# Amicus Curiae Brief — Green Tree Financial Corp. v. Bazzle

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0614%3A20

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2003
- **Citation:** 539 U.S. 444

## Text

No.02-634 '- (sar

IN THE Ma Nyda 3)
Supreme Court of the United Stittex 2);

GREEN TREE FINANCIAL CorP. A/K/A GREEN TREE AOCRETANG
Corp. A/K/A GREEN TREE FINANCIAL
SERVICES CORP. A/K/A CONSECO FINANCE CorP.,
Petitioners,

¥.

LYNN W. BAZZLE AND BURT A. BAZZLE, In A Representative

Capacity On Behalf Of A Class And For All Others Similarly

Situated; DANIEL B. LACKEY, GEORGE BUGGS and FLORENE
BuGGS, In A Representative Capacity On Behalf Of A Class And

For All Others Similarly Situated,
Respondents.

On Writ of Certiorari to the
Supreme Court of South Carolina

BRIEF OF AMICI CURIAE LAWYERS’ COMMITTEE FOR
CIVIL RIGHTS UNDER LAW; NATIONAL ASSOCIATION
FOR THE ADVANCEMENT OF COLORED PEOPLE;
NAACP LEGAL DEFENSE AND EDUCATIONAL FUND,
INC.; NATIONAL ASIAN PACIFIC AMERICAN LEGAL
CONSORTIUM; NATIONAL PARTNERSHIP FOR
WOMEN & FAMILIES; AND WOMEN EMPLOYED
IN SUPPORT OF RESPONDENTS

GARY T. JOHNSON RICHARD T. SEYMOUR

STUART MEIKLEJOHN Counsel of Record
Co-CHAIRS LIEFF, CABRASER,

NORMAN REDLICH HEIMANN & BERNSTEIN, LLP
TRUSTEE 1100 New York Avenue, NW

BARBARA R. ARNWINE Suite 1080 — West Tower

THOMAS J. HENDERSON Washington, DC 20005-3934

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AUDREY WIGGINS
LAWYERS’ COMMITTEE FOR PAUL W. MOLLICA

CIVIL RIGHTS UNDER METES, MULDER, BURGER
LAW & MOLLICA
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SUITE 400 Suite 1410
WASHINGTON, DC 20005-2124 Chicago, IL 60604
(202) 662-8600 (312) 263-0272

Additional Counsel listed on inside cover

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GENERAL COUNSEL

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NATIONAL ASSOCIATION FOR
THE ADVANCEMENT OF
COLORED PEOPLE

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AMERICAN LEGAL
CONSORTIUM

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LIEFF, CABRASER,

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DIRECTOR-COUNSEL

NORMAN J. CHACHKIN

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NAACP LEGAL DEFENSE &
EDUCATIONAL FUND, INC.

99 Hudson Street

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NATIONAL PARTNERSHIP FOR
WOMAN & FAMILIES

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Suite 710

Washington, DC 20009

(202) 986-2600

— —

-_—_

STATEMENT OF INTEREST
SUMMARY OF ARGUMENT
ARGUMENT
A.

Table of Contents

The South Carolina Supreme Court’s Decision
Respects this Court’s Precedents Under the
Federal Arbitration Act and, Accordingly, Is

Not Subject to Further Review .....................

The FAA Provides No Default Rule Prohibiting
Class Arbitration And Which Supersede

State-Law Principles Of Contract ..................

Independently of State Contract Law, the FAA
Authorizes Only a Simple Change of Forum,

Without the Loss of Any Substantive Right ......

Some Claims Require Class Treatment to
Vindicate Statutorily Protected Substantive

| eee

l. Class Litigation Is Sometimes Essential
to the Enforcement of the Civil Rights

ED 5 SRE Se eae ee eee

2. Some Claims Are Too Small to Litigate
Effectively on an Individual Basis, Even

With the Benefit of Fee Award..............

3. If a Claim Cannot Be Litigated on a
Class Basis in Arbitration, and if
Class Treatment is Important to the
Prosecution of the Claim, as in
Civil Rights and Small-Recovery
Cases, Claimants Must Be Allowed

to Litigate Their Claims in Court ..........
CONCLUSION

eee eee eee eee eee eee eee eee eee eee

eee eee eee eee eee

ii
Table of Authorities
1. Cases

Adkins v. Labor Ready, Inc.,

es ee 15
Allied-Bruce Terminix Cos., Inc. v. Dobson,

SEE Eres 5,6
Allison v. Citgo Petroleum Corp,

151 F.3d 402 (Sth Cir. 1998), reh'g denied with

explanation, 151 F.3d 434 (Sth Cir. 1998) ......... 18
Amchem Products, Inc. v. Windsor,
kf EeEreereee 19

Ameron, Inc. v. U.S. Army Corps of Engineers,

787 F.2d 875 (3d Cir. 1986), approved on

rehearing, 809 F.2d 979 (3d Cir. 1986), cert.

dismissed, 488 U.S. 918 (1998) .................0008 18
Bailey v. Ameriquest Mortg. Co.,

No. CIV. 01-545 (JRT/FLN),

2002 WL 100391, 145 Lab. Cas. 4 34,473

SS 8) 8 ee 14
Barnes v. Gorman,

Rl ee 7
Bazzle v. Green Tree Financial Corp.,

351 S.C.244, 569 S.E.2d 349 (2002) ......5, 7, 8, 9, 11

Bresgal v. Brock,

843 F.2d 1163 (9th Cir. 1987) .............ccceeeeeees 18
Brooks v. Travelers Insurance Co.,

og fl Ul 4 15

Brown v. Trustees of Boston University,
891 F.2d 337 (ist Cir. 1989),

cert. denied, 496 U.S. 937 (1990) .................000 18
Butler v. Dowd,

979 F.2d 661 (8th Cir. 1992),

cert. denied, 508 U.S. 930 (1993) ..................08 18

Califano v. Yamasaki,

ID ccccadtntindciinieenidnniniientl 12, 18
Celestine v. Petroleos de Venezuela SA,

pK ee 18
Central Wesleyan College v. W.R. Grace & Co.,

ee EY SEE ctptiincinptdocteucedniiccocsnis 11
Circuit City Stores, Inc. v. Adams,

ey TD tincintiticinndmetetensiscdseninctcindiel 6
Circuit City Stores, Inc. v. Adams,

I HEED cnncceesccseccscesccsccen 15
Cooper v. Federal Reserve Bank of Richmond,

ED incntntnicncniccnionsenmninniniieses 17
Daar v. Yellow Cab Co., :

