Opposition Brief — AT&T Mobility LLC, et al., Petitioners v. Steven McArdle
Supreme Court briefApr 24, 2020
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No. 19-1078
IN THE
Supreme Court of the United States
AT&T MOBILITY LLC; NEW CINGULAR WIRELESS PCS
LLC; NEW CINGULAR WIRELESS SERVICES, INC.,
Petitioners,
v.
STEVEN MCARDLE,
Respondent.
On Petition for a Writ of Certiorari to the
United States Court of Appeals for the Ninth Circuit
RESPONDENT’S BRIEF IN OPPOSITION
ADAM J. GUTRIDE
SETH A. SAFIER
GUTRIDE SAFIER LLP
100 Pine Street
Suite 1250
San Francisco, CA
(415) 639-9090
MATTHEW T. MCCRARY
GUTRIDE SAFIER LLP
265 Franklin Street, Suite 1702
Boston, MA 02110
(214) 502-2171
SCOTT L. NELSON
Counsel of Record
ALLISON M. ZIEVE
PUBLIC CITIZEN
LITIGATION GROUP
1600 20th Street NW
Washington, DC 20009
(202) 588-1000
snelson@citizen.org
Attorneys for Respondent
April 2020
i
QUESTION PRESENTED
Whether the Federal Arbitration Act preempts
California decisional law applying general principles
of contract law to hold that, when a party has a statutory right to seek “public injunctive relief”—that is,
injunctive relief obtained by an individual that benefits the public generally—contractual agreements, including arbitration agreements, that purport to forbid
the plaintiff from seeking and obtaining such relief in
any forum are invalid.
ii
TABLE OF CONTENTS
QUESTION PRESENTED .......................................... i
TABLE OF AUTHORITIES ...................................... iii
INTRODUCTION ....................................................... 1
STATEMENT .............................................................. 3
A. The McGill Rule ............................................... 3
B. The Blair decision ............................................ 6
C. Facts and proceedings of this case .................. 9
REASONS FOR DENYING THE WRIT .................. 12
I.
The court of appeals’ holding does not conflict
with decisions of other courts of appeals or of
this Court............................................................ 12
II. The McGill rule is not contrary to the FAA’s purposes and objectives. .......................................... 19
III. The McGill rule is a ground for “revocation”
of contracts within the meaning of section 2
of the FAA........................................................... 25
IV. The McGill rule does not impair consumer
arbitration in California. ................................... 26
CONCLUSION.......................................................... 33
iii
TABLE OF AUTHORITIES
Cases
Page(s)
14 Penn Plaza LLC v. Pyett,
556 U.S. 247 (2009) ....................................... 14, 23
Aanderud v. Super. Ct.,
221 Cal. Rptr. 3d 225 (Cal. Ct. App. 2017) ......... 26
Allied-Bruce Terminix Cos. v. Dobson,
513 U.S. 265 (1995) ....................................... 17, 26
Am. Express Co. v. Italian Colors Rest.,
570 U.S. 228 (2013) ....................................... 14, 22
Arthur Andersen LLP v. Carlisle,
556 U.S. 624 (2009) ............................................. 17
AT&T Mobility LLC v. Concepcion,
563 U.S. 333 (2011) ...................................... passim
Aviles v. Quik Pick Express, LLC,
703 F. Appx. 631 (9th Cir. 2017). ........................ 29
Blair v. Rent-A-Center, Inc.,
928 F.3d 819 (9th Cir. 2019) ........................ passim
Booker v. Robert Half Int’l, Inc.,
413 F.3d 77 (D.C. Cir. 2005) ............................... 13
Broughton v. Cigna Healthplans,
988 P.2d 67 (Cal. 1999) ........................... 4, 5, 7, 22
Buckeye Check Cashing, Inc. v. Cardegna,
546 U.S. 440 (2006) ................................. 17, 18, 25
Colopy v. Uber Techs. Inc.,
2019 WL 6841218 (N.D. Cal. Dec. 16, 2019) ...... 28
Cruz v. PacifiCare Health Sys., Inc.,
66 P.3d 1157 (Cal. 2003) ......................... 4, 5, 7, 22
iv
DIRECTV Inc. v. Imburgia,
136 S. Ct. 463 (2015) ........................................... 18
Discover Bank v. Super. Ct.,
113 P.3d 1100 (Cal. 2005) ................................... 10
Doctor’s Assocs., Inc. v. Casarotto,
517 U.S. 681 (1996) ................................. 17, 25, 26
EEOC v. Waffle House, Inc.,
534 U.S. 279 (2002) ............................................. 14
Eiess v. USAA Fed. Sav. Bank,
404 F. Supp. 3d 1240 (N.D. Cal. 2019) ............... 27
Epic Sys. Corp. v. Lewis,
138 S. Ct. 1612 (2018) ............17, 19, 20, 21, 25, 26
Ferguson v. Corinthian Colleges, Inc.,
733 F.3d 928 (9th Cir. 2013) ....................... 4, 7, 22
Five Star Sr. Living Inc. v. Mandviwala,
138 S. Ct. 2680 (2018) ........................................... 8
Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20 (1991) ......................................... 14, 23
Gonzalez-Torres v. Zumper, Inc.,
2019 WL 6465283 (N.D. Cal. Dec. 2, 2019) ........ 27
Greenley v. Avis Budget Group Inc.,
2020 WL 1493618
(S.D. Cal. Mar. 27, 2020) ............................... 26, 27
Iskanian v. CLS Transp. L.A., LLC,
327 P.3d 129 (Cal. 2014) ..................... 8, 29, 30, 31
Kindred Nursing Ctrs. Ltd. P’ship v. Clark,
137 S. Ct. 1421 (2017) ..............7, 12, 17, 18, 24, 25
Lamps Plus, Inc. v. Varela,
139 S. Ct. 1407 (2019) ......................................... 24
v
McCardle v. AT&T Mobility LLC,
2018 WL 6803743 (N.D. Cal. Aug. 13, 2018) ...... 10
McCardle v. AT&T Mobility LLC,
2013 WL 5372338 (N.D. Cal. Sept. 25, 2013) ..... 10
McCardle v. AT&T Mobility LLC,
474 F. Appx. 515 (9th Cir. 2012) ......................... 10
McCardle v. AT&T Mobility LLC,
657 F. Supp. 2d 1140 (N.D. Cal. 2009) ............... 10
McGill v. Citibank, N.A.,
393 P.3d 85 (Cal. 2017) ................................ passim
Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc.,
473 U.S. 614 (1985) ........................... 14, 22, 23, 24
Perry v. Thomas,
482 U.S. 483 (1987) ............................................. 17
Preston v. Ferrer,
552 U.S. 346 (2008) ....................................... 15, 25
Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395 (1967) ............................................. 16
Rent-A-Center, West, Inc. v. Jackson,
561 U.S. 63 (2011) ......................................... 17, 25
Rivera v. Uniqlo Calif., LLC,
2017 WL 6539016 (C.D. Cal. Sept. 8, 2017) ....... 26
Rodriguez de Quijas v. Shearson/
Am. Express, Inc.,
490 U.S. 477 (1989) ............................................. 14
Sakkab v. Luxottica Retail N. Am., Inc.,
803 F.3d 425 (9th Cir. 2015) ............... 8, 29, 30, 31
Shearson/Am. Express, Inc. v. McMahon,
482 U.S. 220 (1987) ................................. 14, 22, 23
vi
Shroyer v. New Cingular Wireless Servs., Inc.,
498 F.3d 976 (9th Cir. 2007) ............................... 10
Southland Corp. v. Keating,
465 U.S. 1 (1984) ................................................. 15
Volt Info. Scis., Inc. v. Bd. of Trustees of
Leland Stanford Jr. Univ.,
489 U.S. 468 (1989) ....................................... 15, 16
ZB, N.A. v. Superior Court,
448 P.3d 239 (Cal. 2019) ..................................... 30
Statutes and Rules
Cal. Bus. & Prof. Code § 17500 .............................. 3, 9
Cal. Civ. Code § 3513 .................................................. 4
California Consumer Legal Remedies Act,
Cal. Civ. Code §§ 1750 et seq. ............................ 3, 9
§ 1751 ..................................................................... 3
California Unfair Competition Law,
Cal. Bus. & Prof. Code §§ 17200 et seq. ............ 3, 9
Federal Arbitration Act,
9 U.S.C. §§ 1 et seq........................................ passim
9 U.S.C. § 2 .....................................5, 15, 16, 17, 25
9 U.S.C. § 3 .......................................................... 27
9 U.S.C. § 10(a)(3)................................................ 22
Fed. R. Civ. P. 23(b) .................................................. 21
Fed. R. Civ. P. 23(f) ................................................... 11
INTRODUCTION
California consumer-protection statutes allow
plaintiffs in certain cases to obtain an award of injunctive relief that benefits the general public, rather than
the plaintiffs only. Longstanding principles of California contract law also prohibit contracts from waiving
rights or laws that protect the public at large. In
McGill v. Citibank, N.A., 393 P.3d 85 (2017), the California Supreme Court applied these principles to hold
that any agreement, including an arbitration provision, that purports to extinguish prospectively a person’s right to seek public injunctive relief is invalid
and unenforceable. Under McGill, arbitration provisions remain enforceable whether or not they provide
for arbitration of public-injunction claims. McGill affects only an agreement that leaves no forum for pursuing such relief, and even then it allows enforcement
of the rest of the agreement (including an arbitration
provision).
