Killing Them with Kindness: 'Consumer-Friendly' Arbitration Clauses after AT&T Mobility v. Concepcion
34 Pages Posted: 23 Aug 2012 Last revised: 1 Oct 2012
Date Written: August 2012
In AT&T v. Concepcion, the Supreme Court struck California’s so-called “Discover Bank rule” – a judge-made rule providing that arbitration agreements attended by class action waivers are unenforceable, if those agreements are contained in standard form consumer contracts. But, arguably, Concepcion leaves open and unresolved the viability of a state law challenge to a bilateral arbitration clause which is shown, in a particular case, to impose a forfeiture of the claimant’s ability to vindicate his state law rights. Meanwhile, in the context of federal claims, the Second Circuit in American Express III reaffirmed in light of Concepcion its earlier holdings that a class action waiver contained in an arbitration agreement is unenforceable if it is proven in the individual case that the arbitration clause at issue would force the claimant to shoulder such costs as would prevent the claimant from effectively vindicating its federal statutory rights. On both the state and federal levels, then, cost-based vindication of rights challenges remain a significant concern to corporate defendants looking to exculpate themselves from exposure to aggregate litigation. All of this begs a question this paper seeks to answer: will the robust recognition of cost-based, evidence-backed vindication of rights challenges swallow up the basic ruling of Concepcion, rendering unenforceable arbitration agreements and class action waivers that the Supreme Court has held are otherwise to be enforced?
Keywords: AT&T Mobility v. Concepcion, class actions, arbitration, consumer rights, American Express Merchants Litigation, vindication of rights
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