August 20, 2019 / 8:08 PM / 2 months ago

Business lobby prods 9th Circuit to revisit decision curbing consumer arbitration

(Reuters) - I told you that the 9th U.S. Circuit Court of Appeals was going to get blowback from its June 28 rulings in a trio of cases in which plaintiffs claimed they couldn’t be forced into arbitration because they sought injunctions against corporate defendants. That resistance has arrived: The Chamber of Commerce and other business and employer groups have just submitted amicus briefs calling on the 9th Circuit to reconsider decisions that, in the views of these amici, eviscerate mandatory arbitration provisions.

In the June 28 rulings that the business lobby is protesting, a three-judge 9th Circuit said the Federal Arbitration Act does not preempt California’s public policy that corporations cannot require consumers to waive their right to seek a public injunction. That policy was articulated by the California Supreme Court in 2017’s McGill v. Citibank (2 Cal.5th 945). The 9th Circuit panel analyzed the state Supreme Court’s so-called McGill rule in light of U.S. Supreme Court precedent on mandatory arbitration provisions. The appeals court concluded in Blair v. Rent-a-Center (2019 WL 2701333) and related rulings against AT&T Mobility (2019 WL 2718474) and Comcast (2019 WL 2713292) that because California’s policy of allowing consumers to pursue public injunctions does not specifically obstruct arbitration, it’s not precluded by the FAA. (I’m condensing a lengthy, thoughtful ruling, but that’s its gist.)

Rent-a-Center subsequently informed the 9th Circuit that it was settling its case. But Comcast and AT&T Mobility both moved last month for a rehearing by the panel or the en banc 9th Circuit. Comcast, represented by Gibson Dunn & Crutcher, argued in its petition that the California Supreme Court’s McGill rule is a “newly conceived, ad hoc doctrine transparently designed to thwart arbitration,” so it falls outside of the FAA’s savings clause and cannot justify the revocation of contracts mandating arbitration.

AT&T Mobility’s lawyers from Mayer Brown focused their rehearing petition on the 9th Circuit’s purported failure to heed U.S. Supreme Court precedent from (among other cases) 2011’s AT&T Mobility v. Concepcion (131 S.Ct. 1740) and 2018’s Epic Systems v. Lewis (138 S.Ct. 1612). Those cases, AT&T argued, emphasized that the FAA protects individualized arbitration proceedings – and prohibits “devices and formulas” declaring arbitration to be averse to public policy. According to AT&T Mobility, the 9th Circuit’s adoption of the McGill rule – as well as the court’s previous holding, in 2015’s Sakkab v. Luxottica (803 F.3d 425), that employees cannot be compelled to arbitration cases that include claims under California’s Private Attorney General Act – “are squarely inconsistent with the Supreme Court’s rulings in Epic and Concepcion.”

The Chamber of Commerce and the National Association of Manufacturers filed amicus briefs Monday in both the Comcast and AT&T Mobility cases. So did the Washington Legal Foundation and CTIA – The Wireless Association. The California Employment Law Council seems only to have made an appearance as an amicus for AT&T Mobility, echoing Mayer Brown’s argument that the en banc 9th Circuit should overturn the court’s 2015 Sakkab precedent, which vitiates mandatory arbitration for employees.

The other amici emphasized the impact of the 9th Circuit’s rulings, in addition to arguments about why the holdings are incorrect. The Chamber and NAM brief, for instance, said the decisions “threaten the viability of arbitration broadly in this circuit (and likely beyond) — to the detriment of employees, consumers and businesses alike.” CTIA also contended that the 9th Circuit’s ruling, if not reversed, will “cause significant harm to both businesses and consumers,” because it will force companies like wireless carriers to raise prices to respond to the increased exposure to class actions.

Most of the amici who have turned up to back the AT&T and Comcast calls for rehearing previously submitted briefs to the three-judge appellate panel that already heard the cases. So there’s not much chance their arguments will persuade the panel to reconsider its decision. Will the briefs have more impact with the en banc court? That’s hard to say, but it’s worth noting that the 9th Circuit declined a petition in 2016 to rehear the Sakkab case, and that petition had just as much amicus backing.

AT&T Mobility customer Steven McArdle is represented by Matthew McCrary of Gutride Safier. In an email comment on the amicus briefs, McCrary said, “Federal arbitration law does not allow companies to completely immunize themselves from state laws that protect consumer rights. The panel’s decision was correct and is in harmony with all applicable Supreme Court cases.” If the 9th Circuit requests a response to AT&T Mobility’s en banc petition, McCrary said, his client will oppose it.

Plaintiffs in the Comcast case are represented by Lieff Cabraser Heimann & Bernstein. Lieff partner Roger Heller didn’t respond to my email.

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