In Blair v. Rent-A-Center, Inc., 928 F.3d 819 (9th
Cir. 2019) (Pet App. 5a), a unanimous panel agreed
with the California Supreme Court that the Federal
Arbitration Act (FAA)—which requires generally that
arbitration provisions be enforced to the same extent
as other contracts—does not preempt McGill’s holding. Blair held that the McGill rule is a generally applicable contract defense, Pet. App. 15a–18a, and that
it does not interfere with the FAA’s objectives by disfavoring or burdening arbitration, or interfering with
its fundamental attributes, including its bilateral nature. Id. 18a–23a.
In this case, the Ninth Circuit applied Blair to hold
that a clause in petitioner AT&T Mobility’s arbitration provision that purported to waive consumers’
2
rights to pursue public injunctive relief in any forum
is invalid and unenforceable. Id. 2a. Because AT&T’s
agreement provides that the invalid waiver provision
cannot be severed from the remainder of the arbitration provision, the consequence of that holding in this
specific case was that AT&T’s arbitration provision
was unenforceable. McGill itself, however, would not
have required that result if the contract did not.
AT&T requests that this Court review the lower
court’s holding, but does not claim there is any conflict
among the lower courts. Nor does AT&T identify any
holding of this Court, or of any other court, that the
FAA requires enforcement of an agreement that, instead of requiring arbitration of a substantive claim,
purports to waive it altogether.
AT&T instead argues that, in concluding that the
McGill rule poses no obstacle to achieving the FAA’s
purposes and objectives, both Blair and McGill got it
wrong. The argument that two unanimous courts
erred in applying settled principles of law does not ordinarily justify exercise of this Court’s discretionary
jurisdiction, and this case is no exception. In any
event, the claim of error is unsupported. As both Blair
and McGill explain, the nonwaivability of a consumer’s substantive entitlement to public injunctive
relief neither interferes with arbitration nor affects its
fundamental attributes by imposing incompatible procedures. The McGill rule merely ensures that parties
to bilateral proceedings—whether in arbitration or in
court—have the opportunity to obtain the relief to
which substantive law entitles them.
Finally, AT&T’s assertions, and those of its amici,
that the consequences of McGill are “enormous” because it will invalidate “tens of millions of arbitration
3
agreements in California,” Pet. 23, are flatly wrong.
Those assertions are premised on the misconception
that McGill holds that public injunction claims are
“non-arbitrable” and that plaintiffs will include them
in lawsuits to “circumvent[] Concepcion and evad[e]”
arbitration provisions. Pet. 4, 24. But McGill allows
parties to agree that claims for public injunctive relief
must be arbitrated, or to agree that all liability issues
and other remedial issues must be arbitrated while
deferring public injunctive relief for later judicial resolution. Many companies have crafted valid and enforceable agreements to provide for arbitration in one
of those ways. McGill holds only that the parties cannot waive public-injunction claims altogether. The
only reason the lower courts did not enforce AT&T’s
arbitration provision here was that AT&T wrote into
it a “poison pill” clause providing that if a court found
the public-injunction waiver invalid and unenforceable, the entire arbitration provision would be null and
void. This Court need not grant certiorari to spare
AT&T the consequences of its own contractual choices.
STATEMENT
A. The McGill Rule
California’s Consumer Legal Remedies Act
(CLRA), Cal. Civ. Code §§ 1750 et seq., together with
its Unfair Competition Law (UCL), Cal. Bus. & Prof.
Code §§ 17200 et seq., and its false advertising law, id.
§ 17500, provide substantive rights and remedies to
protect California consumers from unfair and deceptive business practices. The CLRA provides that any
agreement purporting to waive its protections is void
and unenforceable. Cal. Civ. Code § 1751. Another
longstanding California statute prohibits private
4
agreements that waive rights for the protection of the
public. Cal. Civ. Code § 3513.
Among the substantive rights afforded by California’s consumer protection laws is the entitlement to
obtain an injunction against unlawful acts or practices, such as false advertising, for the benefit of the
public at large. Unlike private injunctive relief, which
is principally intended to benefit individual plaintiffs
or discrete classes of similarly situated individuals,
public injunctive relief is intended primarily to benefit
the general public and only incidentally to benefit the
individual plaintiff as a member of the public. See
McGill, 393 P.3d at 89. A plaintiff may seek such relief
if she has suffered a personal injury in fact, see id. at
92, and a request for public injunctive relief does not,
under California law, require class or representative
proceedings: It may be sought in purely bilateral proceedings between an individual plaintiff and a defendant. Id. at 93.
In a pair of decisions preceding this Court’s decision in AT&T Mobility LLC v. Concepcion, 563 U.S.
333 (2011), the California Supreme Court held that
claims for public injunctive relief were not subject to
arbitration and that agreements requiring parties to
arbitrate them were unenforceable. Broughton v.
Cigna Healthplans, 988 P.2d 67 (1999); Cruz v. PacifiCare Health Systems, Inc., 66 P.3d 1157 (2003). Following Concepcion, however, the Ninth Circuit held
that the Broughton-Cruz rule was preempted by the
FAA because it “prohibit[ed] outright the arbitration
of a particular type of claim.” Ferguson v. Corinthian
Colleges, Inc., 733 F.3d 928, 932 (2013) (quoting Concepcion, 563 U.S. at 341).
5
Later, in McGill, the California Supreme Court
considered a contract posing a different question regarding public injunctive relief. Rather than requiring
arbitration of public-injunction claims, the contract
prohibited their assertion in any forum at all. In a
unanimous opinion by Justice Chin, the court held
that the case did not present the Broughton-Cruz issue of whether an agreement to arbitrate public-injunction claims is enforceable, because the parties
had, as the FAA permits, excluded such claims from
their arbitration agreement. See McGill, 393 P.3d at
90, 97. Instead, the issue presented was whether the
agreement was “valid and enforceable insofar as it
purports to waive McGill’s right to seek public injunctive relief in any forum.” Id. at 90.
