jury, and says, gesturing at the prosecutor, “Everything that guy just said is bull$#!+. Thank you.” Then he returns to the defense table. (Watch the scene here, which begins approximately three minutes and 33 seconds into the clip.) Continue Reading »
Archive for 2010
AT&T Mobility, LLC v. Concepcion: What Would Cousin Vinny Have to Say About The Ninth Circuit’s Interpretation of the Equal Footing Principle?
December 10th, 2010 Arbitration Agreements, Arbitration Practice and Procedure, California State Courts, Class Action Arbitration, Class Action Waivers, Practice and Procedure, United States Court of Appeals for the Ninth Circuit, United States Supreme Court Comments Off on AT&T Mobility, LLC v. Concepcion: What Would Cousin Vinny Have to Say About The Ninth Circuit’s Interpretation of the Equal Footing Principle?Some Initial Thoughts on the SCOTUS AT&T Mobility, LLC v. Concepcion Oral Argument
November 16th, 2010 Arbitration Agreements, Arbitration Practice and Procedure, California State Courts, Class Action Arbitration, Class Action Waivers, Practice and Procedure, United States Court of Appeals for the Ninth Circuit, United States Supreme Court Comments Off on Some Initial Thoughts on the SCOTUS AT&T Mobility, LLC v. Concepcion Oral ArgumentAs many readers know, on Tuesday, November 9, 2010 the United States Supreme Court heard oral argument in AT&T Mobility, LLC v. Concepcion, No. 09-893 (blogged here, here, here and here). You can find the transcript of the argument, here, and the audio, here.
After reviewing the oral argument transcript a number of times, and listening to the audio, we still believe it more likely than not that AT&T Mobility will prevail. We’ll develop that thought further in upcoming installments of our Disputing guest post, “AT&T Mobility LLC v. Concepcion: Can Discover Bank Withstand Stolt-Nielsen Scrutiny?” (Part I, here).
There have been a number of differing opinions post argument on how the Court will likely rule. Some believe the argument foreshadows victory for the Concepcions. Others are not so certain, and still others believe that AT&T Mobility may emerge the victor. Like all such opinions, they are are really nothing more than educated guesswork, and should be taken with a grain of salt.
We don’t suggest our take on things is anything more, but we share it for what it is worth. We think the oral argument was basically a toss-up, and that it mainly confirmed what we already knew or surmised: That this is a very difficult case, and that the eight Justices who asked questions appear to be split along ideological lines. We expected no less in light of the 5-3 and 5-4 split decisions in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. ___, 130 S. Ct. 1758 (2010); and Rent-A-Center West v. Jackson, 561 U.S. ___, 130 S. Ct. 2772 (2010).
The key point on which the argument shed no meaningful light is what Associate Justice Clarence Thomas makes of this case. Justice Thomas joined the Stolt-Nielsen and Rent-A-Center majority opinions, but those cases, unlike this one, did not concern the preemptive scope of the Federal Arbitration Act.
Preemption is controversial, and its importance extends far beyond the AT&T Mobility case. Particularly controversial — and very supportive of AT&T Mobility’s position — is the doctrine of “implied preemption,” also known as “conflict” or “obstacle” preemption. In Federal Arbitration Act cases this doctrine tells us that state laws or policies that undermine “the goals and policies of the FAA” are preempted by the Act. Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Univ., 489 U.S. 468, 477-78 (1990).
But Justice Thomas believes that the implied preemption doctrine is unconstitutional. See Wyeth v. Levine, 555 U.S. ___, 129 S. Ct. 1187, 1205 (2009) (Thomas, J. concurring) (“implied pre-emption doctrines that wander far from the statutory text are inconsistent with the Constitution. . . .”). He also believes that Congress intended the Federal Arbitration Act to be a procedural statute that applies only in federal court. See, e.g., Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (Thomas, J., dissenting); Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440 (2006) (Thomas, J., dissenting) (“[I]n state-court proceedings, the FAA cannot be the basis for displacing a state law that prohibits enforcement of an arbitration clause contained in a contract that is unenforceable under state law.”).
He thus believes that state courts can apply state arbitration law as they see fit, irrespective of whether the result would be different had the case been brought in federal court. While AT&T Mobility — like Stolt-Nielsen and Rent-A-Center — was brought in federal court, and everybody concedes that the Federal Arbitration Act applies, Justice Thomas remains a strong proponent of federalism.
