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Thursday, April 28, 2011

Liberal Federalists Lose

On Wednesday, the Supreme Court unsurprisingly held 5-4 that the Federal Arbitration Act preempted California’s rule prohibiting contractual waivers of class arbitrations.  Justice Breyer, writing for the dissent: “[F]ederalism is as much a question of deeds as words. It often takes the form of a concrete decision by this Court that respects the legitimacy of a State’s action in an individual case. Here, recognition of that federalist ideal, embodied in specific language in this particular statute, should lead us to uphold California’s law, not to strike it down.  We do not honor federalist principles in their breach.”

Both perma-prawfs and guest-prawfs filed amicus briefs in this case.  Thoughts on the opinion?  Lawrence Cunningham’s already got up a good post over at CO.

Posted by Brendan Maher on April 28, 2011 at 02:37 AM | Permalink


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Thanks for the post, Brendan. Two things leap out to me. First, in previous cases, the Court has expanded the FAA's scope--and dismissed the argument that mandatory arbitration is unfair--by declaring that arbitration is outcome-neutral. Again and again, the Court has explained that parties don't forfeit their substantive rights by agreeing to arbitrate rather than litigate. But the majority in Concepcion reverses course, reasoning that from the perspective of a corporate defendant, class arbitration has a "risk of error" that is "unacceptable."

Second, the opinion may open the door to another round of arguments by corporate defendants that the FAA preempts state courts from deeming certain provisions in arbitration clauses (i.e., severe discovery limitations) to be unconscionable. There's a lot of rhetoric in the majority opinion about states being unable to "require" certain procedural protections in arbitration. Although the examples the majority cites are extreme (i.e., states can't use the unconscionability doctrine to bootstrap the Federal Rules of Evidence into arbitration), there's plenty of gray terrain that'll surely be contested.

Posted by: David Horton | Apr 28, 2011 10:55:19 AM

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