McGill held that because California contract law
prohibits private agreements from waiving statutory
rights that protect the public, an agreement that purports to waive prospectively the right to seek public
injunctive relief is “invalid and unenforceable.” Id. at
93. McGill further held that the FAA does not preempt
this ruling. Adhering to this Court’s repeated statements that the FAA requires courts to “place arbitration agreements on an equal footing with other contracts” and thus permits them “to be declared unenforceable upon such grounds as exist at law and equity
for the revocation of any contract,” id. at 94 (quoting
Concepcion, 563 U.S. at 339) (internal quotation
marks omitted), McGill explained that the rule
against waivers of substantive rights created for public protection was a generally applicable principle of
California contract law that applied to “any contract—
even a contract that has no arbitration provision,” id.
McGill also pointed out that this Court has consistently stated that the arbitration provisions that the
6
FAA enforces do not encompass waivers of substantive
statutory rights. See id. at 95.
McGill rejected the argument that applying general California contract-law principles to invalidate a
waiver of the right to obtain public injunctive relief
would “disfavor[] arbitration” or “interfere[] with fundamental attributes of arbitration.” Id. at 96. The
court reasoned that waiver of substantive statutory
remedies is not a fundamental attribute of arbitration.
Id. at 97. Moreover, it pointed out that its holding
would not require parties to arbitrate claims for public
injunctive relief. The parties could exclude those
claims from arbitration and require arbitration of
other issues, including liability, leaving the issue of
public injunctive remedies for later litigation in court
if the plaintiff showed entitlement to relief. Id. at 97.
Finally, McGill noted that the agreement before it
was unclear about whether the invalid agreement to
waive claims to public injunctive relief was severable
from the arbitration provision. The court accordingly
left that issue for resolution on remand. Id. at 98.
B. The Blair decision
In Blair, the Ninth Circuit considered an appeal
from a district court order holding that a provision in
an arbitration clause purporting to waive the right to
public injunctive relief was unenforceable under
McGill. In a published opinion, a unanimous panel
agreed with the California Supreme Court that the
FAA does not preempt the McGill rule. See Pet. App.
6a.
The court began its preemption analysis by recognizing that the McGill rule “is a generally applicable
contract defense” that governs both arbitration and
non-arbitration agreements. Id. 15a. Unlike the
7
Broughton-Cruz rule that the Ninth Circuit held
preempted in Ferguson, the McGill rule “shows no
hostility to, and does not prohibit, the arbitration of
public injunctions,” but “merely prohibits the waiver
of the right to pursue public injunctive relief in any
forum.” Id. 16a.
Blair further observed that the McGill rule was
unlike the rule this Court held preempted in Kindred
Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct.
1421 (2017), which “hing[ed] on the primary characteristic of an arbitration agreement—namely a waiver
of the right to go to court and receive a jury trial.” Pet.
App. 16a (quoting Kindred, 137 S. Ct. at 1427). The
McGill rule, by contrast, does not turn on any attribute inherent to arbitration. And, unlike the rule at issue in Kindred, the underlying contract-law principle
has repeatedly been applied to contracts other than
arbitration agreements: It “derives from a general and
long-standing prohibition on the private contractual
waiver of public rights” that “California courts have
repeatedly invoked … to invalidate waivers unrelated
to arbitration.” Id. 17a (citing cases).
Recognizing this Court’s holdings that even generally applicable contract-law principles may be
preempted if they present an obstacle to accomplishing the FAA’s objectives, id. 18a (citing Concepcion,
563 U.S. at 341), Blair further concluded that the
McGill rule does not deprive parties of arbitration’s
benefits. Because public injunctive relief may be obtained in wholly bilateral proceedings, the court explained that the McGill rule does not require the procedural formalities of multiparty or collective proceedings even if parties choose to arbitrate claims for public injunctive relief rather than leave them for judicial
resolution. See id. 19a. Moreover, McGill’s non-waiver
8
principle does not require parties to change arbitral
procedural rules such as those involving discovery. Id.
22a. And issuing or implementing public injunctive relief would not exceed the competency of arbitrators or
involve “procedural complexities not already common
to the arbitration of private injunctions,” id. 21a.
Blair acknowledged that claims for public injunctive relief may involve some “substantive … complexity,” but held that “[a] state-law rule that preserves
the right to pursue a substantively complex claim in
arbitration without mandating procedural complexity
does not frustrate the FAA’s objectives,” Id. 20a. Similarly, the court noted that some claims for public injunctions—like many other arbitrable claims including antitrust, civil RICO, and securities claims—may
involve “lucrative business practices” and “high
stakes” for the defendant. Id. 22a. However, absent
“interfere[nce] with the informal, bilateral nature of
traditional consumer arbitration,” the court concluded
that “high stakes alone [do] not warrant FAA preemption” of a rule aimed only at preserving substantive
rights. Id. 23a.1
––––––––––––––––––––––––
1 Blair’s preemption analysis is generally similar to that em-
ployed in Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425
(9th Cir. 2015). Sakkab held that the FAA does not preempt Iskanian v. CLS Transp. L.A., LLC, 327 P.3d 129 (Cal. 2014), in
which the California Supreme Court held that the FAA does not
require enforcement of agreements that purport to waive an employee’s right to bring a representative qui tam action to collect
penalties for California Labor Code violations under California’s
Private Attorneys General Act (PAGA). This Court has repeatedly denied petitions for certiorari seeking review of Sakkab and
Iskanian. See, e.g., Five Star Sr. Living Inc. v. Mandviwala, 138
S. Ct. 2680 (2018). This case, however, does not involve PAGA
claims or representative actions.
9
C. Facts and proceedings of this case
This case is one of two that were argued in conjunction with Blair and disposed of by unpublished opinions.2 The case arose in 2009 when respondent Steven
McArdle filed suit in a California state court alleging,
among other things, claims under the CLRA, UCL,
and false advertising law against AT&T. The claims
were based on AT&T’s practice of charging customers
international roaming charges for unanswered calls if
they turned on their phones even once while abroad,
while advertising that international phone usage is
like using the phone at home, where customers are not
charged for unanswered calls. The complaint sought
injunctive relief for the benefit of the general public
against AT&T’s false and misleading advertising.
AT&T removed the case to the U.S. District Court
for the Northern District of California and moved to
compel arbitration, citing an arbitration provision
calling for arbitration of “all disputes and claims” between it and its customers. Pet. App. 54a. The provision included a paragraph stating that “[t]he arbitrator may award declaratory or injunctive relief only in
favor of the individual party seeking relief and only to
the extent necessary to provide relief warranted by
that party’s individual claim.” Pet. App. 58a. The
same paragraph included a ban on bringing claims as
a plaintiff or class member in any class proceeding.
The paragraph concluded with a “poison pill” provision stating: “If this specific provision is found unenforceable, the entirety of this arbitration provision
shall be null and void.” Id.
––––––––––––––––––––––––
2 The other case is the subject of the pending petition for cer-
tiorari in Comcast Corp. v. Tillage, No. 19-1066.
