For many litigants and lawyers it is, or soon will be, a “brave new world” in the universe of torts, class actions, and commercial litigation of all kinds—only many litigators may not know it yet. Some will be surprised, some shocked. An old, familiar word, the “A” word, now has a new, profound, forceful impact as a result of two U.S. Supreme Court decisions issued, respectively, in April 2011 and February 2012. The “A” word that has zoomed afresh onto the litigation scene with the thunderous roar and whoosh of a powerful tornado is “Arbitration.” Under these and other developments, can consumer class actions be waived via binding arbitration clauses? Yes! Can personal injury and death lawsuits be tossed because a form agreement to arbitrate was signed? Yes! Can the New York General Business Law prohibiting mandatory arbitration clauses in consumer goods transactions be preempted? Yes!
The earlier Supreme Court decision is AT&T Mobility LLC v. Concepcion,1 a 5-4 ruling that the Federal Arbitration Act (FAA) preempts state laws that make specific categories of claims non-arbitrable. Said the Court: “[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.”2 And less than two months ago, in Marmet Health Care Center, Inc. v. Brown,3 the court held that injury and death lawsuits against nursing homes could be barred by an arbitration agreement. These developments led New York’s Appellate Division, First Department, on March 29, to order arbitration and stay a personal injury lawsuit. Let’s home in on these issues.
