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AT&T Mobility v. Concepcion
Posted on October 4, 2013 by S. Ward Heinrichs
AT&T Mobility v. Concepcion
AT&T Mobility v. Concepcion, (2011) 131 S.Ct. 1740 established that arbitration agreements may contain enforceable class action waiver provisions. More recently, the United States Supreme Court extended that doctrine. (American Express Co. v. Italian Colors Restaurant, (2013) 133 S.CT. 2304.)
In American Express, plaintiff Italian Colors Restaurant (ICR) filed an antitrust class action on behalf of a class of merchants whom American Express was allegedly overcharging for the use of its credit cards. ICR claimed that it could not pursue the claim for its own damages alone because the cost would exceed $1,000,000 and the potential recovery was capped at $40,000. Thus, ICR further claimed that the only economically feasible way of proceeding was as a class action. That would allow it to multiply the $40,000 potential damages by the number of class participants. The Supreme Court said that ICR had no right that would trump the class action waiver even though its individual claim was not economically feasible.
On a different note, the United States Supreme Court ruled that class action arbitration can be enforceable under the right circumstances. (Oxford Health Plans, LLC v. Sutter, (2013) 133 S.Ct. 2064.) A class of doctors alleged in a lawsuit that Oxford Health violated its contract by refusing to pay the prescribed fees for services performed. The agreement had an arbitration provision that did not waive class actions. The parties both agreed to have an arbitrator decide whether the class actions claims could be pursued in arbitration. The arbitrator ruled that the class claims could proceed in arbitration. The insurer Oxford Health appealed. The Supreme Court said that the insurer was stuck with arbitrator’s decision because it had agreed to arbitrate the issue of class action waiver. Had Oxford Health insisted on having a Court rule on the issue, the Supreme Court might have ruled differently.
Labor Code §2699 Private Attorney General Act claims are not necessarily waived by a class action waiver in an arbitration agreement. (Brown v. Superior Court, (2013) 216 Cal.App. 4th 1302.) The Court ruled that PAGA claims can only survive as representative claims, i.e., where one aggrieved employee may seek to claim Labor Code penalties for the state of California on behalf of all employees who suffered the same violations that allow for such penalties. The named plaintiffs had signed an arbitration agreement with a class action waiver. Despite that, the Court found that the waiver did not prevent plaintiffs from seeking PAGA penalties because those claims are not waivable.
The ruling in Brown may not stand because the issue is now before the California Supreme Court in a different case: Iskanian v. CLS Transportation of Los Angeles, (2011) 206 Cal.App.4th 949, review granted, (2012) 147 Cal.Rptr.3d 324.
S. Ward Heinrichs, Esq.
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