Supreme Court Plaintiffs Play
From the Wall Street Journal
Plaintiffs lawyers are always on the prowl for new ways to disrupt or ban arbitration agreements, which interfere with their class-action windfalls. On Tuesday the fight is headed to the Supreme Court, where the Justices will decide whether trial lawyers can use a California law to end run federal law.
In 2008 Amy Imburgia charged in a class-action lawsuit that DirecTV violated California law when it didn’t disclose cancellation fees it assessed if customers terminated before the agreed-upon term of the contract. Under an agreement she had with the company, all disputes were to be handled through arbitration instead of litigation.
That seems straightforward, but in 2014 a California Appeals Court said DirecTV customers weren’t bound by the arbitration agreement. The court said the class could proceed because the contract included a provision that said the parties agreed to arbitrate unless the agreement would be “unenforceable” under state law. Under a California precedent, state courts are barred from enforcing agreements where consumers give up the right to bring class actions or class action-like claims.
Paging the plaintiffs bar. Across the country, agreements like the one in the DirecTV contract are covered by the 1925 Federal Arbitration Act (FAA), which says parties that have arbitration agreements must arbitrate their disputes instead of going to court. Under the U.S. Constitution’s Supremacy Clause, when federal law is clear and doesn’t trample on the constitutional rights of the states, federal law prevails.
The FAA is one of the oldest pre-emption statutes, and its existence trumps the California law under Supreme Court precedents. In AT&T v. Concepcion in 2011, the Justices ruled that the FAA pre-empts state laws and court rules that prevent contracts that include class-action waivers.
Read more in our daily News Update...
From the Wall Street Journal
Plaintiffs lawyers are always on the prowl for new ways to disrupt or ban arbitration agreements, which interfere with their class-action windfalls. On Tuesday the fight is headed to the Supreme Court, where the Justices will decide whether trial lawyers can use a California law to end run federal law.
In 2008 Amy Imburgia charged in a class-action lawsuit that DirecTV violated California law when it didn’t disclose cancellation fees it assessed if customers terminated before the agreed-upon term of the contract. Under an agreement she had with the company, all disputes were to be handled through arbitration instead of litigation.
That seems straightforward, but in 2014 a California Appeals Court said DirecTV customers weren’t bound by the arbitration agreement. The court said the class could proceed because the contract included a provision that said the parties agreed to arbitrate unless the agreement would be “unenforceable” under state law. Under a California precedent, state courts are barred from enforcing agreements where consumers give up the right to bring class actions or class action-like claims.
Paging the plaintiffs bar. Across the country, agreements like the one in the DirecTV contract are covered by the 1925 Federal Arbitration Act (FAA), which says parties that have arbitration agreements must arbitrate their disputes instead of going to court. Under the U.S. Constitution’s Supremacy Clause, when federal law is clear and doesn’t trample on the constitutional rights of the states, federal law prevails.
The FAA is one of the oldest pre-emption statutes, and its existence trumps the California law under Supreme Court precedents. In AT&T v. Concepcion in 2011, the Justices ruled that the FAA pre-empts state laws and court rules that prevent contracts that include class-action waivers.
Read more in our daily News Update...