67 Cal. 2d 695, 433 P.2d 732 (Cal. 1967) ........... 21
Deposit Guaranty Nat’l Bank v. Roper,

I I i aitinls icici cesaneriteteinnneimeais 19
Doctor's Associates, Inc. v. Casarotto,

| ne” 6, 10
EEOC v. Waffle House, Inc.,

es Se ED cntenseccnscesinseccaveses 10, 12, 19
Ferguson v. Countrywide Credit Industries, Inc.,

oe een 15
First Options of Chicago, Inc. v. Kaplan,

ks eee 6,9
Franks v. Bowman Transportation Co.,

TE nintsincinicicicerinnmenmonnnanininniats 17
Gilmer v. Interstate/Johnson Lane Corp.,

ee 11, 13, 14, 16
Graniteville Co. (Sibley Division) v. EEOC,

SEED GPUED cncctccesscsecccssccssccees 18
Green Tree Financial Corp.-Ala. v. Randolph,

FOO Ce FO GRSEED cccccccccccecccess 8, 10, 11, 12, 1415
Hines v. Davidowitz,

TD ciinsiiiiednbntereanamegesenesseeeients 10
Hollon v. Mathis Independent School District,

St 18

iv

Hooters of America, Inc. v. Phillips,

pjf , ) |: fea 15
Howsam v. Dean Witter Reynolds, Inc.,

I sr seiinsrmeennanioeenassiatial 6
In re Cadillac V8-6-4 Class Action,

le Ae EE, CED cdecinccserccsccsocsessocces: 21
Int’l Bhd. of Teamsters v. United States,

| ICE eee ner ee 17
Jenkins v. Raymark Indu.,

782 F.2d 468 (Sth Cir.1986) ...........ccccseceeeesees 12
Johnson v. West Suburban Bank,

Be Fe Es BED coccccccccccccoscosescccess 15
Leonard v. Terminix Int'l Co., L.P.,

2002 Ala. LEXIS 316 (October 18, 2002) .......... 21

Lowery v. Circuit City Stores, Inc.,
158 F.3d 742 (4th Cir. 1998), vacated and
remanded on other grounds, 527 U.S. 1031
(1999), reaff'd, Lowery v. Circuit City
Stores, Inc., 206 F.3d 431 (4th Cir.),

cert. denied, 531 U.S. 822 (2000) ................... 18
Mastrobuono v. Shearson Lehman /lutton, Inc.,

— & eee 6,8
McDonald v. Washington,

ee CEP GED coccccosvececcccesescenes 21
Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc.,

EK 6, 13, 14
Moses H. Cone Memorial Hosp. v. Mercury Const. Corp.,

GS ED cecccncenccccnntenantemnsenersnesencent 14
Murray v. United Food and Commercial Workers Int'l

Union,

PEG GEE = ccccecssncccceccsessesoess 15

National Center for Immigrant Rights v. INS,
743 F.2d 1365 (9th Cir. 1984), vacated on other
grounds, 481 U.S. 1009 (1987) .............0cceeeee 18
Paige v. California,
102 F.3d 1035 (9th Cir. 1996) .................ceeeee es 18

Vv

Paladino v. Avnet Computer Technologies, Inc.,

134 F.3d 1054 (11th Cir. 1998) ....................0 16
Perry v. Thomas,

IN IIIT is icidinniiettitccensstinianntiaiened 6, 10
Prima Paint Corp. v. Flood & Conklin

Manufacturing Co.,

A ST cctitidadiednenninadinedanisanninetes 10

Robinson v. Metropolitan-North Commuter R.R. Co.,
267 F.3d 147 (2d Cir. 2001),

cert. denied, 535 U.S. 951 (2002) ...............0005. 17
Sharpe v. Cureton,

ee 18
Southland Corp. v. Keating,

TIS WIE ‘iniiinicitinseisncsnedientendacnsneneds 5, 6

State ex rel. Dunlap v. Berger,

211 W.Va. 549, 567 S.E.2d 265 (W. Va.),

cert. denied sub nom. Friedman’s Inc. v. West

Virginia, 123 S. Ct. 695, 154 L. Ed. 2d 631

SEED ssenenenssnaddssetetandaddidiimmeenenangenvensi 21
Thiessen v. General Electric Capital Corp.,

267 F.3d 1095 (10th Cir. 2001),

cert. denied, 122 S. Ct. 2614,

ee 17
Ting v. AT&T,

182 F. Supp. 2d 902 (N.D. Cal. 2002), aff'd in

relevant part, 319 F.3d 1126 (9th Cir. 2003) ....... 14
USA Check Cashers of Little Rock, Inc. v. Island,

349 Ark. 71, 76 S.W.3d 243 (Ark. 2002) ............ 21
Vasquez v. Superior Court,

Eanes 21

Volt Information Sciences, Inc. v. Board of Trustees of
Leland Stanford Junior University,

i ccicsiieil 6, 8,9, 10
Zepeda v. INS,
(6g, | ESSE 18

vi
2. Statutes and Rules
Age Discrimination in Employment Act ........ 11, 14, 15, 16
Americans with Disabilities Act ................c0cceceeeeeees 15
ST seimiieidnsenhaipieadunentiasiidiinanebeiiveseneianes 15
ST A EID EE ceusccsecenecsscsbeniccusidscusséouses 22
Family and Medical Leave Act................cccceseeeeeeeeeeees 2
Federal Arbitration Act, 9 U.S.C. §§ 1 ef seq............ passim
Pregnancy Discrimimation Act.............0:ccceeeeeeeeeeeneeenes 2
Title VII of the Civil Rights Act of 1964 .................008 15
ee Re icancvcnccecccccnssconssessecsnssesesensonens 15
ar UTD ETT ccnnutnsesencdabiscnssaneennividbnieennddenls 15, 16
e & GR 8 prrerrrrrrrrr ys 11, 12, 20, 22
Se A WOES Wie Gee WU enccvcccccccccapscescsssencncssosess 22
3. Treatises and Law Reviews

Blume, The “Common Questions” Principle in the
Code Provision for Representative Suits,

FO DEI. Le. BBV. SIS (IGS) ccccccccccscccccccccccsccee 9
Blume, Jurisdictional Amount in Representative Suits,

15 MINN. L. REV. 501 (1931) ..............ccecesseeeees 9
CHAFEE, SOME PROBLEMS OF EQUITY (1950) ............-..++ 9

Davies, Federal Civil Rights Practice In The 1990's:

The Dichotomy Between Reality And Theory,

Gp TE Eade BEE CESS cccccccccccccccccessecces 21
Developments in the Law—Multiparty Litigation in the

Federal Courts,

71 HARV. L. REV. 874, 928-41 (1958) ................ 9
Gordon, The Common Question Class Suit Under the
Federal Rules and in Illinois, 42 ILL. L. REV. 518 (1947) ...9
Note, Action Under the Codes Against Representative

Defendants,

Pe Ey Gly GP CU cncesasccsccccvcnsescssocse 9
RESTATEMENT (2D) OF CONTRACTS, § 204, comment d ......7

Vii

Sternlight, As Mandatory Binding Arbitration Meets
The Class Action, Will The Class Action Survive ?,