10
In 2009, the district court denied AT&T’s motion to
compel arbitration based on the California Supreme
Court’s decision in Discover Bank v. Superior Court,
113 P.3d 1100 (2005), which held that class-action
bans in consumer arbitration provisions were unenforceable, and the Ninth Circuit’s decision in Shroyer
v. New Cingular Wireless Servs., Inc., 498 F.3d 976
(9th Cir. 2007), which held the Discover Bank rule not
preempted by the FAA. See McCardle v. AT&T Mobility LLC, 657 F. Supp. 2d 1140 (N.D. Cal. 2009). While
AT&T’s appeal was pending, this Court held in Concepcion that the FAA preempts the Discover Bank
rule. The Ninth Circuit reversed and remanded this
case in light of Concepcion. See McCardle v. AT&T
Mobility LLC, 474 F. Appx. 515 (2012). Meanwhile,
the parties had completed briefing on Mr. McArdle’s
motion to certify this case as a class action.
On remand, Mr. McArdle opposed AT&T’s motion
to compel arbitration on the ground that the arbitration provision’s purported waiver of his right to seek
public injunctive relief made it unenforceable. In the
course of the district court proceedings, AT&T confirmed to the district court that the agreement’s poison-pill provision applied to the entire paragraph concerning limits on relief and class proceedings.
Ruling before the California Supreme Court’s decision in McGill, the district court held that the waiver
of public injunctive relief was enforceable, granted
AT&T’s motion to compel arbitration, and stayed the
case pending arbitration. See McCardle v. AT&T Mobility LLC, 2013 WL 5372338 (N.D. Cal. Sept. 25,
2013). The parties then commenced arbitration proceedings. While the proceedings were pending, the
California Supreme Court granted review in McGill,
and Mr. McArdle requested that the arbitration be
11
stayed pending the outcome. The arbitrator refused
that request and held a two-day hearing in June 2016.
In September 2016, the arbitrator ruled in favor of
AT&T, rejecting Mr. McArdle’s proof that AT&T’s
marketing and contractual materials were misleading, contained key omissions, and were given inconsistent interpretations by AT&T.
Mr. McArdle filed a timely motion in the district
court to vacate the award and, after the decision in
McGill, moved that the district court reconsider its order granting AT&T’s motion to compel arbitration.
The district court granted the motions based on the
intervening decision in McGill and held that the FAA
does not preempt the McGill rule. The court also rejected AT&T’s contention that the invalid waiver of
public injunctive relief could be severed from the arbitration provision. The court held that AT&T’s request
for severance contradicted not only the plain language
of the poison-pill provision, but also AT&T’s previous
representations about the meaning of that provision.
See Pet. App. 28a–42a.
AT&T again appealed. Pending completion of the
appeal, the parties briefed a renewed motion for class
certification, and the district court granted class certification in part in August 2018. See McCardle v.
AT&T Mobility LLC, 2018 WL 6803743 (N.D. Cal.
Aug. 13, 2018). AT&T filed a petition for leave to appeal under Federal Rule of Civil Procedure 23(f),
which the court of appeals denied in January 2019.
Meanwhile, the district court stayed class notice pending resolution of the Rule 23(f) petition and the pending appeal of the order reconsidering the motion to
compel arbitration. The case has otherwise not been
stayed in the district court, and discovery is ongoing.
12
Following its decision in Blair, the Ninth Circuit,
in an unpublished decision, affirmed the district
court’s ruling that this case is not subject to arbitration under McGill. Pet. App. 1a. The court held that
the waiver of public injunctive relief was invalid under
McGill, and that its invalidity rendered the entirety of
the arbitration provision null and void under the unambiguous terms of the poison-pill clause. Pet. App.
2a.
AT&T petitioned for panel rehearing and rehearing en banc. The panel denied rehearing, and no Ninth
Circuit judge requested a vote on rehearing en banc.
Pet. App. 4a.
REASONS FOR DENYING THE WRIT
I.
The court of appeals’ holding does not
conflict with decisions of other courts of
appeals or of this Court.
A. AT&T makes no pretense of claiming a conflict
among federal courts of appeals or state courts of last
resort over whether the FAA preempts the McGill
rule. The two courts that have addressed that issue—
the California Supreme Court and the Ninth Circuit—
both applied this Court’s FAA preemption jurisprudence and agreed that it does not require enforcement
of arbitration provisions that waive the right to public
injunctive relief in any forum and are thus invalid and
unenforceable under California state law. Both courts
concluded that the McGill rule is an application of
generally applicable principles of contract law that
satisfy the FAA’s “equal-treatment principle,” Kindred, 137 S. Ct. at 1426, because they do not discriminate overtly or covertly against arbitration. And both
agreed that the requirement that plaintiffs be allowed
to seek public injunctive relief in some forum does not
13
pose an obstacle to achieving the FAA’s purposes and
objectives because nothing about the requirement is
inconsistent with arbitration’s bilateral nature and
procedural informality.
AT&T likewise cites no decisions of other circuits
calling Blair’s analysis into question or holding that
the FAA requires enforcement of arbitration provisions that purport to waive substantive claims for relief in the face of general contract-law principles under
which such waiver agreements are invalid. Nor does
AT&T identify decisions in other states that have led
to disagreement over whether the FAA preempts the
sort of non-waiver rule adopted in McGill. Rather,
similarly to McGill and Blair, courts addressing arbitration provisions in other contexts have held that the
FAA does not require enforcement of waivers of substantive claims for relief. See, e.g., Booker v. Robert
Half Int’l, Inc., 413 F.3d 77, 83 (D.C. Cir. 2005) (Roberts, J.) (holding arbitration provision’s prohibition on
attorney’s fees to be invalid and unenforceable, but
severable). In the absence of any broad conflict over
the principles underlying Blair and McGill, the agreement of two courts concerning whether decisional law
of a single state is preempted does not require review
by this Court.
B. Blair and McGill are also fully consistent with
this Court’s decisions. This Court has never held that
the FAA requires enforcement of a purported waiver
of a substantive claim, and AT&T does not suggest
otherwise. Rather, this Court’s decisions enforcing arbitration provisions repeatedly emphasize that arbitration involves a choice of forum, not a waiver of
claims: “By agreeing to arbitrate a statutory claim, a
party does not forgo the substantive rights afforded by
the statute; it only submits to their resolution in an
14
arbitral, rather than a judicial, forum.” Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614, 628 (1985); accord EEOC v. Waffle House,
Inc., 534 U.S. 279, 295, n.10 (2002); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991); Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490
U.S. 477, 481 (1989); Shearson/Am. Express, Inc. v.
McMahon, 482 U.S. 220, 229–30 (1987). An agreement
to arbitrate is not “a prospective waiver of the substantive right.” 14 Penn Plaza LLC v. Pyett, 556 U.S.
247, 265 (2009). Indeed, this Court has agreed that an
arbitration clause containing “a prospective waiver of
a party’s right to pursue statutory remedies” would be
“against public policy,” Mitsubishi, 473 U.S. at 637,
n.19.
In American Express Co. v. Italian Colors Restaurant, this Court held that a class-action ban in an arbitration provision was enforceable even though its
practical effects might make particular claims too
costly for the plaintiffs, but reiterated that the FAA
does not require enforcement of arbitration provisions
that expressly waive statutory claims and remedies.
570 U.S. 228, 236–39 (2013). The Court explained that
the principle that an arbitration provision may not
foreclose assertion of substantive claims “finds its
origin in the desire to prevent ‘prospective waiver of a
party’s right to pursue statutory remedies.’” Id. at 236
(quoting Mitsubishi, 473 U.S. at 637 n.19). The Court
added: “That [principle] would certainly cover a provision in an arbitration agreement forbidding the assertion of certain statutory rights.” Id.
The principle that the FAA does not require enforcement of agreements forbidding assertion of
claims applies equally to state and federal claims.
