Concepcion

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In DIRECTV, Inc. v. Imburgia, a decision released this week, the United States Supreme Court rejected the California Court of Appeal’s interpretation of a binding arbitration provision that would have rendered unenforceable a class arbitration waiver provision.  In doing this, the Supreme Court once again affirmed the primacy of the Federal Arbitration Act (“FAA”) and the invalidity of  attempts by state courts to limit the enforceability of class arbitration waiver provisions.

DIRECTV involved a claim by consumers that DIRECTV’s early termination fees violate California law.  The service agreement at issue in the action provided that any claims would be resolved by binding arbitration.  The agreement contained a class arbitration waiver but provided that if the “laws of your state” made the waiver unenforceable, then the entire arbitration provision “is unenforceable.”  The lawsuit was filed in 2008, prior to the United States Supreme Court’s 2011 decision in AT&T Mobility, LLC v. Concepcion holding that the FAA preempted California case law deeming class arbitration waiver provisions unenforceable.Continue Reading United States Supreme Court Once Again Rejects California’s Attempt To Void Class Arbitration Waivers

Just last week, in the case GameStop Corp., a National Labor Relations Board (NLRB) administrative law judge applied recent Board precedent and ignored contrary cases from federal courts to find an employer’s arbitration agreement was unenforceable because it waived the right of employees to bring class or collective actions.  While the decision has yet to be approved by the NLRB itself (parties can appeal ALJ decisions to the NLRB), it illustrates the continuing tension in this area between the NLRB (which disfavors class action waivers in employee arbitration agreements) and the federal courts (which favor them). 

As we have reported, U.S. federal courts continue to hold that employees may enter into arbitration agreements in which they waive the right to file class or collective action claims.  The U.S. Supreme Court put its stamp of approval on such waivers in 2011 in the blockbuster case AT&T v. Concepcion, holding that the enforceability of arbitration agreements was governed by the Federal Arbitration Act (FAA), which preempted any state law purporting to regulate arbitration agreements, including arbitration agreements with class action waivers.  Building on a decades-long line of cases steadily increasing support for the concept of arbitration and similar alternative dispute resolution (“ADR”) methods for resolving litigation, Concepcion also held decisively that arbitration agreements could include waivers by the parties of the right to bring lawsuits as class actions.  The U.S. Supreme Court has re-affirmed Concepcion in subsequent decisions.Continue Reading Chasm Continues To Widen, For Now, Between NLRB and Federal Courts On Enforceability Of Class Action Waivers In Employment Agreements