AT&T Mobility v. Concepcion

  • August 26, 2014
    Guest Post

    By Archis A. Parasharami, litigation partner at Mayer Brown, and James Tierney, litigation associate at Mayer Brown

    *This post originally appeared on Class Defense

    In the three years since AT&T Mobility LLC v. Concepcion, courts have largely been rejecting substantive attacks on arbitration agreements that waive class actions. By contrast, in some cases plaintiffs have succeeded in avoiding arbitration by arguing that they never agreed to it in the first place.

    The latest case to address such questions of contract formation comes from the Ninth Circuit, which held last week in Nguyen v. Barnes & Noble, Inc. that  plaintiff Kevin Nguyen had not agreed to arbitration because he and similarly situated consumers lacked sufficient notice of the company’s online “browsewrap” terms of use. Because the Ninth Circuit applied New York law governing contract formation—and because the court indicated that it would have come to the same conclusion under California law—the decision is an important one for all businesses that engage in online commerce in the United States.

    In the opinion, the Ninth Circuit distinguished between the familiar “clickwrap” process—in which a user affirmatively accepts terms by, for example, clicking “I agree” after receiving notice of the terms—and “browsewrap,” in which a company makes the relevant terms available to users on the web site (usually by providing a hyperlink), but does not require a customer to record his or her assent to the terms.

    In Nguyen, each page on Barnes and Noble’s web site included a link to the applicable terms of use. If followed, the link would direct a user to the terms, which provided that a user accepts the terms by “visiting any area in the Barnes & Noble.com Site, creating an account, [or] making a purchase.” The terms, among other things, provided that parties would resolve their disputes by arbitration on an individual basis.

  • June 20, 2013
    Guest Post

    by John Vail, Vice President and Senior Litigation Counsel, Center for Constitutional Litigation

    In a decision one justice called a “betrayal of our precedents,” the Supreme Court today ruled that corporations can use arbitration clauses to insulate themselves from liability.  

    The decision culminates a thirty year judicial effort by the Court to turn an innocuous 1920s statute, the Federal Arbitration Act, into a weapon used to thwart enforcement of rights by consumers, employees, and small businesses. 

    In American Express v. Italian Colors Restaurant, a restaurant filed a class action complaining that American Express had used monopoly power to force merchants to accept credit cards at rates approximately 30 percent higher than the fees for competing credit cards, in violation of antitrust statutes.  American Express moved to compel arbitration based on a clause in its agreement with the restaurant that provided, in part, “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.”

    The restaurant -- invoking a line of Supreme Court cases that held open the possibility courts could invalidate arbitration clauses that effectively precluded vindication of federal statutory rights -- opposed arbitration.  It demonstrated that costs of litigating an individual claim were “’at least several hundred thousand dol­lars, and might exceed $1 million,’ while the maximum recovery for an individual plaintiff would be $12,850, or $38,549 when trebled,” and argued that preclusion class resolution effectively precluded it from vindicating its claim. 

    The Second Circuit agreed, having held that “the only economically feasible means for . . . enforcing [respondents’] statutory rights is via a class action.” The Supreme Court reversed.

    The Court, with Justice Scalia writing for a five person majority, first found nothing specific in the antitrust laws  - no “congressional command “ - requiring the Court  to reject the waiver of class arbitration.“The antitrust laws do not ‘evinc[e] an intention to pre­clude a waiver’ of class-action procedure.”

    The Court also found no “entitlement to class proceedings for the vindication of statutory rights” flowing from congressional approval of Rule 23, noting that in AT&T Mobility v. Concepcion it already had rejected the argument that “federal law secures a nonwaivable opportunity to vindicate federal policies by satisfying the procedural strictures of Rule 23 or invoking some other informal class mechanism in arbitration.”

  • March 9, 2012

    by Nicole Flatow

    The U.S. Supreme Court’s decision last year in AT&T Mobility v. Concepcion was a major blow to consumers’ ability to file class actions and hold corporations accountable. In the 5-4 decision, the majority rejected a lower court ruling that an arbitration clause was unconscionable because it barred class actions.

    But a recent federal appeals court decision that considered Concepcion as precedent may pave a way forward for litigants seeking to challenge corporate action as a class, writes Philadelphia litigator Joshua D. Wolson on The Legal Intelligencer Blog.

    In In re American Express Merchants Litig., the Second Circuit held that an arbitration clause containing a class action waiver was unenforceable. The case was twice reversed by the U.S. Supreme Court for reconsideration in light of Concepcion and another limiting Supreme Court precedent, and twice more, the court maintained its holding.

    In striking down the class action waiver, the court relied on an affidavit from an economist, which showed that no rational plaintiff would bear the cost alone of winning such a complicated antitrust case, when the potential payout was so comparatively small. 

    “The evidence presented by plaintiffs here establishes, as a matter of law, that the cost of plaintiffs' individually arbitrating their dispute with Amex would be prohibitive, effectively depriving plaintiffs of the statutory protections of the antitrust laws,” the judges wrote.

    If plaintiffs can overcome class action bans by providing affidavits from economic experts, perhaps there is a future for consumer class actions, Wolson writes. But, he cautions, “it seems likely that the Supreme Court will have the last word.”

  • February 8, 2012

    by Nicole Flatow

    The U.S. Supreme Court’s decision last term rejecting a class action gender discrimination lawsuit against Wal-Mart was seen as a major blow to corporate accountability in discrimination cases. But the case is also proving its impact in areas outside of the employment or discrimination context.

    As Greenwire’s Lawrence Hurley reports, the Wal-Mart v. Dukes decision has been cited in several environmental decisions in both federal and state court, in just the first seven months since the case came down.

    Hurley provides details on three of the decisions, all of which deny class certification to plaintiffs attempting to band together to sue large companies that they allege had contaminated their water supplies.

    “The post-Wal-Mart court rulings so far also illustrate how keen the defense bar is to make the most of the Supreme Court case,” Hurley writes, quoting Richard Samp, a lawyer at the conservative Washington Legal Foundation.

    "The decision is being cited by virtually every defendant who is opposing class certification," Samp said.

    During a Senate Judiciary Committee hearing in June on the impact of Wal-Mart and a second case decided last term, AT&T v. Concepcion, University of Colorado law professor Melissa Hart warned:

  • October 14, 2011

    by Nicole Flatow

    This week, the U.S. Supreme Court heard oral argument in a case about whether a consumer protection law that explicitly says “you have a right to sue” can be overridden by the fine print in a credit card contract.

    The case, in which plaintiffs are challenging hidden fees of as much as $257 on a card with a $300 limit, is the latest to test individuals’ ability to hold corporations accountable in the courts.

    Over the past few years, several important decisions have limited that right. In Wal-Mart v. Dukes, the court limited the scope of class actions in discrimination cases. In AT&T Mobility v. Concepcion, the court upheld a provision prohibiting class action lawsuits in a phone service contract. And in Ashcroft v. Iqbal and Bell Atlantic Corps v. Twombly, the court made it more difficult to initiate a civil lawsuit in court.

    But these are just a few of the decisions in which the Supreme Court has empowered corporations through “seemingly small” procedural rulings, explains Alan B. Morrison in his new ACS Issue Brief, “Saved by the Supreme Court: Rescuing Corporate America.” In fact, “[s]ince the late 1980s, on almost every occasion where big corporations have had a case of major significance in the High Court, the Court has ruled in their favor.” He explains: