This is the second installment of my insights from the recent ABA conference.
Concepcion: During the discussion of the Supreme Court’s decision in AT&T Mobility, LLC v. Concepcion, which upheld the use of arbitration clauses with class action waivers, Paul Bland of Public Justice (who filed an amicus brief in support of the plaintiffs) made some interesting points. He suggested that the Supreme Court might rule differently in a case coming up from a state supreme court instead of a federal court of appeals, because Justice Thomas has taken the view that the Federal Arbitration Act does not apply in state court, and thus might vote with the Concepcion dissenters in a state court case. (Although is it really the lower courts’ role to try to count how justices might vote in the Supreme Court in a yet-to-be-decided case, as opposed to following the precedent that exists?) Bland also noted that the plaintiffs in Concepcion might have strengthened their case had they developed a factual record on the extent to which AT&T’s arbitration provision is actually used by consumers. Bland suggested that AT&T’s provision is hardly ever used, but Andy Pincus, who argued for AT&T in Concepcion, pointed out that part of the reason for the relatively small number of arbitrations that have gone forward is that AT&T imposes a substantial incentive on itself to settle individual disputes. Paul Bland also suggested that, in seeking to avoid application of Concepcion, plaintiffs can argue that they cannot effectively vindicate statutory rights in arbitration because, where cases involve complicated legal issues and small amounts at stake, it is not practical to pursue arbitration. He cited the Supreme Court’s decision in Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79 (2000) as potentially supporting that result if the right kind of factual record is developed by the plaintiffs. The Eleventh Circuit recently rejected an argument along these lines, however, in Cruz v. Cingular Wireless, LLC, No. 08-16080, 2011 U.S. App. LEXIS 16811 (11th Cir. Aug. 11, 2011). The speakers agreed that the Second Circuit’s forthcoming decision in In re American Express is one to watch on this issue. In insurance class actions, if the use of arbitration by insurers is expanded, I expect it will be difficult for plaintiffs to contend that they cannot effectively vindicate statutory rights, such as bad faith claims or other violations of insurance statutes, in individual arbitrations. Typically the penalties available are more than adequate to provide an incentive to arbitrate. We might see this argument made in insurance class actions involving de minimus statutory violations with small penalties, but so far the courts seem disinclined to allow this type of argument by plaintiffs as a way around Concepcion.
Wal-Mart v. Dukes: Joe Sellers, who argued for the plaintiffs in Wal-Mart v. Dukes, suggested that, with respect to the Supreme Court’s holding that “Trial by Formula” is impermissible and defendants must be allowed to prove up their affirmative defenses on an individual basis in class actions, we may see arguments by plaintiffs that this holding should be limited to Title VII and other statutory claims. He noted that Title VII expressly provides a statutory right to assert individualized defenses. Professor Coffee in his discussion of Dukes did not read it as potentially limited in this fashion. Mark Perry, who was on the team representing Wal-Mart in Dukes, said this argument was unlikely to succeed because this part of the decision was unanimous and was compelled by the Rules Enabling Act, under which a procedural rule cannot change substantive law.