42 WM. & MARY L. REV. 1 (2000) ................... 20
STREET, 1 FEDERAL EQUITY PRACTICE (1909) ...............4. y
Wheaton, Representative Suits Involving Numerous

Litigants,

I i cicmnadl )
7A WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND

, - iby ft 20
7A WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND

PROCEDURE § 1778 (Supp.1983) .............0ce0e0e. 21
7B WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND

PROG © TFG CIPS cccccccccccccccccscccccccccs 20

Yeazell, From Group Litigation to Class Action:
Part II: Interest, Class, and Representation,
27 UCLA L. REV. 1067 (1980) ................ceeeeeee 9

STATEMENT OF INTEREST

The Lawyers’ Committee for Civil Rights Under Law
(“Lawyers’ Committee”) is a tax-exempt, nonprofit civil
nghts organization, founded in 1963 by the leaders of the
American Bar, at the request of President Kennedy, in order
to help defend the civil nghts of minorities and the poor. Its
Board of Trustees presently includes several past Presidents
of the American Bar Association, past Attorneys General of
the United States, law school deans and professors, and
many of the nation’s leading lawyers. It has independent
local affiliates in Boston, Chicago, Denver, Los Angeles,
Philadelphia, San Antonio, San _ Francisco, and
Washington, D.C. Through the Lawyers’ Committee and its
affiliates, hundreds of attorneys have represented thousands
of clients in civil mghts cases across the country, including a
large number of cases challenging racial discnmuination in
employment.

The National Association for the Advancement of
Colored People (NAACP), established in 1909, is the
nation's oldest civil mghts organization. The fundamental
mission of the NAACP is the advancement and improvement
of the political, educational, social and economic status of
minonty groups; the elimination of prejudice; the publicizing
of adverse effects of discrimination; and the initiation of
lawful action to secure the elimination of age, racial,
religious and ethnic bias.

' Written consent to the filing of this brief has been obtained
from the parties in accordance with Supreme Court Rule 37.3(a). Copies
of the consent letters have been filed with the Clerk. Pursuant to
Supreme Court Rule 37.6, the amici state that this brief was not authored
in whole or part by counsel for any party and that no party or entity, other
than the amici and their counsel, made any monetary contribution to its

preparation or submission.

Ln
a ae Pe Ga

2

The NAACP “egal Defense and Educational Fund,
Inc. (“LDF’’) is a non-profit corporation formed to assist
Afncan Americans in secunng their constitutional and
statutory mghts through the prosecution of lawsuits,
including class actions, and to provide legal services to
Afncan Americans suffering injustice by reason of racial
discnmination.

The National Asian Pacific Amencan Legal
Consortium (“NAPALC”) is a national non-profit, non-
partisan organization whose mission is to advance the legal
and civil nghts of Asian Pacific Americans. Collectively,
NAPALC and its Affiliates the Asian Law Caucus and the
Asian Pacific American Legal Center of Southern California,
have over 50 years of experience in providing legal public
policy, advocacy, and community education on
discrimination issues. NAPALC and its Affiliates have a
long-standing interest in addressing matters of discnmuination
that have an impact on the Asian Pacific American
community, and this interest has resulted in NAPALC’s
participation in a number of amicus briefs before the courts.

The National Partnership for Women & Families
(“National Partnership”) is a national advocacy organization
that develops and promotes policies to help women achieve
equal opportunity, quality health care, and economic security
for themselves and their families. Since its founding in
1971, the National Partnership (formerly the Women’s Legal
Defense Fund) has worked to advance equal employment
opportunities by monitoring agencies, EEO enforcement,
challenging employment discrimination in the courts, and
leading efforts to promote employment policies such as the
Family and Medical Leave Act and the Pregnancy
Discrimination Act.

(
|
;
}
|

3

Women Employed is a national membership
association of working women based in Chicago, with a
membership of 2000. Since 1973, the organization has
assisted thousands of working women with problems of
discrimination and harassment, monitored the performance
of equal opportunity enforcement agencies, and developed
specific, detailed proposals for improving enforcement
efforts.

One of the principal objectives of amici is to protect
the ability of minorities, women, and the poor to obtain
effective civil redress for injuries, whether in arbitration or
through the courts.

SUMMARY OF ARGUMENT

The South Carolina Supreme Court has examined and
authoritatively construed the arbitration agreement used here
pursuant to general principles of state law, and has found that
it does allow the arbitration of class claims. Its
determination of state law and construction of the contract
should not be subject to further review by this Court.

Petitioner’s argument that the Federal Arbitration Act
creates a default rule, overriding state contract law and
forbidding arbitration of class claims where the arbitration
agreement is silent, has no basis in the text or policy of the
statute, and would constitute a judicial rewnting of the
statute. The decision below advances the policy of the FAA,
and was sound.

The FAA authorizes only a simple change of forum,
without the loss of any substantive right under state or
federal law. This Court has recognized that the right of the
EEOC to bring an action seeking relief for a charging party
is a substantive right, and that excessive costs may

4

jeopardize substantive rights by effectively precluding resort
to arbitration. The ability of a private party to litigate a
claim effectively ‘s no less a substantive nght.- In select
cases, the ability to proceed collectively may likewise be
essential to vindicate effectively a substantive nght.

Class treatment is sometimes essential to the
enforcement of the civil rights laws. Proof of a pattern of
discrimination may be critical to victims’ ability to prevail.
The additional discovery in class proceedings is often
necessary in order to prove the pattern and to establish a
structure whereby victims can be identified and made whole.
Finally, broad injunctive relief is often necessary to eradicate
discrimination, but may be unavailable outside the context of
a class proceeding. Additionally, as this Court and
commentators have often observed, class treatment is also
essential to the vindication of class members’ nights where
the amounts at stake are too small to justify individual
litigation. Even with the benefit of fee-shifting statutes,
these cases are economically less desirable than cases in
which substantial recoveries or broad injunctive relief are at
stake. A blanket rule prohibiting class based arbitration
accordingly would have a detrimental impact on the ability
of victims of civil rights violations and plaintiffs with small
monetary statutory claims from having their substantive
rights vindicated.

For these reasons, if a class claim cannot be litigated
in arbitration but class treatment is important to the
prosecution of the claim, such as in civil nghts cases and
small-recovery cases, claimants must be allowed to litigate
their claims in court.

5
ARGUMENT

A. The South Carolina Supreme Court’s Decision
Respects this Court’s Precedents Under the
Federal Arbitration Act and, Accordingly, Is Not
Subject to Further Review

The present case involves the South Carolina
Supreme Court’s application of South Carolina’s contract
law to a claim in arbitration founded on South Carolina’s
consumer law. Bazzle v. Green Tree Financial Corp., 351
S.C. 244, 265, 569 S.E.2d 349, 360 (2002) Resolution of this
matter in respondent’s favor entails a straightforward
application of this Court’s established jurisprudence
applying state-law contract law to interpret the scope of
arbitration under the Federal Arbitration Act, 9 U.S.C. §§ 1
et seq. (“FAA”). Green Tree, however, petitions the Court to
create a new, preemptive rule of contract construction,
barring class arbitration unless explicitly commanded by the
written instrument. Because this rule lacks any basis in the
FAA or this Court’s decisional law, Green Tree’s argument
ought to be rejected and the South Carolina Supreme Court’s
judgment affirmed.

