The Appellate Corner
| Publication year | 2011 |
| Pages | 0271 |
WILSON F. GREEN
wgreen@fleenorgreen.com
The Big Story: Class-Action Bans in Arbitration Agreements Enforced
The decision in AT&T Mobility LLC v. Conception, No. 09-893 (U.S. April 27, 2011), though long-awaited, was probably inevitable after last term's decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 123 S. Ct. 1758 (2010). Stolt-Nielsen had held that, where an arbitration agreement is silent on whether arbitration can proceed on behalf of a putative class, there is no authority in the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., for forcing a party to arbitrate against a putative class. The Stolt-Nielsen Court reasoned that arbitration is a matter of contract and an inherently individual process, and, thus, for class arbitration to be appropriate, there must be some affirmative indicia that the parties intended to allow class arbitrations. A silent agreement, of course, lacked such an indicia.
The arbitration agreement in Concepcion contained a class-action waiver, which is a provision prohibiting the consumer from bringing a class action. Concepcion brought a class action in federal district court, and AT&T moved to enforce its arbitration agreement. Concepcion opposed, contending that the clause's banning the class-action mechanism was unconscionable under California law. California courts had previously held that arbitration agreements containing class-action waivers are unconscionable if they compel individual arbitration of "negative value" claims-which are claims where the costs of prosecution are too small or disproportionate to the potential recovery.
Concepcion addressed whether a court must enforce a class-action waiver contained in a consumer arbitration clause where a "negative value" claim might be involved. The district court and the Ninth Circuit found the waiver unconscionable, and further held that California's unconscionability determination as to class-waivers was non-discriminatory. The Supreme Court reversed. Writing for the Court's majority of five, Justice Scalia reasoned that the FAA preempted California's unconscionability law because arbitration is inherently an individualized proceeding (the holding from Stolt-Nielsen), and, thus, the prohibition of a class-action waiver in any context of arbitration is inimical to the arbitral process itself.
The decision in Concepcion likely undermines the holding in Terminix Int'l. Co., LP v. Leonard, 854 So.2d 529 (Ala. 2002). In Leonard, our supreme court held unconscionable an arbitration agreement, because arbitration was an inherently individual process, and because the value of the claim was negative-value. Given the holdings in Stolt-Nielsen and Concepcion, it now appears that any principle of state law which challenges the inherently individual nature of arbitration is discriminatory, so that the FAA prohibits enforcing such state-law defenses.
Noteworthy Decisions from the Alabama Supreme Court
Venue; Forum Non Conveniens
Ex parte Wachovia Bank, NA, No. 1100645 (Ala. May 27, 2011)
A Lee County business had money taken from its account through forgery. The checks were processed in Lee County at the bank's offices. The business sued the bank in Macon County, and the bank moved for transfer based on forum non conveniens, which was denied. The supreme court granted mandamus relief under the "interest of justice" prong of forum non conveniens. The court reasoned that there was no sufficient "nexus" between the dispute and Macon County because all of the salient events occurred in Lee County.
Venue;...
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