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Sunday, March 18, 2012

Concepcion Redux

The bundle of issues surrounding the Supreme Court's recent arbitration decision AT&T Mobility v. Concepcion has graced the "pages" of Prawfs before (most notably, some great blogging by David Horton here and Aaron Bruhl here and here).  One of the key questions post Concecpion was how would state courts react to the decision?  State courts had aggresively pushed back at the Federal Arbitration Act (FAA), often resisting the FAA's preemptive impact on state law (check out Aaron Bruhl's great paper on this topic here).  I recently wrote a short paper (yes, posted on SSRN for those interested) for a great symposium at Penn State addressing "US Arbitration Law in the Wak of AT&T Mobility" suggesting some reasons why Concepcion might have more limited impact than others have suggested.  

Given all this discussion, I wanted to highlight a recent en banc decision by the Supreme Court of Missouri, Brewer v. Missouri Title Loans (thanks to David Horton for bringing the case to my attention).  The decision, issued on March 6, stands as a strong example of how state courts might limit Concepcion.  The Missouri Supreme Court emphasize the factual context of Concepcion, arguing that the Supreme Court's reluctance to finding AT&T's arbitration agreement unconscionable was based on the pro-consumer provisions in the agreement.  Thus, the existence of the class-action waiver in Concepcion could not serve as a basis for unconscionability without also examining the other mechanisms provided in the arbitration agreement for individual plaintiffs to pursue low-value claims.  In addition, the Court deployed Justice Thomas's concurrence - notwithstanding the fact that he signed the majority opinion - to narrowly construe the majority's holding.  

For those thinking through issues of preemption and precedent as applied to the FAA, Brewer is a great case to puzzle about.

UPDATE: As Adam Zimmerman notes in the comments, Myriam Gilles is hosting what looks like a great half-day conference on AT&T Mobility v. Concepcion on April 26, 2012, at the Cardozo School of Law (Myriam has also written a great article along with Gary Friedman on the topic, titled After Class: Aggregate Litigation in the Wake of AT&T Mobility v. Concepcion) .  For more details, click here.

Posted by Michael Helfand on March 18, 2012 at 10:31 AM | Permalink


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Anonymous -- that's a really interesting point about Marmet. But Marmet was a per curiam opinion, and I'm pretty sure that they're not always unanimous. (Check out Stephen L. Wasby et al., The Per Curiam Opinion: Its Nature and Functions, 76 Judicature 29, 35 (1992)). Thomas also didn't dissent from Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (2003)--another per curiam decision that applied the FAA in state court.

Posted by: David Horton | Mar 22, 2012 10:14:44 PM

Roger, the U.S. Supreme Court's recent decision in Marmet Health Care Center, Inc. v. Brown seems to undercut the suggestion that Justice Thomas might not have signed onto Concepcion had that case made its way to the Supreme Court from a state court proceeding. In Marmet, the U.S. Supreme Court unanimously applied Concepcion to a state court proceeding to hold a state judicial precedent grounded in state public policy was preempted by the FAA.

Posted by: Anonymous | Mar 22, 2012 8:44:49 PM

Michael -

Interesting article. One great point you raise in Part III that I was not aware of is the difference between how the state and federal courts are dealing with PAGA in light of Concepcion. As you note, federal courts are analogizing PAGA to the Discover Bank rule and finding it preempted, while the state courts are pushing back, daring the Supreme Court to find PAGA preempted, but perhaps confident that Thomas would not vote to do so in a state court case. Not having looked at the cases, and not being as up on Erie as I probably should be, let me ask you a question: short of a US Supreme Court decision on PAGA, does one side have to give? That is, is a California state court determination that PAGA is not preempted by the FAA a state court interpretation of a state statute that is binding on the federal courts under Erie, or is a federal court determination that PAGA is preempted a federal court interpretation of federal law that is binding on the state courts under the Supremacy Clause? (Or neither?) The combination of Concepcion and Thomas's refusal to endorse Southland is creating some fascinating federalism issues.

Posted by: Roger Perlstadt | Mar 21, 2012 3:14:57 PM


Those are some great points. You may want to check out Part III of my article "Purpose, Precedent, and Politics: Why AT&T Mobility Cover Less Than You Think" where I discuss how Concepcion would'be been decided differently had it come to the Supreme Court via state court in the ways you suggest. I think your CAFA point is dead on and is something a lot of plaintiffs side attorneys have told me they are now focused on.

Posted by: Michael Helfand | Mar 19, 2012 11:21:47 PM

One interesting aspect of the Concepcion discussion that I think gets overlooked is the role of the Class Action Fairness Act. Others have noted (and I tend to agree) that Thomas may not have signed onto finding the Discover Bank rule preempted if the case had come up through the state courts. That is, if Discover Bank itself had been appealed from the California Supreme Court to the US Supreme Court, Thomas (based on his "Southland was wrong" line of dissents) would like not have found the Discover Bank rule preempted. Instead, however, because the issue came up through the federal courts in Concepcion, he was free to find preemption. But why was the Concepcion litigation in federal, not state court? The Class Action Fairness Act (CAFA). Plaintiffs' claims in Concepcion were all state law claims, but CAFA removed the complete diversity requirement from certain large class actions. If Justice Thomas continues to refuse to apply the FAA to state court cases (which I've got no reason to doubt he will), I think the difference between which class actions can stay in state court and avoid removal under CAFA (like, I presume, Brewer) will mean the difference between which class actions are going to be subject to Concepcion-like scrutiny of unconscionability determinations.

Posted by: Roger Perlstadt | Mar 19, 2012 3:57:20 PM

Just a quick plug on the subject. For those of you interested in AT&T Mobility v. Concepcion, Myriam Gilles is hosting a wonderful half-day conference on the subject on April 26, 2012, at Cardozo Law School. It features panels with a great combination of well-established practitioners (Gary Freedman, Paul Bland, Elizabeth Cabraser, Stephen Weiss, Will Wade-Gery, and Deepak Gupta) and wonderful scholars (Judith Resnik, Charles Silver, Jean Sternlight, Nina Pillard, and Brian Fitzpatrick and yours truly).

To RSVP, email [email protected] More information is available here: http://www.cardozo.yu.edu/MemberContentDisplay.aspx?ccmd=ContentDisplay&ucmd=UserDisplay&userid=10342&contentid=23870&folderid=308

Posted by: Adam Zimmerman | Mar 18, 2012 10:17:37 PM

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