The role of state law under the Federal Arbitration
Act is an enduring, if troubled, theme of the Court’s recent
FAA cases. Nearly twenty years ago, in Southland Corp. v.
Keating, 465 U.S. 1 (1984), the Court held that the FAA
applies in proceedings in state courts and preempts contrary
state anti-arbitration laws. The Court has had repeated
encounters with the preemption issue, but the path of the law
has been questioned. In Allied-Bruce Terminix Cos., Inc. v.
Dobson, 513 U.S. 265 (1995), the Court considered the issue
anew, and while Southland was reaffirmed, three separate
opinions urged that the holding in Southland was in error and
that the FAA should not be deemed preemptive. Jd. at 282
(O’Connor, J. concurring); id. at 284 (Scalia, J., dissenting);

6
id. at 285 (Thomas, J., dissenting).

Yet side-by-side with these cases, the Court has held
unanimously that state—not federal—contract law governs
the interpretation of arbitration agreements. See, e.g., First
Options of Chicago, Inc. v. Kaplan, 514 US. 938, S44
(1995) (to decide “whether the parties agreed to arbitrate a
certain matter,” courts apply “ordinary state-law principles
that govern the formation of contracts”); Mastrobuono v.
Shearson Lehman Hutton, Inc., 514 U.S. 52, 62-63 (1995)
(applying New York and Illinois law);- Volt Information
Sciences, Inc. v. Board of Trustees of Leland Stanford Junior
Univ., 489 U.S. 468, 475-76 (1989) (“general state-law
principles of contract interpretation [apply] to the
interpretation of an arbitration agreement within the scope of
the Act”); Perry v. Thomas, 482 U.S. 483, 492 (1987) (“state
law, whether of legislative or judicial origin, is applicable if
that law arose to govern issues concerning the validity,
revocability, and enforceability of contracts generally”)
(emphasis in original). Although the parties’ intent controls
regarding whether they agreed to arbitrate a particular
dispute, determining their intent is a question for the court to
decide. Howsam v. Dean Witter Reynolds, Inc., 123 S. Ct.
588, 592 (2002); Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 US. 614, 626 (1985).
Especially when interpretation of the contract arises from the
state’s highest court, its ruling deserves special deference.
See, e.g., Mastrobuono, 514 U.S. at 60 n.4 (citing to Volt

? See also Circuit City Stores, Inc. v. Adams, 532 U.S 105, 122
(2001) (acknowledging that “[{n)ot all of the Justices who join today’s
holding agreed with Allied-Bruce”); Doctor's Associates, Inc. v.
Casarotto, 517 U.S. 681, 689 (1996) (Thomas, J., dissenting “for the
reasons given im my dissent last Term in {Allied-Bruce]”); Perry v.
Thomas, 482 U.S. 483, 493-94 (1987) (Stevens and O’Connor, J.J.,
dissenting) (doubting the original outcome in Southland).

——————— -

Info).

This is a classic “missing-term” case. Green Tree’s
arbitration contract form by all accounts fails to address class
arbitration. As the Court noted last Term, courts have taken
varying approaches to filling missing terms in contracts.
Barnes v. Gorman, 122 S. Ct. 2097, 2102 (2002) (“Some
authorities say that reasonably implied contractual terms are
those that the parties would have agreed to if they had
adverted to the matters in question. See 2 Farnsworth, supra,
§ 7.16, at 335, and authorities cited. More recent
commentary suggests that reasonably implied contractual
terms are simply those that ‘compor[t] with community
standards “of fairmess,)5 RESTATEMENT (SECOND) OF
CONTRACTS § 204, Comment d; see also 2 Farnsworth,
supra, § 7.16, at 334- 336.”). The FAA nowhere dictates a
rule for filling in missing terms about either the scope or
process of arbitration.

To supply the missing term here, the South Carolina
Supreme Court applied its own default rule, applicable to
contracts generally, construing silence in the contract against
the drafter (Green Tree):

[U]}nder general principles of contract
interpretation, we construe Green Tree’s
omission of any reference to class actions
against them. . . . No case law or statute in
South Carolina prohibits class-wide
arbitration. To the contrary, this Court
strongly favors arbitration and has held that a
State court may order consolidation of claims
subject to mandatory arbitration without any
contractual or statutory directive to do so.

Bazzle, 351 S.C. at 265, 569 S.E.2d at 360 (citations and
footnote omitted). The South Carolina Supreme Court

8

adopted the same course that this Court took to construe a
doubtful choice-of-law clause in Mastrobuono, 514 US. at
62-63 (applying “the common-law rule that a court should
construe ambiguous language against the interest of the party
that drafted it”).’

Because the South Carolina high court’s application
of its own contract law lies beyond this Court’s review, there
remains nothing more for the Court to decide. See, e.g., Volt
Info, 489 U.S. at 474 (“[a]ppellant acknowledges, as it must,
that the interpretation of private contracts is ordinarily a
question of state law, which this Court does not sit to
review”). Yet Green Tree makes an effort here to obtain de
novo review. Its oft-stated contention that the use of terms
such as “you,” “us,” and “this contract” in the agreement
preclude class arbitration (Pet. Br. at 38-44) just attempts to
resurrect before this Court the state law arguments rejected
by the South Carolina Supreme Court. It disregards the state
court’s conclusion that Green Tree’s form language,
including the terms cited, “at best ... creates an ambiguity.”
Bazzle, 351 S.C. at 264, 569 S.E.2d at 359.

Green Tree’s back-up argument—that the “arbitration
agreement cannot bind non-representative class members
who are not parties to the specific arbitration agreements
upon which the Bazzle and Lackey proceedings were
predicated” (Pet. Br. at 45)}—likewise slights the findings
below. Green Tree used a virtually identical form with all of
the class members (id. at 264 n.18, 569 S.E.2d at 359), and
so it was bound by contract to arbitrate with all of them, and
all of them with Green Tree. /d. at 266, 569 S.E.2d at 360.

> See also Green Tree Financial Corp.-Ala. v. Randolph, 531
U.S. 79, 95 n.1 (2000) (Ginsburg, J., concurring in part and dissenting in
part) (Alabama applies “usage and custom” to fill missing contract terms,
where contract did not specify division of forum fees). Petitioner’s brief
conspicuously omits any citation to Randolph.

ee ——

9

No class member was dragooned into the proceeding. Jd. at
269, 569 S.E.2d at 362 (“[t]he class members’ rights appear
to have been properly protected by the notice given to all of
them”). If individual consumers did not wish to arbitrate
their claim under the form, they were permitted to opt out of
the proceeding. /d. at 250, 569 S.E.2d at 352. The decision
below is thus insulated from review.