Justice Thomas’ deference to state law is problematic for AT&T Mobility. Perhaps AT&T Mobility’s best argument is that the Federal Arbitration Act impliedly preempts the Discover Bank rule for the reasons set forth in Stolt-Nielsen. Apparently concluding that the Justices in the Stolt-Nielsen majority — including Justice Thomas — are the ones most likely to support AT&T Mobility’s position, AT&T Mobility deliberately downplayed the implied preemption issue, although it made clear that it believes the Federal Arbitration Act both expressly and impliedly preempts the Discover Bank rule.
That was a wise strategy given Justice Thomas’ rejection of implied preemption. Its wisdom was borne out by what transpired at the argument: of the eight Justices that asked questions, the four more liberal ones (Associate Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia M. Sotomayor and Elena Kagan) appear to be leaning in favor of finding that the Federal Arbitration Act does not preempt the Discover Bank rule, while the four more conservative ones (Chief Justice John G. Roberts, and Associate Justices Antonin G. Scalia, Anthony M. Kennedy, and Samuel J. Alito, Jr.) appear to be leaning in favor of finding that the Federal Arbitration Act preempts Discover Bank.
That means Justice Thomas is likely to hold the deciding vote, but where he’ll ultimately cast it, nobody knows (at least outside the Supreme Court). We believe there are equally plausible reasons why he might vote for or against preemption.
We’ll explore all of this and more in our Disputing guest post. In the meantime, keep an eye out for our next Forum article on AT&T Mobility, which will focus on the highlights of the oral argument and tie them into the express and implied preemption issues that this critically important case presents.
U.S. Law Week Quotes Philip J. Loree Jr. Comments on SCOTUS AT&T Mobility LLC v. Concepcion Class Waiver Case
October 23rd, 2010 Arbitration Agreements, Arbitration Practice and Procedure, Class Action Arbitration, Class Action Waivers, United States Court of Appeals for the Ninth Circuit, United States Supreme Court Comments Off on U.S. Law Week Quotes Philip J. Loree Jr. Comments on SCOTUS AT&T Mobility LLC v. Concepcion Class Waiver CaseOn October 14, 2010 I was interviewed by Tom P. Taylor, a reporter for The United States Law Week, about the AT&T Mobility LLC v. Concepcion case (blogged here, here, here and here), which will be argued before the United States Supreme Court on November 9, 2010. On October 19, 2010 Tom’s excellent article on AT&T Mobility was published in 79 U.S.L.W., No. 14 (October 19, 2010) (BNA), and he extensively quoted my comments in it.
U.S. Law Week is a subscription only publication, but I received permission from the Bureau of National Affairs (“BNA”) to post a copy of the article on my LinkedIn profile. So, if you are a member of Linkedin, you can access a copy of the article here (it does not appear in my “public” LinkedIn profile).
We would like to thank Tom for conducting a very professional interview and following up with a well-written, comprehensive and informative article about this critically important case.
We are following AT&T Mobility closely, and will be commenting further on it in the near future. I am also working on a guest-post about the case for another ADR-oriented blog. Stay tuned for details….
International Institute for Conflict Prevention and Resolution Publishes Philip J. Loree Jr.’s October 2010 Article on Granite Rock Co. v. International Brotherhood of Teamsters
October 7th, 2010 Uncategorized Comments Off on International Institute for Conflict Prevention and Resolution Publishes Philip J. Loree Jr.’s October 2010 Article on Granite Rock Co. v. International Brotherhood of TeamstersThe October 2010 issue of Alternatives to the High Cost of Litigation, the excellent newsletter of the International Institute for Conflict Prevention and Resolution (”CPR”), featured an article I wrote on the United States Supreme Court’s decision in Granite Rock Co. v. International Brotherhood of Teamsters, No. 08–1214 (June 24, 2010). The article is entitled “Despite Granite Rock’s Procedural Dodge, Court Issues A Straightforward Decision on Bargaining Agreements,” 28 Alternatives 175 (October 2010).
The article discusses Granite Rock in detail, and argues, among other things, that:
the Court deliberately dodged consideration of an important factor in the case — a signed contract that potentially could have answered the question — by reflexively applying a procedural rule that forced the court to put the fact aside, instead of remanding for proper consideration.
. . . .
