Class Action Defense Strategy Blog : Class Action Lawyer & Attorney : Sheppard Mullin Law Firm : Antitrust, Securities, Wage & Hour, Consumer Fraud

In Phillips v. Sprint PCS, __ Cal. App. 4th __, 2012 WL 4378199 (1st Dist., Sept. 26, 2012), the California Court of Appeal affirmed a trial court’s decision to reconsider its past order refusing to enforce an arbitration clause including a class action waiver. In doing so, the Court recognized the “major change in California law” wrought by the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011). Under Concepcion, class action waivers contained in arbitration provisions subject to the Federal Arbitration Act (the “FAA”) are enforceable. The FAA preempts contrary state law.

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By Sarah Kagan and Shannon Petersen

On March 16, 2012, the Ninth Circuit followed the recent U.S. Supreme Court decision in AT&T Mobility, Inc. v. Concepcion, 131 S. Ct. 1740 (2011), and held that the Federal Arbitration Act (the FAA) preempts state law refusing to enforce arbitration provisions with class action waivers. See Marygrace Coneff v. AT&T Corp., --- F.3d ----, 2012 U.S. App. LEXIS 5520 (9th Cir. Wash. Mar. 16, 2012). Coneff follows closely on the heels of the Ninth Circuit's recent opinion in Kilgore v. KeyBank, Nat'l Ass'n, --- F.3d ----, 2012 WL 718344, *10 (9th Cir. March 7, 2012), in which it followed Concepcion in holding the FAA preempts California law excluding claims for "public injunctions" from arbitration.

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By Shannon Petersen

In CompuCredit Corp. v. Greenwood, ---S.Ct.---, 2012 WL 43514 (U.S. Jan. 10, 2012), the Supreme Court has again enforced an arbitration clause and class action waiver in a consumer contract. In doing so, the Court solidified the holding of its recent landmark decision of AT&T Mobility v. Concepcion, 563 U.S. ___, 131 S.Ct. 1740 (2011) that under the Federal Arbitration Act (the “FAA”) arbitration agreements must be enforced according to their terms. Indeed, CompuCredit demonstrates a growing consensus on this point. While the Court decided Concepcion by a 5-4 majority, 8 out of 9 justices formed the majority in CompuCredit, with only Justice Ginsberg dissenting. Justice Scalia wrote the majority opinions in both cases.

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By Paul Seeley

In the recently published decision Mazza v. American Honda Motor Company, Inc., No. 09-55376 (9th Cir. 1-12-12), the Ninth Circuit reversed the certification of a nationwide class composed of consumers seeking relief under California’s consumer protection laws. In doing so, the court significantly decreased the viability of such nationwide classes, particularly when the plaintiff seeks to recover under any particular state’s consumer protection statutes.

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By John Stigi and Eric O’Connor

In UFCW Local 1776 v. Eli Lilly & Co., No. 09-0222-CV, 2010 WL 3516183 (2d Cir. Sept. 10, 2010), the United States Court of Appeals for the Second Circuit reversed an order of the United States District Court for the Eastern District of New York certifying a class of third party payors (“TPPs”) consisting of unions and insurers who underwrite the purchase of drugs prescribed by physicians in an action against pharmaceutical manufacturer Eli Lilly & Co. (“Lilly”) alleging civil violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962, 1964 (“RICO”). At the core of this decision is the Second Circuit’s rejection of the use of “aggregate proof” of causation in the consumer class certification process.
 

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By Jennifer Hoffman

In MacKay v. Superior Court (October 6, 2010) ___ Cal.App.4^th ___ the Second District Court of Appeal threw out a class action challenging an insurer's rating practices on the ground that California law prohibits insureds from challenging rates approved by the California Department of Insurance ("DOI") through a civil action. Writing for the court, Justice Croskey concluded that the "filed rate doctrine" applies to California insurance ratemaking, despite the voters' enactment of Proposition 103, and that the exclusive remedy for challenging an insurer's approved rating practices was through a statutory administrative review process.
 

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By Anna McLean and Molly Newland

After years of growth, the Federal Arbitration Act ("FAA"), and numerous court decisions emphasizing the strong public policy in favor of arbitration as a cost-effective means of resolving disputes, arbitration now appears to be under siege—particularly in the consumer context.  Many consumer contracts, including those involving cellular phones, credit cards, and other consumer finance products, such as automobile retail installment contracts, contain mandatory arbitration provisions requiring consumers to resolve any disputes through arbitration rather than through the courts. In many cases, these contracts have attempted to establish arbitration an alternative to the high cost, slow pace, and uncertainty of class action litigation. Now consumer arbitration itself has become the focus of public entity investigations and class action lawsuits. Ultimately, consumer arbitration will likely survive, perhaps with new guidelines and consistent rules governing the process so companies know when their arbitration agreements will be enforced.
 

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