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« Upcoming MCLE teleseminar on California consumer protection laws | Main | Blogosphere commentary on AT&T Mobility v. Concepcion »

Wednesday, April 27, 2011

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Jeffrey Wilens

Not good, but perhaps not as bad as could be. Remanded to 9th Circuit which could presumably still find the arbitration agreement unconscionable without relying on the "Discover Bank" rule. At a minimum that would delay any real change for a few years until 2012 elections and hopefully a better Congress and Democratic President.

The Supreme Court did NOT hold that arbitatrion agreements in general (or even the one created by AT&T) are immune from contract defenses such as unconscionability or that a class action waiver can never be unconscionable.

It did hold a state cannot rely on a "policy" of encouraging lawsuits and collective relief to the detriment of the FAA. Thus, maybe this is more form over substance.

Elliot Silverman

__Discover Bank__ is now overruled, and I think it's safe to say that __Gentry__ (42 Cal.4th 443) is going to fall as well, on the same rationale.

TK

There is no way that this section of Gentry survives the case (from p. 465, internal citations omitted):

"Nor do we accept Circuit City's argument that a rule invalidating class arbitration waivers discriminates against arbitration clauses in violation of the Federal Arbitration Act. We considered at great length and rejected a similar argument in Discover Bank. The principle that in the case of certain unwaivable statutory rights, class action waivers are forbidden when class actions would be the most effective practical means of vindicating those rights is an arbitration-neutral rule: it applies to class waivers in arbitration and nonarbitration provisions alike. 'The Armendariz requirements are . . . applications of general state law contract principles regarding the unwaivability of public rights to the unique context of arbitration, and accordingly are not preempted by the FAA.' We also continue to reject Circuit City's suggestion that class actions are incompatible with arbitration and that compelling class arbitration in the appropriate case violates the FAA."

The better question is how much of Armendariz survives.

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