This Court’s decisions, including Italian Colors, have
15
repeatedly stated that arbitration clauses may not
waive claims, without suggesting that state-law
claims differ in this respect. Indeed, in Preston v. Ferrer, this Court held that an arbitration provision was
enforceable in part because the signatory “relinquishe[d] no substantive rights … California law may
accord him.” 552 U.S. 346, 359 (2008). Blair and
McGill likewise protect against the relinquishment of
substantive rights, something this Court has never
held that the FAA requires.
In this respect, the Court’s decisions reflect the
language of section 2 of the FAA, 9 U.S.C. § 2, which
makes an agreement to “settle by arbitration a controversy” valid, irrevocable, and enforceable. The FAA
thus provides for enforcement of an agreement “to arbitrate,” Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Jr. Univ.,489 U.S. 468, 474 (1989), and
“withdr[aws] the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration,”
Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). Section 2, however, says nothing about the enforcement
of an agreement that does not provide for arbitration
of a substantive claim, but instead purports to waive
it altogether. Nothing in section 2 withdraws the
states’ power to require some forum for the presentation of claims that parties have not agreed to resolve
by arbitration.
The McGill rule does not implicate section 2 as this
Court has construed it because it does not render unenforceable an agreement to arbitrate a controversy
over the availability of public injunctive relief. It also
does not prevent enforcement of agreements to arbitrate matters other than the availability of public injunctive relief. And it does not prevent arbitration
16
over matters that the parties have agreed to arbitrate
from proceeding in accordance with their agreement,
as the FAA also requires. See Volt, 489 U.S. at 475.
Rather, it honors the parties’ decision to exclude the
availability of public injunctive relief from the scope of
their arbitration.
The only agreement that the McGill rule holds unenforceable is one that waives altogether a party’s
right to obtain public injunctive relief in some forum.
Such an agreement is not within section 2’s enforcement mandate to begin with because it is not a provision in a contract requiring that a matter be settled by
arbitration. Nor is it transformed into such an agreement when embedded in the same section of the contract that contains provisions for arbitration. It is a
fundamental principle of this Court’s FAA jurisprudence that the enforcement of an agreement to arbitrate is an entirely separate matter from the enforcement of a contract’s substantive terms. See Prima
Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,
402 (1967) (adopting the view that “except where the
parties otherwise intend[,] arbitration clauses as a
matter of federal law are ‘separable’ from the contracts in which they are embedded”). Only where, as
here, a contract conditions the agreement to arbitrate
on the enforceability of the substantive waiver does
the McGill rule have the indirect consequence of preventing arbitration. Even that, however, is a matter of
enforcing the terms of the agreement to arbitrate, not
denying enforcement.
C. Blair and McGill are also consistent with this
Court’s repeated recognition that section 2 of the FAA
makes “arbitration agreements as enforceable as
other contracts, but not more so.” Prima Paint, 388
U.S. at 404 n.12. By providing that arbitration
17
provisions “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract,” 9 U.S.C. § 2, the
FAA “establishes an equal-treatment principle: A
court may invalidate an arbitration agreement based
on ‘generally applicable contract defenses’ like fraud
or unconscionability, but not on legal rules that ‘apply
only to arbitration or that derive their meaning from
the fact that an agreement to arbitrate is at issue.’”
Kindred, 137 S. Ct. at 1426 (quoting Concepcion, 563
U.S. at 339); accord Epic Sys. Corp. v. Lewis, 138 S.
Ct. 1612, 1622 (2018).
The Court has repeatedly recognized that generally applicable state-law defenses to “[t]he validity of
a written agreement to arbitrate (whether it is legally
binding, as opposed to whether it was in fact agreed
to—including, of course, whether it was void for unconscionability)” are preserved by section 2’s saving
clause. Rent-A-Center, West, Inc. v. Jackson, 561 U.S.
63, 69 n.1 (2011); see also, e.g., Epic Sys. Corp. v.
Lewis, 138 S. Ct. 1612, 1622 (2018); Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 (2006).
Thus, “the text of § 2 declares that state law may be
applied ‘if that law arose to govern issues concerning
the validity, revocability, and enforceability of contracts generally.’” Doctor’s Assocs., Inc. v. Casarotto,
517 U.S. 681, 686–87 (1996) (quoting Perry v. Thomas,
482 U.S. 483, 492–93 n.9 (1987)); accord Arthur Andersen LLP v. Carlisle, 556 U.S. 630–31 (2009).
“States may regulate contracts, including arbitration
clauses, under general contact law principles and they
may invalidate an arbitration clause ‘upon such
grounds as exist at law or in equity for the revocation
of any contract.’” Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281 (1995) (quoting 9 U.S.C. § 2).
18
Blair and McGill conscientiously apply these precedents, and their results are fully consistent with this
Court’s insistence that state laws “place[] arbitration
contracts ‘on equal footing with all other contracts.’”
DIRECTV Inc. v. Imburgia, 136 S. Ct. 463, 468 (2015)
(quoting Buckeye, 546 U.S. at 443). As Blair and
McGill explain, California law neither discriminates
against arbitration “on its face” nor does so “covertly.”
Kindred, 137 S. Ct. at 1426. Rather, California has for
more than a century applied its general prohibition
against private agreements that waive public rights
“to invalidate waivers unrelated to arbitration.” Blair,
Pet. App. 17a (citing cases decided from 1896 to 2002).
The California contract-law principle at issue is not
one applicable only “to arbitration agreements and
black swans”; it “in fact appl[ies] generally, rather
than singl[ing] out arbitration.” Kindred, 137 S. Ct. at
1428 & n.2.
Moreover, both Blair and McGill follow this
Court’s instruction in Concepcion that, in assessing
whether the FAA preempts state law, courts must look
beyond whether the law at issue satisfies the equaltreatment criterion and consider whether it stands as
an obstacle to fulfillment of the FAA’s purposes by imposing procedures incompatible with arbitration. See
Concepcion, 563 U.S. at 343. As both Blair and McGill
explain, even if companies respond to the McGill rule
by choosing to require arbitration of the issue of public
injunctive relief rather than carving it out of their arbitration clauses, the result will not alter arbitration’s
bilateral nature, require procedural formalities inconsistent with arbitration, or exceed the competencies of
arbitration tribunals. See Blair, Pet. App. 18a–23a;
McGill, 393 P.3d at 97.
19
In sum, the preemption analysis applied in Blair
and McGill conflicts neither with decisions of other
courts of appeals and state supreme courts nor with
this Court’s precedents. In the absence of such conflict, review by this Court is unwarranted.
II. The McGill rule is not contrary to the FAA’s
purposes and objectives.
AT&T asserts that the FAA impliedly preempts
the McGill rule because, in AT&T’s view, the rule is
incompatible with the individualized proceedings
characteristic of arbitration and thus interferes with
the achievement of the FAA’s purposes and objectives.
According to AT&T, the court of appeals relied on an
“impermissibly narrow” reading of Concepcion’s holding that state laws that would impose procedural requirements incompatible with arbitration are
preempted, Pet. 21, and wrongly treated “Concepcion
as preempting only state-law rules that impose procedures exactly equivalent to class arbitration,” id. 20.
The court of appeals, however, did no such thing. In
fact, both Blair and McGill recognized that, under
Concepcion, even a generally applicable state-law contract doctrine “is nonetheless preempted by the FAA
if it ‘stand[s] as an obstacle to the accomplishment of
the FAA’s objectives.’” Blair, Pet. App. 18a (quoting
Concepcion, 563 U.S. at 341); see McGill, 393 P.3d at
96–97. Blair further acknowledged that the imposition of procedures incompatible with the bilateral nature of arbitration would create such an obstacle. Pet.
