As 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.
Imburgia is a decision by the California Court of Appeals, Second District, Division One of which the California Supreme Court denied review. Like many other Federal Arbitration Act cases, it presents some interesting vertical conflict of law questions, but the California Court of Appeals does not appear to have resolved them in the way the U.S. Supreme Court presumably intended them to be resolved under the Volt and Mastrobuono lines of cases. 
Before Concepcion not only did the California state courts hold that the Federal Arbitration Act did not preempt the Discover Bank rule, but so did the U.S. Court of Appeals for the Ninth Circuit. Thus, at the time, the risk companies like DIRECTV and others with consumer class arbitration exposure had was that applicable state law would not only ban class arbitration waivers, but applicable federal law would permit that to happen.