B. The FAA Provides No Default Rule Prohibiting
Class Arbitration And Which Supersede State-
Law Principles Of Contract

Petitioner also claims that the FAA interposes a
mandatory, federal default rule* that bars class arbitration
unless expressly authorized. Yet the FAA authorizes
enforcement of arbitration contracts only upon their own
terms, and this contract, as duly construed by the South
Carolina courts, authorizes class arbitration. See, e.g., First
Options, 514 U.S. at 947 (“basic objective” of FAA is to
enforce contracts “according to their terms”); Volt Info, 489
U.S. at 476 (federal policy under FAA “is simply to ensure

* Congress wrote no exclusion of class treatment into the FAA,
although class actions existed at the time the FAA was enacted. CHAFEE,
SOME PROBLEMS OF EQuiTy (1950) at 220-42; 1 STREET, FEDERAL
EQUITY PRACTICE (1909) § 552; Blume, The “Common Questions”
Principle in the Code Provision for Representative Suits, 30 MICH. L.
REV. 878 (1932); Blume, Jurisdictional Amount in Representative Suits,
15 MINN. L. REV. 501 (1931); Yeazell, From Group Litigation to Class
Action: Part Il: Interest, Class, and Representation, 27 UCLA L. REV.
1067 (1980); Developments in the Law—Multiparty Litigation in the
Federal Courts, 71 HARV. L. REV. 874, 928-41 (1958); Note, Action
Under the Codes Against Representative Defendants, 36 HARV. L. REV.
89 (1922); Wheaton, Representative Suits Involving Numerous Litigants,
19 Cornell L.Q. 339 (1934); Gordon, The Common Question Class Suit
Under the Federal Rules and in Illinois, 42 Lt. L. REV. 518 (1947).
There is no basis for any contention that Congress was unaware of the
possibility of class treatment, or intended sub silentio to establish any
special rule of the type for which petitioner contends.

10

the enforceability, according to their terms, of private
agreements to arbitrate”); Prima Paint Corp. v. Flood &
Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967) (“the
purpose of Congress in 1925 was to make arbitration
agreements as enforceable as other contracts, but not more
so”). Silence is not a basis on which this Court has

previously incorporated optional terms into agreements.”

The FAA contains no express terms curbing the
availability of class arbitrations under state law. Indeed, as a
general matter, “[t]he FAA contains no express pre-emptive
provision, nor does it reflect a congressional intent to occupy
the entire field of arbitration.” Volt Info, 489 U.S. at 477.
The FAA preempts state law only “to the extent that it
actually conflicts with federal law—that is, to the extent that
it ‘stands as an obstacle to the accomplishment and execution
of the full purposes and objectives of Congress.’” /d. at
477-78 (quoting Hines v. Davidowitz, 312 U.S. 52, 67
(1941)).

More particularly, “[t]here is no federal policy
favoring arbitration under a certain set of procedural rules;
the federal policy is simply to ensure the enforceability,
according to their terms, of private agreements to arbitrate.”
Volt Info, 489 U.S. at 476. See also Doctor's Associates,
Inc. v. Casarotto, 517 U.S. 681, 688 (1996) (state rule
governing “efficient order of proceedings” may be enforced).

5 This Court has been cautious when the arbitration agreement
is silent on a key term See, e.g, EEOC v. Waffle House, Inc., 534 US.
279, 294 (2002) (refusing to read into silent agreement a term precluding
administrative relief of civil rights claim); Randolph, 531 U.S. at 90-91
(declining to read into silence a term on the division of forum fees);
Perry, 482 U.S. at 492 (remanding, rather than deciding, issue of whether
employees could press “ancillary claims for conversion, civil conspiracy,
and breach of fiduciary duty” in arbitration).

1]

Green Tree complains that the state court’s decision
transformed its arbitration “into a massive proceeding with
millions of dollars at stake and the full trappings of the
process under Rule 23” (Pet. Br. at 32). Mere generic
attacks on the “practical problems associated with class
arbitration,” as Green Tree argues (Pet. Br. at 17, 38-42),
will not suffice to meet this burden. See, e.g, Green Tree
Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90 (2000) (party
seeking to avoid arbitration on ground of undue expense has
burden to establish factual record and cannot rely on
generalities); Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 30 (1991) (rejecting “generalized attacks” on the
arbitration process as applied to a broker’s ADEA claim).
Surely, petitioner cannot claim prejudice in the fact that the
clearly meritorious claims of numerous persons with whom
they had agreements were heard and determined. The fact
that many such persons might not have asserted a claim in
the absence of class treatment is not a legally cognizable
burden. Petitioner has made no record showing that it was
more expensive or time-consuming to adjudicate the rights
of class members in the class arbitral proceeding than in a
large number of individual proceedings involving the same
common questions, and it would not be reasonable to
entertain such an assumption in the absence of evidence.

If anything, the decision below advances rather than
retards FAA objectives. Bazzle, 351 S.C. at 266, 569 S.E.2d
at 361. Class treatment of common issues holds mutual
benefits for claimants and respondents. Economies of scale
save attorneys’ fees and resources that would otherwise be
squandered defending numerous individual arbitrations over
the same issue. And resolution of a class action in a
defendant’s favor brings global closure to a disputed issue.
See Central Wesleyan College v. W.R. Grace & Co., 6 F.3d
177, 185 (4th Cir. 1993) (“Findings in a common issues trial
on even a few of the eight identified questions may

12

eventually save considerable time and judicial resources.
Significant economies may be achieved by relieving
educational institutions of the need to prove over and over
when defendants knew or should have known of asbestos’
hazards, or whether defendants engaged in concerted efforts
to conceal this knowledge, or even whether certain of
defendants’ products crumble and release dust under hand
pressure.”); Jenkins v. Raymark Indus., 782 F.2d 468, 472
(Sth Cir. 1986) (“To the extent defendants win, the
elimination of issues and docket will mean a far greater
saving of judicial resources. Furthermore, attorneys’ fees for
all parties will be greatly reduced under this plan, not only
because of the elimination of so much tral time but also
because the fees collected from all members of the plaintiff
class will be controlled by the judge.”). There is no cause to
believe that such advantages would not attend a well-
managed class arbitration.

This Court has refused to construe even statutory
language discussing individual litigation as creating a
presumption against class litigation, holding that Congress
would have to express such an intent clearly, because the
courts will not infer an intent to exempt particular causes of
action from the normal rules of civil procedure, including
Rule 23. Califano v. Yamasaki, 442 U.S. 682, 700-01
(1979). Because the FAA is intended to provide only for a
change of forum, it would be similarly inappropriate to
create a default rule foreclosing a particular manner of
litigation.

Cc. Independently of State Contract Law, the FAA
Authorizes Only a Simple Change of Forum,
Without the Loss of Any Substantive Right

Although this particular case may be resolved
according to state law, the federal FAA itself conveys a
separate, substantive, and independent limitation on

—_—— o_o

13

arbitration agreements and their interpretation: that they not
impede a claimant from effective vindication of federal or
State statutory nghts. This Court traced the dividing line in
Waffle House:

We have held that federal statutory claims
may be the subject of arbitration agreements
that are enforceable pursuant to the FAA
because the agreement only determines the
choice of forum. “In these cases we
recognized that ‘[b]y 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 arbitral,
rather than a judicial, forum.’ [Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 628, 105 S. Ct. 3346, 87
L.Ed.2d 444 (1985)].” Gilmer v. Interstate/
Johnson Lane Corp., 500 U.S. 20, 26, 111 S.
Ct. 1647, 114 L. Ed. 2d 26 (1991).

534 U.S. at 295 n.10. Twice in recent Terms, the Court
recognized circumstances where the FAA would not compel
enforcement of arbitration agreements that invaded a
claimant’s ability to vindicate substantive rights. In Waffle
House, the Court held that this principle would preclude
judicial construction of “an employee’s agreement to submit
his claims to an arbitral forum as a waiver of the substantive
statutory prerogative of the EEOC to enforce those claims
for whatever relief and in whatever forum the EEOC sees
fit.” Jd. at 295. And in Randolph, 531 U.S. at 90, the Court
stated, “[i]t may well be that the existence of large arbitration
costs could preclude a litigant ... from effectively
vindicating her federal statutory rights in the arbitral forum.”
The principle that enforceable arbitration agreements do not
involve the waiver of substantive rights applies with equal

14

force to state statutory claims.°

The adequacy of procedures in arbitration is
considered on a case-by-case basis. See, e.g., Randolph, 531
U.S. at 92; Gilmer, 500 U.S. at 33 (claims of procedural
inadequacies “best left for resolution in specific cases”).
Thus, regarding the availability of class actions, there will be
cases where—upon inquiry into the particular arbitration
clause and facts of the case—the class procedure may be
integral to a claimant’s vindication of a cause of action in
arbitration. See, e.g., Bailey v. Ameriquest Mortg. Co., No.
CIV. 01-545 (JRT/FLN), 2002 WL 100391, 145 Lab. Cas.
34,473 (D. Minn. Jan 23, 2002) (finding that collective
action was integral to relief in FLSA case: “when all the
procedural hurdles contained in the Agreement are
considered together—the need to travel to defendant’s
forum, pay half the costs of the arbitrator, proceed
individually rather than collectively, and the limitation of
damage recovery, the likely result is obvious: the cost of
bringing the claim will quickly outweigh any potential
recovery under the Act’); Ting v. AT&T, 182 F. Supp. 2d
902, 933 (N.D. Cal. 2002) (under California consumer
statute, court found that the contract’s resti:ctions on
damages that a successful plaintiff could obtain, and
prohibition on joinder of claims through class actions to be
unconscionable, because they deprived retail customers of a
meaningful remedy), aff'd in relevant part, 319 F.3d 1126
(9th Cir. 2003).’ Any decision in this case must avoid

® Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460
U.S. 1, 24 (1983) (discussing § 2 of the FAA in a state-law contract case,
the Court stated: “The effect of the section is to create a body of federal
substantive law of arbitrability, applicable to any arbitration agreement
within the coverage of the Act.”); Mitsubishi, 473 U.S. at 619-20,
involved state as well as federal statutory claims.

. Regarding the availability of a class or collective action in
arbitration, Gilmer came closest to this issue when it addressed collective
actions in the ADEA context. 500 U.S. at 32. While holding that the

eee eee el

15

trammeling on the future case-by-case development of this
issue under the FAA.

Those courts that have held that the right to class
treatment can be waived have failed to consider or honor the
limitation of the FAA that arbitration agreements not impede
a claimant from effective vindication of federal or state
statutory rights. They generally hold that the parties to an
arbitration agreement are free to bargain away judicial
remedies, and do not consider—or reject out of hand—the
importance of class actions and other judicial remedies to the
statutory scheme, and whether the rights in question can be
effectively vindicated in the absence of class treatment.
This standardless approach is particularly risky in light of the
fact that a number of companies have been judicially
determined to have trafted agreements or rules that were
intended to give them an edge in arbitration they would not
be allowed in court, or that precluded remedies that would be
available in court.”

absence of these mechanisms does not inherently preclude arbitration in
every ADEA case, the Court also observed that the NYSE rules under
review in fact provided for collective proceedings. /d.

* E.g., Johnson v. West Suburban Bank, 225 F.3d 366, 377 (3d
Cir. 2000) (right to seek $500,000 in statutory TILA damages lost in
absence of class treatment, but “simply because judicial remedies are a
part of a law does not mean that Congress meant to preclude parties from
bargaining around their availability”), cert. denied, 531 U.S. 1145
(2001); Adkins v. Labor Ready, Inc., 303 F.3d 496, 503 (4th Cir. 2002)
(same); Randolph v. Green Tree Financial Corp.-Ala., 244 F.3d 814,
817-18 (11th Cir. 2001) (even though class actions are important tool
under TILA, they can be waived in agreement).

* E.g., Brooks v. Travelers Insurance Co., 297 F.3d 167, 170-71
(2d Cir. 2002) (ADEA, ADA, and ERISA); Murray v. United Food and
Commercial Workers International Union, 289 F.3d 297, 304 (2d Cir.
2002) (Title VII, 42 U.S.C. § 1981); Hooters of America, Inc. v. Phillips,
173 F.3d 933, 940 (4th Cir. 1999) (Title VII); Ferguson v. Countrywide
Credit Industries, Inc., 298 F.3d 778, 786 (9th Cir. 2002) (Title VII);
Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 891 (9th Cir. 2002)

16

D. Some Claims Require Class Treatment to
Vindicate Statutorily Protected Substantive
Rights

1. Class Litigation Is Sometimes Essential to
the Enforcement of the Civil Rights Laws

Many individual civil rights actions can fairly be
resolved on the basis of facts unique to the claim in question,
without any plausible contention that a pattern of
discrimination is involved. However, class treatment where
there is such a pattern is often essential to vindicate civil
rights, from at least three perspectives. First, it enables
plaintiffs to obtain the evidence necessary to show a pattern
of discrimination going beyond the isolated facts particular
to that individual claim. Second, it enables plaintiffs to use
the types and scale of proof necessary to show such patterns
and to establish a structure by which victims can be
identified and obtain relief. Third, one of the principal aims
of civil rights actions is the eradication of discrimination, but
broad injunctive relief is often unavailable outside the
context of a class action.

In Gilmer, the New York Stock Exchange rules
provided for class arbitrations and allowed awards of
equitable relief. This Court accordingly rejected petitioner’s
argument that his arbitration agreement was unenforceable in
that it did not provide for broad equitable relief and
collective actions. The opinion observed that ADEA cases
can be conciliated individually and that the EEOC can bring
class actions. 500 U.S. at 32. That statement does not speak
to the fundamental question raised in this case, because
petitioner’s argument was abstract. He made no showing
that he could not effectively vindicate his rights in a purely

(Title VII); Paladino v. Avnet Computer Technologies, Inc., 134 F.3d
1054, 1057-59 (11th Cir. 1998) (Title VII).

op eta ek me —

17
individual action.

The discovery necessary to prove a pattem of
discrimination is generally unavailable in litigation of an
individual claim. Far more discovery is generally allowed in
class actions because of the complexity of the case, however,
and this additional discovery is often necessary for plaintiffs
.o make the statistical and other showings that are critical to
proving a classwide pattern of discrimination.

Obtaining a just outcome can depend entirely on
proof of a discriminatory pattern. For this reason, this Court
has identified pattern and practice cases as having unique
methods of proof affecting all persons subject to the
challenged practice. Int'l Bhd. of Teamsters v. United States,
431 U.S. 32 (1977). Thus, statistical and other evidence is
available to prove such patterns of discrimination. Once
such a pattern is established, it creates a rebuttable
presumption that each class member was victimized by the
discrimination, shifting to defendants the burden of
persuasion to establish the contrary.'°

There is no effective substitute for this
classwide approach, because it permits the vindication of
rights of persons who were harmed by discrimination but are
not aware of it,'' or courts may refuse to take evidence of

'° Int'l Bhd. of Teamsters v. United States, 431 U.S. 324, 361-
62 (1977); Franks v. Bowman Transportation Co., 424 U.S. 747, 772-737
(1976); Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867,
875-76 (1984); Robinson v. Metro-North Commuter R.R. Co., 267 F.3d
147, 168 (2d Cir. 2001), cert. denied, 535 U.S. 951 (2002); Thiessen v.
General Electric Capital Corp., 267 F.3d 1095, 1106 (10th Cir. 2001)
(“significant advantage” in ADEA collective action), cert. denied, _
US. __, 122 S. Ct. 2614, 153 L. Ed. 2d 799 (2002).

'' The Fourth Circuit has observed that “sophisticated general
policies and practices of discrimination are not susceptible to such
precise delineation by a layman who is in no position to carry out a full-
fledged investigation himself,” although “[I]ong observation of plant

18

patterns of discrimination into account outside the context of
a class action.'”

Moreover, even if individual plaintiffs prove
pervasive discrimination, the absence of class certification
jeopardizes or bars the kind of systemic injunction that will
prevent future wrongs. Many courts have held that broad
injunctive relief is prohibited to the extent that it exceeds
what is needed to give individual relief to the named
plaintiffs. '°

practice may bring the realization that he and his black-coemployees are
not getting anywhere.” Graniteville Co. (Sibley Division) v. EEOC, 438
F.2d 32, 38 (4th Cir. 1971).

'2 For example, even where plaintiffs obtain such evidence
because of an earlier unsuccessful effort to obtain class certification, and
as many as 206 plaintiffs gather together into a consolidated case, one
Circuit has held that plaintiffs could not rely on evidence of the pattern of
discrimination in litigating their claims because no class had been
certified, and then affirmed the dismissal of all 206 plaintiffs’ individual
claims. Allison v. Citgo Petroleum Corp, 151 F.3d 402 (Sth Cir. 1998),
reh'g denied with explanation, 151 F.3d 434 (Sth Cir. 1998), followed by
Celestine v. Petroleos de Venezuela SA, 266 F.3d 343, 355—56 (Sth Cir.
2001) (same case). In effect, the denial of class certification blinded the
court to the type of evidence that was dispositive in Teamsters.

'3 E g., Califano v. Yamasaki, 442 U.S. 682, 702 (1979); Brown
v. Trustees of Boston University, 891 F.2d 337, 361 (ist Cir. 1989), cert.
denied, 496 U.S. 937 (1990); Ameron, Inc. v. U.S. Army Corps of
Engineers, 787 F.2d 875, 888 (3d Cir. 1986), approved on rehearing,
809 F.2d 979, 982 n.1 (3d Cir. 1986), cert. dismissed, 488 U.S. 918
(1998); Lowery v. Circuit City Stores, Inc., 158 F.3d 742, 766-67 (4th
Cir. 1998), vacated and remanded on other grounds, 527 U.S. 1031
(1999), reaff'd, Lowery v. Circuit City Stores, Inc., 206 F.3d 431, 437
(4th Cir.), cert. denied, 531 U.S. 822 (2000); Hollon v. Mathis
Independent School District, 491 F.2d 92, 93 (Sth Cir. 1974) (per
curiam); Sharpe v. Cureton, 319 F.3d 259, 273 (6th Cir. 2003); Butler v.
Dowd, 979 F.2d 661, 674 (8th Cir. 1992), cert. denied, 508 U.S. 930
(1993); Zepeda v. INS, 753 F.2d 719, 727-29 (9th Cir. 1983); Nat'l
Center for Immigrant Rights v. INS, 743 F.2d 1365, 1371-72 (9th Cir.
1984), vacated on other grounds, 481 U.S. 1009 (1987); Bresgal v.
Brock, 843 F.2d 1163, 1170~71 (9th Cir. 1987); Paige v. California, 102

19

Nor would the EEOC be able to fill the void that
would be left if employers required their employees to sign
arbitration agreements that excluded class treatment, and if
this Court held that such agreements would be effective even
where class treatment is necessary to vindicate statutory
rights. As this Court recognized in Waffle House, the EEOC
has never been able to bring more than a small fraction of the
enforcement cases filed annually,'* and the primary burden
of enforcing Title VII has since the beginning been on
private plaintiffs.

2. Some Claims Are Too Small to Litigate
Effectively on an Individual Basis, Even
With the Benefit of Fee Awards

“Where it is not economically feasible to obtain relief
within the traditional framework of a multiplicity of small
individual suits for damages, aggrieved persons may be
without any effective redress unless they may employ the
class-action device.” Deposit Guaranty Nat'l Bank v. Roper,
445 US. 326, 339 (1980). This Court has recently
reaffirmed this percepiion. Amchem Products, Inc. vy.
Windsor, 521 U.S. 591, 617 (1997), stated that “the policy at
the very core of the class action mechanism is to overcome
the problem that small recoveries do not provide the
incentive for any individual to bring a solo action
prosecuting his or her rights. A class action solves this
problem by aggregating the relatively paltry potential
recoveries into something worth someone’s (usually an
attorney’s) labor (citations omitted).”

Small-claim recoveries are not limited to consumer
cases. For example, employment discrimination cases
involving denials of promotion ordinarily involve smailer

F.3d 1035, 1039 (9th Cir. 1996).
'* EEOC v. Waffle House, 534 U.S. at 290 n.7.