App. 19a–20a.
AT&T’s contrary argument reflects its mistaken
view that the FAA’s command that arbitration provisions be enforced extends beyond “terms providing for
individualized proceedings,” Epic, 138 S. Ct. at 1619
20
(emphasis added), and imposes a check on the substantive rights that may be at stake in such proceedings. But the implied preemptive effect of the FAA, as
this Court has construed it, is more limited: “States
cannot require a procedure that is inconsistent with
the FAA, even if it is desirable for unrelated reasons.”
Concepcion, 563 U.S. at 351 (emphasis added). Thus,
the court of appeals was correct to focus on whether
public injunctive relief would require multi-party or
collective procedures or other procedural formalities
incompatible with individualized arbitration, not on
whether the substance of a claim for such relief may
involve consideration of matters beyond the individual
circumstances of the plaintiff.
As Blair explains, the contention that the McGill
rule is inconsistent with the individualized nature of
arbitration procedures and the advantages Congress
sought to achieve by allowing parties to choose such
procedures is unconvincing. A claim for public injunctive relief requires neither the participation of nonparties nor procedural formalities to protect their interests, and it requires no alteration of agreed-to arbitral
mechanisms involving discovery and other procedural
matters. See Pet. App. 18a–22a. Thus, even if parties
choose to arbitrate claims for public injunctive relief
rather than leaving them to judicial resolution, they
need not forgo “arbitration as envisioned by the FAA”
or resort to “a procedure that is inconsistent with the
FAA.” Concepcion, 563 U.S. at 351. The McGill rule in
no way provides “that a contract is unenforceable just
because it requires bilateral arbitration.” Epic, 138 S.
Ct. at 1623.
AT&T’s arguments consistently miss the mark in
failing to appreciate that prohibiting a waiver of the
right to obtain public injunctive relief does not entail
21
a change in the nature of arbitration procedures. For
example, AT&T asserts that “[a] public-injunction
claim is virtually identical to a claim under Rule
23(b)(2) for a class-wide injunction.” Pet. 10. A Rule
23(b)(2) injunctive action, however, asserts claims for
relief “respecting the class,” not the general public,
and Rule 23 imposes federal procedures regulating
how that collective proceeding may be prosecuted in
federal court by the named plaintiffs who represent
the class. Such procedures are not implicated when an
individual plaintiff seeks a public injunction in arbitration or state court, because California law explicitly
states that public injunctions do not require any class,
representative, or collective proceedings. See McGill,
393 P.3d at 93. Moreover, a judgment on an individual
plaintiff’s claim for a public injunction under state
consumer protection law is preclusive only as to that
plaintiff, just as is a judgment on an individual plaintiff’s claim for an injunction under antitrust law, so
there are no due-process concerns requiring collective
procedures. Cf. Concepcion, 563 U.S. at 349 (stating
that procedural formalities would be “required for absent parties to be bound by the results of [class] arbitration”). Nothing in Concepcion, Epic, or this Court’s
other decisions suggests that, in the absence of a requirement of procedural formalities, the availability of
a substantive statutory remedy to an individual plaintiff by itself transforms the procedural nature of arbitration.
Similarly, AT&T’s assertion that public injunctions may strain the administrative capabilities of arbitrators does not demonstrate that the possibility of
such relief is incompatible with individualized proceedings. Such an injunction operates only on one of
the parties to a one-on-one arbitration, and it has long
22
been established that “an arbitrator generally has the
authority to enter injunctive relief against a party
that has entered into an arbitration agreement.” Ferguson, 733 F. 3d at 937. Moreover, the notion that arbitrators lack “institutional advantages” necessary to
the issuance or supervision of such relief reflects the
kind of mistrust of arbitral capability that the Ninth
Circuit rejected in Ferguson when it held that the
Broughton-Cruz rule prohibiting arbitration of claims
for public injunctive relief was hostile to arbitration
and preempted by the FAA. Id. at 936.
That public-injunction claims, as a substantive
matter, may involve consideration of the public interest and evidence of the impact of the defendant’s conduct on the public likewise does not alter the fundamental attributes of arbitration, or transform an individualized, bilateral proceeding into something more.
Many arbitrable claims require consideration of such
evidence, and consideration of whatever evidence is
needed to resolve a claim is a fundamental attribute
of arbitration. See 9 U.S.C. § 10(a)(3). An antitrust
claim pursued in arbitration typically requires evidence of the anticompetitive effect of the defendant’s
conduct and any procompetitive justifications for it—
matters that extend far beyond the individual circumstances of the parties. But no one would suggest that
arbitration of an antitrust claim “is not arbitration as
envisioned by the FAA.” Concepcion, 563 U.S. at 351.
Indeed, in Italian Colors, this Court held that the FAA
requires arbitration of such claims despite the cost of
developing such evidence. 570 U.S. at 238–39. This
Court has likewise held that many claims requiring
consideration of evidence beyond the individual parties are arbitrable. See, e.g., Mitsubishi, 473 U.S. at
637 (antitrust); McMahon, 482 U.S. at 229–33
23
(Securities Exchange Act claims); id. at 238–42 (civil
RICO claims); Pyett, 556 U.S. at 258 (employment discrimination claims); Gilmer, 500 U.S. at 33–35 (federal civil rights claims). The FAA would not permit,
let alone require, enforcement of an arbitration provision that purported to waive altogether one party’s
right to bring such claims against the other in any forum. See Mitsubishi, 473 U.S. at 637 n.19.
Similarly, consideration of even private injunctive
relief requires consideration of the public interest and
possible effects on nonparties. See Blair, Pet. App.
21a. Yet AT&T concedes that such relief is not incompatible with arbitration. And AT&T does not argue
that the public-interest considerations necessarily involved in issuing such relief require a departure from
individualized arbitration proceedings or that an arbitration provision could permissibly require a party to
waive entitlement to any form of injunctive relief.
AT&T’s comparison between the stakes of class arbitration and the stakes of public injunctive relief likewise fails. Concepcion’s holding that requiring collective procedures that dramatically alter the stakes of
arbitration is incompatible with the FAA’s purposes,
see 563 U.S. at 350–51 & n.8, does not imply that the
FAA grants parties a license to contract out of all highstakes substantive rights and remedies. Of course,
some companies may choose, as McGill permits, not to
arbitrate public injunctive relief because of their assessment of the stakes of such litigation. Similarly, a
company might consider antitrust cases or other highstakes commercial cases unsuitable for arbitration.
But AT&T does not suggest that state antitrust laws
are by nature inconsistent with bilateral arbitration
procedures and preempted by the FAA for that reason,
24
or that, if they were, the FAA would require enforcement of contracts providing for waiver of such claims.
The FAA does not preempt state laws that create
substantive claims for relief just because some parties
might view those claims as poor candidates for arbitration, and it does not require states to allow companies to force consumers to waive altogether any substantive claims companies would prefer not to arbitrate. Such substantive state laws neither disfavor
contracts that “have the defining features of arbitration agreements” nor “hing[e] on the primary characteristic of an arbitration agreement.” Kindred, 137 S.
Ct. at 1426, 1427. Individualized procedures may be
one of those defining features, but waiver of substantive entitlements to relief—even high-stakes ones—is
not. And not even AT&T suggests that facilitating otherwise impermissible waivers of substantive rights
was one of the objectives that Congress sought to
achieve in enacting the FAA. Indeed, such waivers are
antithetical to the FAA’s purposes. See Mitsubishi,
473 U.S. at 628, 637 n.19.
Moreover, even if it were true, as AT&T argues,
that arbitration of high-stakes, substantively complex
claims is not “arbitration as envisioned by the FAA,”
Pet. 22 (quoting Concepcion, 563 U.S. at 355), the consequence would not be that the FAA requires enforcement of agreements waiving such claims. At most, the
implication of such a view might be that it would take
a particularly plain statement of intent to arbitrate
such claims before the FAA would require or permit
their arbitration. See Lamps Plus, Inc. v. Varela, 139
S. Ct. 1407, 1415 (2019). But nothing in the FAA
would authorize enforcement of the waiver of such
substantive claims in the face of contrary state law.
25
In sum, a state law that seeks only to preserve substantive rights while giving full scope to parties’
choices about whether or not to arbitrate those rights
does not conflict with the FAA. Unless and until there
is disagreement among the lower courts over that
proposition, there is no need for this Court’s intervention.
III. The McGill rule is a ground for “revocation” of contracts within the meaning of
section 2 of the FAA.
While relying primarily on its implied preemption
arguments, AT&T also briefly incorporates by reference the argument made in the petition in Comcast
Corp. v. Tillage, No. 19-1066, that the McGill rule does
not fall within the saving clause of section 2 of the
FAA because it is not among the “grounds [that] exist
at law or in equity for the revocation of any contract.”
9 U.S.C. § 2. The brief in opposition in Tillage explains
in detail why that argument does not merit review by
this Court. It suffices here to say that the Court need
not consider the saving clause to sustain the McGill
rule, because an agreement to waive a claim for substantive relief is not an agreement to arbitrate within
the meaning of section 2’s enforcement mandate to
begin with. In any event, this Court has repeatedly
held that the saving clause’s reference to grounds for
“revocation” encompasses generally applicable
grounds on which an arbitration provision may be “invalidated” by courts—that is, nullified because it is
not “legally binding,” regardless of “whether it was in
fact agreed to.” Rent-A-Center, 561 U.S. at 68, 69 n.1;
see also, e.g., Epic, 138 S. Ct. at 1622; Kindred, 137 S.
Ct. at 1326; Concepcion, 53 U.S. at 340; Preston, 552
U.S. at 983; Buckeye, 546 U.S. at 444; Casarotto, 517
26
U.S. at 687; Allied-Bruce, 513 U.S. at 281. McGill expressly provides a basis for finding a contract “invalid,” 393 P.3d at 93, and its application in this case
rendered the agreement, by its own terms, “null and
void,” Pet. App. 58a. There is no reason for this Court
to reconsider whether a contract defense with that effect satisfies the saving clause.
IV. The McGill rule does not impair consumer
arbitration in California.
AT&T argues that review is “urgently needed” to
prevent “enterprising plaintiffs” from “circumventing
this Court’s holdings in Epic and Concepcion” in order
“to evade arbitration in ‘virtually every case’ invoking
California consumer protection statutes.” Pet. 23–24.
But McGill does not allow evasion of arbitration: In
accordance with the FAA, it allows companies to require consumers to agree to broad arbitration provisions covering disputes arising out of their contractual
relationships. Many well-known companies have already crafted arbitration agreements that comply
with McGill by allowing arbitration of public-injunction claims or deferring such claims to judicial proceedings that would follow arbitration of other issues.
What McGill does not allow a company to do is eliminate claims for such relief altogether.
A. Under McGill, courts have held that an arbitration provision that is silent as to the availability of
public injunctive relief will be enforced. See Rivera v.
Uniqlo Calif., LLC, 2017 WL 6539016 (C.D. Cal. Sept.
8, 2017); see also Aanderud v. Super. Ct., 221 Cal.
Rptr. 3d 225, 239 (Cal. Ct. App. 2017). McGill likewise
does not bar enforcement of an arbitration provision
that allows an arbitrator to issue public injunctive relief. See Greenley v. Avis Budget Group Inc., 2020 WL
27
1493618, at *8 (S.D. Cal. March 27, 2020); GonzalezTorres v. Zumper, Inc., 2019 WL 6465283, at *8 (N.D.
Cal. Dec. 2, 2019).
McGill also allows a defendant to exclude public
injunctive relief from arbitration while requiring arbitration of the rest of a consumer’s claims, as long as
the consumer eventually has the ability to seek public
injunctive relief in court. See, e.g., Eiess v. USAA Fed.
Sav. Bank, 404 F. Supp. 3d 1240 (N.D. Cal. 2019). In
such cases, the defendant can write its agreement to
require that arbitration (including on liability and
other forms of relief on the claims that underlie the
request for public injunctive relief) precede any judicial proceedings on public injunctive relief. See id. at
1260 (staying litigation of public injunctive claims
pending arbitration pursuant to 9 U.S.C. § 3); see also
McGill, 393 P.3d at 97 (noting appropriateness of such
stays); Blair, Pet. App. 25a (“Parties are welcome to
agree to split decisionmaking between a court and an
arbitrator in this manner.”). Thus, the defendant will
receive the full benefits of arbitration, subject only to
the requirement that, at some point, it litigate over
possible public injunctive relief if the plaintiff succeeds in proving liability. Indeed, a defendant can
achieve this result even if its arbitration provision
contains an invalid waiver of public injunctive relief,
as long as the agreement permits severance of the
public-injunction waiver from the agreement to arbitrate other claims. With all these options available, a
company would lose its ability to arbitrate consumer
claims only if it chose to bet its entire arbitration provision on the enforceability of its public-injunction
waiver, as AT&T did here, rather than taking the
more typical approach of requiring severance of invalid or unenforceable provisions.
28
B. That large numbers of consumer plaintiffs may
include claims for injunctive relief in their complaints
does not mean that they will thereby “side-step” arbitration. Pet. 24. Claims for injunctive relief in consumer cases do not trigger the McGill rule unless they
satisfy McGill’s detailed criteria defining what qualifies as “public injunctive relief.” See McGill, 393 P.3d
at 89–90. Therefore, AT&T’s claim (Pet. 24–25) that
2001 consumer plaintiffs have sought injunctive relief
in three years—besides not being a tremendously
large number for a state the size of California—says
nothing about how many cases potentially implicate
McGill. Indeed, AT&T acknowledges that only a small
fraction of those post-McGill claims seek public injunctive relief. Pet. 25. Moreover, even complaints
that refer to public injunctive relief do not necessarily
bring the McGill rule into play. “Merely declaring that
a claim seeks a public injunction … is not sufficient to
bring that claim within the bounds of the rule set forth
in McGill.” Colopy v. Uber Techs. Inc., 2019 WL
6841218 (N.D. Cal. Dec. 16, 2019).
In any event, plaintiffs who plead proper claims for
public injunctive relief do not thereby “evade their …
agreements to arbitrate.” Pet. 26. An arbitration provision will remain enforceable unless it precludes public injunctive relief in any forum and is written to prevent severance of that invalid waiver from otherwise
enforceable arbitration provisions. Thus, a plaintiff
whose arbitration provision excludes public injunctive
relief from the scope of arbitration is still likely to be
required to arbitrate liability and other forms of relief
before being able—if she can establish liability—to request public injunctive relief from the court.
The possibility that, at the end of the day, an individual who otherwise succeeds in proving liability in
29
individual proceedings will be able to present a claim
for public injunctive relief either to an arbitrator or a
court thus hardly amounts to the revival of class proceedings under another name, as AT&T suggests. Pet.
24. In particular, such cases present no possibility of
aggregated damages awards (and associated commonfund class fee awards), the principal feature of class
proceedings that was of concern to the Court in Concepcion. 563 U.S. at 350.
