The 2018-2019 term of the U.S. Supreme Court opened with a newly configured court in which Justice Kavanaugh joined as an Associate Justice following the retirement of Justice Kennedy. Since October of last year, the Court has heard 69 argued appeals, several of which arose from class action litigation. Over the past nine months, the Court has addressed issues relating to class action practice concerning arbitration provisions, federal removal statutes, consumer antitrust law, FDA preemption, and the equitable tolling of interlocutory appeals. Although presented with class action questions related to cy pres awards, data privacy litigation standing, issue class certification, securities laws, and TCPA claims, the Court declined to resolve these issues. Reflective of the Court’s decisions this term at large, rulings were unanimous or sharply divided along ideological lines, with the Court declining to hear a number of controversies. The below summary provides an overview of class action decisions by the Court this term, including recent remands and certiorari decisions.
Class arbitration came back before the Supreme Court this term in Lamps Plus, Inc. v. Varela. Today, the Supreme Court issued a 5-4 decision in Lamps Plus, holding that, under the Federal Arbitration Act, “courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis.” Rather, class arbitration must be expressly authorized by contract.
The facts of Lamps Plus are straightforward. An employee had signed an arbitration agreement upon being hired to work for Lamps Plus. After a data breach, the employee sued Lamps Plus in federal court. Lamps Plus filed a motion to compel individual arbitration, and the district court granted the motion to compel but authorized arbitration on a class basis. The Ninth Circuit affirmed, reasoning that the arbitration provision was ambiguous as to class arbitration and must be construed against the employer under California’s contra proferentem rule that ambiguities in a contract must be
Yesterday the First Circuit weighed in on a hot topic – the enforceability of arbitration provisions in online contracts. In Cullinane, several plaintiffs brought a putative class action alleging that Uber had violated Massachusetts’ consumer protection statute by assessing certain fees. Uber filed a motion to compel arbitration under its Terms of Service, which contained an arbitration provision and class action waiver. After the district court granted the motion, the First Circuit reversed, finding the arbitration provision unenforceable because Uber did not make its Terms of Service sufficiently conspicuous when its customers created a ride-sharing account. Cullinane underscores the importance of obtaining customers’ affirmative consent to an online contract.
At the outset, the First Circuit acknowledged that the Federal Arbitration Action places arbitration provisions upon the same footing as other contract provisions. It also emphasized that arbitration is a matter of contract and that a valid contract must exist in order for the arbitration provision to be enforced. The
Since the Federal Arbitration Act’s (FAA) enactment in 1925, parties have sparred over the enforceability of arbitration agreements in a number of contexts. In recent years, the battle has focused on the enforceability of class or collective action waivers, pursuant to which parties agree to forgo their right to proceed on a class basis and to pursue claims in arbitration on an individual basis instead. Between 2011 and 2013, the United States Supreme Court issued several opinions enforcing class action waivers in the consumer context, but none dealt with employment arbitration agreements. On Monday, the United States Supreme Court removed any doubt that class or collective action waivers contained in employment arbitration agreements are enforceable, affirming a potential cure for the employment class action epidemic.
The argument that employment class action waivers are different from consumer class action waivers derives from Section 7 of the National Labor Relations Act (NLRA), which guarantees employees the right to engage in collective activities
Much has been said and written about Congress’ rejection of the CFPB proposal to ban class action waivers in arbitration agreements between consumers and financial services companies. One of the most frequent statements I have heard from some politicians in the media is that Congress has voted to ban class actions against banks. As is true with many political statements from both sides of the aisle, this one is only partially true. Here are a few additional (but not alternative) facts to place Congress’ action in context.
- The CFPB rule, and not Congress’ rejection of it, would have represented a change in the law. Since the Supreme Court’s 2011 decision in AT&T Mobility v. Concepcion, class action waivers have generally been enforceable in contracts for consumer financial services. The CFPB proposed rule was based on the agency’s authority granted under the Dodd-Frank Act. However, Congress and the President had the final say regarding whether the rule would take effect, and
Last week, the Supreme Court consolidated and agreed to hear three appeals of Circuit Court decisions concerning whether class action waivers contained in employment arbitration agreements infringe on employees’ rights under Section 7 of the National Labor Relations Act. According to the schedule currently in place, briefing on these cases will commence in late February 2017. Unless a ninth Supreme Court justice is appointed, confirmed, and seated before oral argument in this consolidated appeal, the possibility of a 4-4 decision—and resulting preservation of the status quo–looms large.
Employers commonly use arbitration agreements to minimize the expense and exposure of employment-related claims. By mandating arbitration of employment disputes, they hope to ensure that these matters are resolved in a cost-effective and confidential manner. Many arbitration agreements go a step further, requiring employees to pursue their claims individually, and to waive their right to proceed on a class or collective basis. Unfortunately, the certainty employers have striven to achieve with such agreements has proven elusive in recent years, as the National Labor Relations Board (NLRB) and several courts have found that class action waivers violate employees’ rights.
Although the U.S. Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion upheld the enforceability of class action waivers in the consumer context, in the years since, the NLRB has repeatedly rejected the use of class action waivers in the employment context. In In re D.R. Horton, the NLRB held that class action waivers inherently infringe on employees’
We have written several times in this blog about what we perceived as the inconsisteny between the Massachusetts decisions in the Feeney v. Dell case and the SCOTUS decision in Concepcion….
Just over two years ago, the Supreme Court issued its decision in AT&T Mobility, LLC v. Concepcion, holding that the Federal Arbitration Act preempted a state rule that class action waivers…
Last week, the Massachusetts Supreme Judicial Court issued two long-awaited decisions concerning the enforceability of class action waivers in arbitration agreements. Feeney v. Dell, Inc. (…