The tradeoff the Court made when it elevated institutional concerns over deciding a case based on its undisputed facts was not a fair one. While the Court pointed out that consideration of the belatedly raised argument would have resulted in the Court ruling for the first time on an issue not considered by the Ninth Circuit, and perhaps not one fully briefed, that justification presupposes that consideration of the retroactive CBA would have required intensive analysis of a controversial issue.
But there was no real controversy here. The plain terms of a fully executed contract clearly and unambiguously contravened the key assumption on which the majority opinion rested: that there was a formation-date dispute.
28 Alternatives at 175 & 178.
The article is the second of a two-part series. The first part discussed and critically analyzed the Supreme Court’s decision in Rent-A-Center, West Inc. v. Jackson, No. 09-497 (June 21, 2010). That part was entitled “Rent-A-Center‘s Roadmap Extends Beyond Contracts. . . To Congress and the Supreme Court’s New Term,” 28 Alternatives 154 (September 2010) (blogged here).
Alternatives also recently published two other articles I wrote earlier this year, both of which were featured as cover stories: “Stolt-Nielsen Delivers a New FAA Rule — And then Federalizes the Law of Contracts,” 28 Alternatives 121 (June 2010), and “It’s Time for Doctrines: The Supreme Court Wrestles with ‘Severablility’ and the ‘Clear and Unmistakable Standard,” 28 Alternatives 73 (March 2010) (blogged here and here).
Alternatives is a subscription-only publication. Subscription information is available at this page, as well as at the publisher’s, John Wiley & Sons’s, website here.
I would like once again to take this opportunity to thank CPR, and Russ Bleemer, Editor of Alternatives, for their kind assistance and support in featuring my articles. CPR is one of the most prestigious ADR organizations in the United States, and, as I have said before, Russ is a very intelligent, dedicated and professional editor with whom it is a pleasure to work.
AT&T Mobility LLC v. Concepcion: What is the Scope of Federal Preemption in Class Waiver Cases?
September 30th, 2010 Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Class Action Arbitration, Class Action Waivers, Practice and Procedure, Unconscionability, United States Court of Appeals for the Ninth Circuit, United States Court of Appeals for the Second Circuit, United States Supreme Court Comments Off on AT&T Mobility LLC v. Concepcion: What is the Scope of Federal Preemption in Class Waiver Cases?Part II
Introduction
Part I of this two-part post (here) briefly discussed the background of AT&T Mobility LLC v. Concepcion, No. 09-893, a case pending before the United States Supreme Court that will be argued on November 9, 2010. We now delve into the details of the preemption questions before the Court and take a guess at the outcome.
Federal Arbitration Act Preemption
The Federal Arbitration Act does not preempt all state law applicable to arbitration agreements, but it expressly preempts state law that conflicts with Section 2, and impliedly preempts all state law that “stands as an obstacle to the accomplishment and execution of the full purposes of Congress” embodied in the Federal Arbitration Act. See Shroyer v. New Cingular Wireless Serv., Inc., 498 F.3d 976, 988 (9th Cir. 2007) (citations and quotation omitted).
Does Section 2 of the Federal Arbitration Act Expressly Preempt the Discover Bank Rule?
Section 2 of the Federal Arbitration Act declares that arbitration agreements within its scope “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Section 2 establishes substantive federal law that expressly preempts all conflicting state law, except for state law that permits “the revocation of any contract” or governs the formation, interpretation, or construction of contracts generally.
The exception to federal preemption is exceedingly narrow, for it saves from preemption only state laws that apply equally across the board to all contracts. The United States Supreme Court summarized it well when it said:
States may regulate contracts, including arbitration clauses, under general contract law principles and they may invalidate an arbitration clause ‘upon such grounds as exist at law or in equity for the revocation of any contract. What States may not do is decide that a contract is fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause. The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal footing, directly contrary to the Act’s language and Congress’s intent.
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281 (1995) (citations and quotations omitted; emphasis in original). Continue Reading »
AT&T Mobility LLC v. Concepcion: What is the Scope of Federal Preemption in Class Waiver Cases?