C. AT&T’s contention that its dire predictions are
supported by experience following the holdings in Iskanian and Sakkab that the right to bring a representative action under PAGA is not subject to waiver,
see supra n.1, does nothing to advance its claim for review. As explained above, supra n.1, this Court has
repeatedly declined to review Iskanian and Sakkab,
and this case in any event provides no opportunity to
do so. Moreover, although PAGA claims are undoubtedly common (largely because disregard of wage-andhour laws is widespread), Iskanian and Sakkab have
not led to wholesale evasion of arbitration provisions.
Rather, as has already begun to happen under
McGill and Blair, courts following Sakkab and Iskanian have held that an employee-plaintiff who is a
party to an otherwise valid arbitration provision that
contains an invalid PAGA waiver must arbitrate his
individual wage-and-hour claims while litigation is
stayed. Only after arbitrating may he pursue representative claims for statutory penalties under PAGA,
and only if the arbitration has borne out his claim to
have been aggrieved by a Labor Code violation. Even
then, 75 percent of any penalties awarded will go to
the state. See Aviles v. Quik Pick Express, LLC, 703 F.
Appx. 631, 632 (9th Cir. 2017).
30
The non-waivability of PAGA claims, in short, provides neither a means for evading arbitration nor a pot
of gold at the end of the rainbow for plaintiffs.3 Thus,
arbitration of employee claims remains prevalent after Iskanian and Sakkab, and there is no sign that employers’ inability to use it to obtain waiver of qui tam
liability for penalties under PAGA has deprived employers of whatever legitimate benefits they see in arbitration or induced them to forgo requiring employees to arbitrate. Indeed, while AT&T trumpets the
number of PAGA claims that have been asserted since
Iskanian, it makes no effort to demonstrate that large
numbers of cases have evaded arbitration or that large
numbers of plaintiffs have emerged from individual
arbitration to successfully pursue PAGA penalty
claims.
D. For all the reasons just discussed, AT&T’s prediction that Blair and McGill “may lead companies to
abandon arbitration,” Pet. 29, is highly unlikely. The
mere possibility that a consumer plaintiff who otherwise surmounts the hurdle of proving liability in individual arbitration may have an opportunity to seek
public injunctive relief either from a court or an arbitrator will not lead “rational” companies to forgo the
benefits of arbitration that make it worth their while
to “subsidize” it, Pet. 29—a choice they make not out
of charitable motives but because they believe that individualized arbitration is advantageous to them.
––––––––––––––––––––––––
3 In addition, the California Supreme Court recently held in
ZB, N.A. v. Superior Court, 448 P.3d 239 (2019), that a representative action under PAGA is limited to statutory penalties
and does not entitle a plaintiff, as “representative” of other employees, to seek back wages on their behalf. That holding substantially limits the financial consequences of Iskanian’s nonwaivability holding.
31
Companies that otherwise see benefits in consumer
arbitration provisions will not forgo using them just
because they cannot be used to force a waiver of the
plaintiff’s entitlement to a particular form of relief,
just as employers have not abandoned arbitration after Sakkab and Iskanian.
Even before McGill, not all arbitration provisions
precluded arbitration of claims for public injunctive
relief or purported to require waiver of such claims.
And after McGill, companies have continued to use
broad consumer arbitration provisions while complying with McGill’s prohibition on waiver of public injunctive relief in various ways. Ticketmaster’s terms,
for example, provide that all customer claims are subject to individual arbitration, in which the arbitrator
may award any relief provided by law: “[A]n arbitrator
can award on an individual basis the same damages
and relief as a court (including injunctive and declaratory relief or statutory damages) and must follow
these Terms as a court would. For the avoidance of
doubt, the arbitrator can award public injunctive relief.”4 Bank of the West has drafted its arbitration provision similarly: “If the remedy is available to you under applicable law, this paragraph does not affect your
ability to seek public injunctive relief, as defined in
McGill v. Citibank … pursuant to the process described in this provision.”5
––––––––––––––––––––––––
https://help.ticketmaster.com/s/article/Terms-of-Use?language=en_US#section17, ¶ 17 (last visited April 22, 2020) (terms
effective June 25, 2019).
5 https://www.bankofthewest.com/-/media/pdf/deposits/perso
nal-account-disclosure.pdf, p.57 (last visited April 20, 2020)
(terms effective December 1, 2019).
4
32
Other companies have taken a different approach,
creating severability provisions designed to allow public injunctive relief to be decided by courts while otherwise calling for arbitration of consumer claims. Williams-Sonoma’s terms, for example, permit customers
to seek public injunctive relief in court, but require
that any such proceedings happen only if, and after,
the customer arbitrates liability and other requested
relief.6 H&R Block, in its terms for tax year 2019, continues to purport to waive claims for public injunctive
relief, but goes on to provide: “If a court decides that
applicable law precludes enforcement of any of this
paragraph’s limitations as to a particular claim or any
particular remedy for a claim (such as a request for
public injunctive relief), then that particular claim or
particular remedy (and only that particular claim or
particular remedy) must remain in court and be severed from any arbitration.”7 Discover also now provides that its provision precluding claims for public injunctive relief is severable if invalid or unenforceable.8
In short, AT&T’s prediction that companies will
cut off their nose to spite their face by abandoning
––––––––––––––––––––––––
6 https://www.williams-sonoma.com/customer-service/legalstatement.html#terms (last visited April 20, 2020) (terms effective January 2020) (“If either party seeks a ‘public injunction,’ all
other claims and prayers for relief must be adjudicated in arbitration first and any prayer or claim for a ‘public injunction’
in…court stayed until the arbitration is completed, after which
the…court can adjudicate the party's claim or prayer for ‘public
injunctive relief.’”).
7
https://www.hrblock.com/pdf/HRBlock-Software-LicenseAgreement.pdf, § 11.3 (last visited April 20, 2020).
8
https://www.discover.com/applications/cma/assets/EBZ_
19_693003_Cardmember_Agreement_Updates_Prime.pdf, p.4
(last visited April 22, 2020) (terms effective Dec. 31, 2019).
33
arbitration altogether if they cannot use it as a device
to limit consumers’ substantive rights has already
proved to be false.
E. At a minimum, it is extremely premature to
predict that Blair’s holding that the FAA does not provide a license for waiver of substantive rights will
have the disastrous effects AT&T predicts. Consideration of the issue would be particularly inappropriate
in the context of a case where the impact of the McGill
rule has been distorted by AT&T’s choice to make its
arbitration provision self-destruct if its waiver of public-injunctive relief is invalidated. If review were otherwise justified, a case in which the invalidation of a
waiver of public injunctive relief resulted in either an
arbitrator’s issuance of such an injunction or a court’s
issuance of an injunction following the proper arbitration of other issues under an otherwise valid arbitration provision would allow a more informed assessment of the McGill rule’s impact on the arbitration
process. Meanwhile, this case—whose resolution has
already been too long delayed—should be permitted to
proceed.
CONCLUSION
For the foregoing reasons, the petition for a writ of
certiorari should be denied.
34
Respectfully submitted,
ADAM J. GUTRIDE
SETH A. SAFIER
GUTRIDE SAFIER LLP
100 Pine Street
Suite 1250
San Francisco, CA 94111
(415) 639-9090
SCOTT L. NELSON
Counsel of Record
ALLISON M. ZIEVE
PUBLIC CITIZEN
LITIGATION GROUP
1600 20th Street NW
Washington, DC 20009
(202) 588-1000
snelson@citizen.org
MATTHEW T. MCCRARY
GUTRIDE SAFIER LLP
265 Franklin Street, Suite 1702
Boston, MA 02110
(214) 502-2171
Attorneys for Respondent
April 2020
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.