2016 in Arbitration Law: Fleeting Victories for Consumer Advocates?
This post has been viewed 2,791 times.
If I had drafted this annual summary post on November 7, 2016, it would have looked different. At that point, the year had produced numerous (final or proposed) federal regulations that significantly restricted the use of arbitration with consumers in large industries. In addition, Justice Scalia’s death, along with the prospective election of Secretary Clinton, appeared poised to alter the make-up of the U.S. Supreme Court, which has voted 5-4 in many of the critical arbitration decisions in the last decade.
As I draft this post on January 4, 2017, it is still true that 2016 produced multiple federal regulations and some significant decisions that move away from the rigid arbitration-enforcement world view that Justice Scalia professed, but the election of Donald Trump, and the opening on the U.S. Supreme Court, may undo those pro-consumer changes.
Here were the big arbitration developments I saw in 2016:
- The death of Justice Antonin Scalia in February. He authored arbitration blockbusters like Buckeye Check Cashing v. Cardegna (2006); Rent-A-Center, West v. Jackson (2010); AT&T Mobility v Concepcion (2011); American Express Co. v. Italian Colors Restaurant (2013).
- Courts created uncertainty for the enforcement of delegation clauses. Enforced in Mohamed v. Uber Technologies, Inc., __ F.3d __, 2016 WL 4651409 (9th Cir. Sept. 7, 2016) and Regions Bank v. Rice, 2016 WL 3031357 (Ala. May 27, 2016). Rejected in Morgan v. Sanford Brown Institute, 2016 WL 3248016 (N.J. June 14, 2016) and Smith v. D.R. Horton, Inc., 2016 WL 3660720 (S.C. July 6, 2016).
- Courts also created uncertainty regarding who decides availability of class arbitration. Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 2016 WL 53806 (3d Cir. Jan. 5, 2015) (parties’ incorporation of AAA rules is insufficient to delegate the availability of classwide arbitration to arbitrators); Sandquist v. Lebo Automotive, Inc., 376 P.3d 506 (Cal. July 28, 2016) (arbitrator decides); Dell Web Communities, Inc. v. Carlson, 2016 WL 1178829 (4th Cir. Mar. 28, 2016) (court decides).
- FAA allows no special treatment for famous athletes. Arbitral awards against Tom Brady and Adrian Peterson, which had been vacated in federal district courts, were un-vacated by federal appellate courts.
- Finn got under my skinn. The high court in New Hampshire got creative in Finn v. Ballentine Partners, LLC, __ A.3d __, 2016 WL 3268852 (NH June 14, 2016). After finding no avenue for vacating an arbitration award in the FAA, it concluded the FAA’s sections regarding confirming and vacating awards do not apply in state courts and vacated the award under its state arbitration act. Threw me into a tizzy.
- 7th Circuit supported NRLB on arbitration. The NLRB has ruled that arbitration agreements which prohibit class actions violate the federal labor laws. But, five federal circuit courts have disagreed with the Board. This year, the 7thCircuit stood up for the Board in Lewis v. Epic Systems Corp., 2016 WL 3029464 (7th Cir. May 26, 2016). Watch for SCOTUS to weigh in on this issue in the near future.
Tags:
