Strange Bedfellows in SCOTUS Arbitration Ruling

Darrell VanDeusen
Darrell VanDeusen

In a 6-3 decision, the Supreme Court has decided that satellite television customers are required to individually arbitrate their disputes with the provider, DirecTV. The Court held that the Federal Arbitration Act (FAA) preempts the use of a California state law that said such a provision was unenforceable. DirecTV, Inc. v. Imburgia, 2015 U.S. LEXIS 7999 (Dec. 14, 2015).

The decision, which will apply equally to employment and commercial contracts, is a pretty straight forward application of the Court’s decision in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). Concepcion held that a California law invalidating class action waivers in arbitration violated the FAA. In this case, DirecTV sought the arbitration of subscribers’ California court challenge to the company’s early termination fees. A state trial court ruled arbitration was not available because the user agreement had a provision stating that arbitration would not occur if the “law of your state” prohibited class action waivers. The California Court of Appeal affirmed the denial of arbitration and the California Supreme Court denied a petition for certiorari, but the U.S. Supreme Court took the case.

Writing for the majority, Justice Breyer said that the FAA bars state courts from placing arbitration contracts “on a different footing” from contracts generally, which is what the state court did here. “After examining the grounds upon which the Court of Appeal rested its decision, we conclude that California courts would not interpret contracts other than arbitration contracts the same way,” said Justice Breyer. “Rather, several considerations lead us to conclude that the court’s interpretation of this arbitration contract is unique, restricted to that field.”

In dissent, Justice Ginsburg said the Court incorrectly read the DirecTV agreement in favor of “the powerful economic enterprises” that force arbitration and class action waivers onto consumers and employees. “I would take no further step to disarm consumers, leaving them without effective access to justice,” she wrote, acknowledging Concepcion’s application. Justice Sotomayor joined Justice Ginsberg. But…wait for it… the third dissenter was Justice Thomas, who wrote separately to say that he would hold that the FAA doesn’t apply to proceedings in state court. Justice Kagan was in the majority.

Ok, it’s not that unusual to have the justices come out in different groupings in Court decisions, despite what the media would have us believe (i.e., Justice Kennedy is the only one who a litigant need convince). But it makes for good press, and having Justices Ginsberg and Thomas on the same side in dissent is surprising since their views are not typically the same.

While we’re talking Supreme Court (and since it’s near the Holidays), I offer up a possible gift idea: I just finished reading “Sisters In Law: How Sandra Day O’Connor and Ruth Bader Ginsburg Went to the Supreme Court and Changed the World” by Linda Hirshman. It provides an interesting look into the lives of the first and second women on the Court.

Be advised, however, that Hirshman is a Ginsberg acolyte. She puts Saint Ruth on a pedestal (o.k., perhaps not without good reason given Ginsberg’s bona fides as the “Thurgood Marshall of the women’s movement” both before and after she became a judge). But in so doing, she takes some unnecessary cheap shots at those Justices (and others) who do not share her view. Justice O’Connor does not get the same starry-eyed attention from Hirshman. Nevertheless, the insight provided into the development of the Court’s jurisprudence regarding pregnancy discrimination, sexual harassment, affirmative action and reproductive rights is pretty good and makes it a worthwhile read.

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