Conceptualizing Concepcion: The Continuing Viability of Arbitration Regulations

Abstract

Section 2 of the Federal Arbitration Act (“FAA”) provides that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” In AT&T Mobility Limited, LLC v. Concepcion, a sharply-divided Supreme Court held that the FAA preempted a California unconscionability rule that effectively guaranteed plaintiffs the right to class action arbitrations. A wildly controversial decision, Concepcion has left courts and litigants uncertain about whether longstanding state and federal regulations on the arbitration process remain viable. To take but a few examples, may the draftor of an adhesive contract select the arbitrators unilaterally or eliminate all of a plaintiff's rights to discovery? State and federal courts have traditionally not permitted such behavior. But to date there has been no systematic analysis of the impact of the Concepcion Court’s expansive reasoning on such regulations.

This article — the first of its kind to do so — fills that void. We argue that Concepcion has entrenched, and in many ways rewritten, the fundamental principles of arbitration jurisprudence. What made Concepcion a bellwether was not its narrow holding on class actions, but rather its unprecedented analysis of when and how the FAA trumps other laws. In earlier opinions, the Court had suggested that the FAA would trump rules that were not “generally applicable” but instead were applied to discriminate against arbitration. But in Concepcion, the Court devised a new test that held that the California rule was preempted because it conflicted with the “fundamental attributes of arbitration” — informality, efficiency, reduced costs, and speed.

We argue that the Court’s newly-minted preemption analysis, in combination with its free-floating abstractions about arbitration’s “fundamental attributes,” threaten to jeopardize a bevy of facially neutral contract laws merely because they are applied to arbitration agreements. In formalizing what arbitration is and why it is important, Concepcion has unwittingly upended decades of statutory and common law that hinder arbitration’s “fundamental attributes.” This article describes how the Court arrived upon this precipice, shows how going over — taking Concepcion’s reasoning to its logical conclusion — disrupts a longstanding body of law, and suggests a lodestar to guide courts and litigants safely back from the post-Concepcion cliff.