Arguably, California courts and commentators were taken by surprise at the breadth of the U.S. Supreme Court's intent in its decision of AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), to impose federal preemption under the Federal Arbitration Act to compel state courts to enforce arbitration agreements as the parties intended. Concepcion's sweeping scope is now understood as far more than just invalidating class action waivers in arbitration agreements in consumer adhesion contracts.

Now, in its most recent opinion, the court's extension of federal preemption under the FAA over enforcement of arbitration agreements in state court is just about complete. In a 5-3 opinion, in which Justice Sonya Sotomayor did not participate, the U.S. Supreme Court in American Express Co. v. Italian Colors Restaurant, 133 S.Ct 2304 (2013), held that the FAA does not permit courts to invalidate a contractual waiver of class arbitration on the grounds that the plaintiff's cost of individually arbitrating a federal statutory remedy may exceed the potential recovery. In American Express, the court enforced a class action waiver in the arbitration clause in plaintiff merchants' credit contract with American Express, denying them the right to bring their Sherman Act claims as a class action under F.R.C.P., Rule 23. The court's majority held that even if actions for anti-trust could be prohibitively expensive if brought as an individual claim, arguably even nullifying access to a federal statutory right unless brought collectively, that predicament did not justify extension of the "effective-vindication" doctrine to invalidate the contractual waiver of class arbitration. Rather, enforcement of the contractual waiver was required under the FAA.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]