Ninth Circuit rejects efforts to circumvent Federal Arbitration Act, U.S. Supreme Court's Concepcion decision
The U.S. Chamber urged the full U.S. Court of Appeals for the Ninth Circuit to hold that the Federal Arbitration Act ("FAA") preempts preempts California’s rule—adopted in Broughton v. Cigna Healthplans of California (1999), and reaffirmed in Cruz v. PacifiCare Health Systems, Inc. (2003)—that claims for so-called “public” injunctive relief are non-arbitrable as a matter of state policy. The appeal arises out of proposed class action brought by debtors seeking to block the creditors from collecting on debts or reporting defaults. NCLC's amicus brief argues that the Broughton/Cruz rule conflicts with, and is therefore preempted by, the FAA, which requires enforcement of arbitration agreements according to their terms “notwithstanding any state substantive or procedural policies to the contrary,” as the U.S. Supreme Court recently explained in AT&T Mobility LLC v. Concepcion (2011). According to NCLC's brief, arbitration benefits businesses and consumers, employers and employees, creditors and debtors, by allowing them to resolve disputes promptly and efficiently while avoiding the costs associated with traditional litigation. Arbitration is speedy, fair, inexpensive, and less adversarial than litigation in court.
The law firm Mayer Brown LLP served as the U.S. Chamber Litigation Center's co-counsel for the Chamber's amicus brief. Andy Pincus of Mayer Brown argued before the Ninth Circuit on behalf of the Chamber as amicus.
The en banc Ninth Circuit reversed the district court's dismissal of plaintiff's claims, reversed the denial of defendants' motion to compel arbitration, and remanded with instructions to the district court to compel arbitration. The majority held that the bank's petition to compel arbitration should have been granted because the arbitration clause is not unconscionable and that the plaintiff's claims do not fall within the public injunctive relief exception to the FAA. The court expressly declined to reach the argument that Broughton/Cruz is vitiated after AT&T Mobility v. Concepcion.