September 30th, 2010 Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Class Action Arbitration, Class Action Waivers, Practice and Procedure, United States Court of Appeals for the Ninth Circuit, United States Supreme Court Comments Off on AT&T Mobility LLC v. Concepcion: What is the Scope of Federal Preemption in Class Waiver Cases?Part I
Introduction
In our recent feature “What to Make of the Second Circuit Voiding a Class Action Waiver Under California’s Discover Bank Rule,” we briefly discussed AT&T Mobility LLC v. Concepcion, No. 09-893, a case which asks the United States Supreme Court to determine whether the Federal Arbitration Act preempts California’s Discover Bank rule. The Discover Bank rule deems unconscionable class action and class arbitration waivers in adhesive contracts in circumstances where a consumer alleges that a party with superior bargaining power has committed widespread but small-dollar fraud. Petitioner AT&T Mobility LLC (“AT&T Mobility”) has filed its brief (here); various organizations, including the Chamber of Commerce of the United States of America, have filed an impressive stack of amicus curiae briefs supporting AT&T Mobility (here); Vincent and Liza Concepcion (the “Concepcions”) have filed their brief, which was posted online earlier today (here); and AT&T will presumably submit a reply brief. The Court has scheduled argument for November 9, 2010.
AT&T Mobility is an extremely important case because it will decide whether the Federal Arbitration Act preempts certain state law unconscionability and public-policy-based rules that are principally directed at class arbitration and class action waivers. This issue has spawned a number of conflicting decisions in the state and federal courts, including Feeney v. Dell, Inc. 454 Mass. 192 (2009), a case we blogged back in 2009 (posts here and here).
This two-part feature takes a closer look at AT&T Mobility, considers the principal issues before the Court, and ventures a guess on what the outcome will be. This Part I discusses the background of the case, and Part II (here) outlines Federal Arbitration Act preemption rules, analyzes and explains why we believe the Federal Arbitration Act expressly and impliedly preempts the Discover Bank rule, and provides our best guess as to what the Supreme Court will conclude. Continue Reading »
Fifth Circuit Says District Court That Compelled Arbitration Does Not Have Inherent Power to Impose Sanctions on Counsel for Arbitration Misconduct
September 17th, 2010 Arbitration Practice and Procedure, Attorney Fees and Sanctions, Practice and Procedure, United States Court of Appeals for the Fifth Circuit Comments Off on Fifth Circuit Says District Court That Compelled Arbitration Does Not Have Inherent Power to Impose Sanctions on Counsel for Arbitration MisconductIntroduction
An arbitration panel acting under a broad, unrestricted arbitration agreement can generally impose sanctions on a party. But if a federal district court compels arbitration, and retains jurisdiction, can it impose sanctions on counsel who allegedly misbehave during the arbitration proceedings? On September 13, 2010 the United States Court of Appeals for the Fifth Circuit held 3-0 that the answer is “no,” unless the conduct was in direct defiance or disobedience of the district court’s orders or otherwise threatened the district court’s own judicial authority or proceedings. See Positive Software Solutions Inc. v. New Century Mtg. Corp., No. 09-10355, slip op. (5th Cir. September 13, 2010).
Background
Positive Software Solutions arose out of arbitration between Positive Software Solutions, Inc. and New Century Mortgage Corp. A district court in Texas compelled arbitration and retained jurisdiction. Positive Software lost, and sought to vacate the award on evident partiality grounds, which were ultimately rejected by the Fifth Circuit en banc. See Positive Software Solutions Inc. v. New Century Mtg. Corp., 476 F.3d 278 (5th Cir. 2007) (en banc). After the Fifth Circuit remanded the award for confirmation, New Century declared bankruptcy, the parties settled, and the American Arbitration Association administratively closed the proceedings.
As part of the settlement, New Century waived the attorney-client privilege, and turned over to Positive Software its arbitration files, which Positive Software would use in support of a motion in the district court for sanctions against New Century’s arbitration counsel, Ophelia Camiña, a partner at Susman, Godfrey, LLP (“Susman Godfrey”); Susman Godfrey; and Barry Barnett (apparently another lawyer who represented New Century). On March 2008 Positive Software filed its motion for sanctions pursuant to Fed. R. Civ. P. 37, 28 U.S.C. § 1927, and the court’s inherent power.
In February 2009 the district court imposed pursuant to its inherent power $10,000 in sanctions against Camiña, which represented a portion of Positive Software’s attorney fees incurred during arbitration. The district court ruled that the sanctions were for conduct that “took place in connection with the arbitration, not in connection with discovery under the Court’s supervision.”
Camiña appealed, and the Fifth Circuit reversed. Continue Reading »
