As Predominant Issues readers well know, the intersection between class actions and arbitration agreements has been a hotly contested issue in the Supreme Court. By and large, the Supreme Court’s recent jurisprudence has strengthened the strong presumption in favor of arbitration. Most notably, the Court’s decision in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), held that the Federal Arbitration Act (FAA) preempted a California state law that invalidated arbitration provisions containing class action waivers. In the wake of Concepcion, companies (especially those that are frequent targets of class actions) have experimented with creative methods to expand the categories of claims subject to arbitration. At the same time, many states have enacted laws that seek to limit the extent to which parties can contractually waive certain rights and remedies.
While last year did not usher in any “blockbuster” arbitration rulings from the Supreme Court—with the lone candidate dismissed as improvidently granted—the circuit courts issued several key rulings addressing diverse issues under the FAA. For instance, the Ninth Circuit considered whether an arbitration agreement ran afoul of a California law precluding the waiver of rights seeking “public” injunctive relief. Meanwhile, the Eighth Circuit took the rare step of holding that a district court had abused its discretion by failing to strike class allegations at the Rule 12 stage, as the plaintiff’s class allegations appeared to be a ploy manufactured to avoid an arbitration provision permitting only individual disputes. And the Eleventh Circuit denied a motion to compel in which the defendant sought to avail itself of a third-party service provider’s arbitration agreement, with one judge writing separately to question the provenance (and continued viability) of a long-held judicial canon resolving doubts in favor of arbitration. As the cases reinforce, many of these decisions turn on highly nuanced issues of contractual interpretation that frequently prove traps for the unwary—both plaintiffs and defendants alike.