20
back pay claims than hiring and discharge cases.

In all areas of the law, it is difficult for persons with
small monetary claims to find capable counsel. Even with
fee-shifting statutes, these cases remain economically less
desirable than cases in which substantial recoveries or broad
injunctive relief are at stake.

Class actions are for all these reasons commonly seen
as indispensable to the goals of Congress in enacting many
causes of action. In perhaps the most extensive employment
discrimination treatise in common use, Prof. Larson stated:
“It now is apparent that the increasing complexity and
urbanization of modern American society has tremendously
magnified the importance of the class action as a procedural
device for resolving disputes affecting numerous people.
Nowhere is this more evident than in the context of the
increased number of actions involving the federal
government, labor unions, business and nonprofit
associations, civil rights, and consumer groups.”'* Profs.
Wright, Miller, and Kane state: “Another important factor
indicating the superiority of a Rule 23 action in the consumer
protection field is that typically the individual claims are for
small amounts, which means that the injured parties would
not be able to bear the significant litigation expenses
involved in suing a large corporation on an individual

basis.”'® State courts have also recognized this reality.'’

'5 74 WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND
PROCEDURE § 1751 at 14~15 (1986) (footnotes omitted).

‘© 7B WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND
PROCEDURE § 1782 at 59 (1986); see also Jean Sternlight, As Mandatory
Binding Arbitration Meets The Class Action, Will The Class Action
Survive?, 42 Wm. & MARY L. REV. 1, 9 (2000) (“The potential
defendants know that because many claims are not viable if brought
individually, plaintiffs will often drop or fail to initiate claims once it is
clear that class relief is unavailable” (footnote omitted), and noting that

—_~— — ~~ + -

21

in a multi-year period since First USA required its customers to sign
arbitration agreements, only four customers had made claims against it,
while during the same period it invoked arbitration to resolve 51,622
claims against customers); Julia Davies, Federal Civil Rights Practice In
The 1990's: The Dichotomy Between Reality And Theory, 48 HASTINGS
L.J. 197, 236 (1997) (“Despite the existence of individual attorneys
whose choice of cases is driven more by ideological commitment than
money, the plaintiffs’ damages were a factor many survey participants
viewed as extremely important in determining what cases they wanted to
accept.”) (foomote omitted).

See, e.g., USA Check Cashers of Little Rock, Inc. v. Island,
349 Ark. 71, 76 S.W.3d 243 (Ark. 2002) (potential recovery to each
member of class expected to be relatively small and would not justify
contingency fee cases nor cases in which attorneys charge on an hourly
basis); Daar v. Yellow Cab Co., 67 Cal. 2d 695, 715, 433 P.2d 732 (Cal.
1967) (“It is more likely that, absent a class suit, defendant will retain the
benefits from its alleged wrongs.”); Vasquez v. Superior Court, 4 Cal. 3d
800 (1971) (“Individual actions by each of the defrauded consumers is
often impracticable because the amount of individual recovery would be
insufficient to justify bringing a separate action; thus an
seller retains the benefits of its wrongful conduct.”); McDonald v.
Washington, 862 P.2d 1150 (Mont. 1993) (“The Green court also put into
perspective the need for class actions and the type of case which is best
litigated as a class action: Equity has long recognized that there is need
for a course which would redress wrongs otherwise unremediable
because the individual claims involved were too small, or the claimants
too widely dispersed . . . In the instant case, the claims involved would be
unremediable without class action status because most are minor in and
of themselves.”) (citation omitted); Jn re Cadillac V8-6-4 Class Action,
461 A.2d 736 (N.J. 1983) (“[I)}ndividual actions or a test case may be an
inferior alternative to the class action when the economics of the situation
make it impossible for the aggrieved members to vindicate their rights by
separate actions.”) (quoting 7A Wright, Miller & Kane, FEDERAL
PRACTICE & PROCEDURE § 1778 (Supp.1983)). See also Leonard v.
Terminix Int'l Co., L.P., 2002 Ala. LEXIS 316 (October 18, 2002) (“This
arbitration agreement is unconscionable because it is a contract of
adhesion that restricts the Leonards to a forum where the expense of
pursuing their claim far exceeds the amount in controversy. The
arbitration agreement achieves this result by foreclosing the Leonards
from an attempt to seek practical redress through a class action and
restricting them to a disproportionately expensive individual
arbitration.”); State ex rel. Dunlap v. Berger, 211 W.Va. 549, 567 S.E.2d

22

3. If a Claim Cannot Be Litigated on a Class
Basis in Arbitration, and if Class
Treatment is Important to the Prosecution
of the Claim, as in Civil Rights and Small-
Recovery Cases, Claimants Must Be
Allowed to Litigate Their Claims in Court

In the event that a company-drafted arbitration
agreement expressly precludes class treatment, or is silent on
class treatment and state contract law does not require class
treatment, and class treatment is important to the vindication
of the claim, there are a number of means of protecting the
rights of claimants. One is to do as the lower courts did here,
exercising judicial responsibility over the question of class
certification and requiring the arbitral process to resolve the
merits. Another would be to require the arbitrator to
consider whether to certify the class, using the same
standards the courts would follow.'* A third would be to
exempt the controversy from the arbitration agreement and
have the courts determine the individual and class claims,
with the individual claims subject to remand to arbitration in
the event that class certification is denied.'? Any approach

265, 278-79 (W. Va.) (“Thus, in the contracts of adhesion that are so
commonly involved in consumer and employment transactions,
permitting the proponent of such a contract to include a provision that
prevents an aggrieved party from pursuing class action relief would go a
long way toward allowing those who commit illegal activity to go
unpunished, undeterred, and unaccountable.”), cert. denied sub nom.
Friedman's Inc. v. West Virginia, 123 S. Ct. 695, 154 L. Ed. 2d 631
(2002). "

'* Federal standards under Rule 23 or, in appropriate cases,
collective-action standards under the Fair Labor Standards Act, would be
appropriate in cases arising under Federal law and in cases that would if
filed in court be removable to the Federal courts. State class action
standards would be appropriate for non-removable cases arising under
State law.

'° The availability of Rule 23(f), to test the decision whether to
certify the class, is am important assurance of fairness under this

23

would be sufficient if it preserves the opportunity for
consideration of class certification under the standards used
by the courts.

CONCLUSION

For the reasons stated above, the decision of the
South Carolina Supreme Court should be affirmed.

Respectfully submitted,

Richard T. Seymour
Counsel of Record
LIEFF, CABRASER, HEIMANN &
BERNSTEIN, LLP
1100 New York Avenue, NW
Suite 1080 - West Tower
Washington, D.C. 20005-3934
Telephone 202-582-1000

24

Gary T. Johnson
Stuart Meiklejohn
Co-Chairs
Norman Redlich
Trustee
Barbara R. Amwine
Thomas J. Henderson
Michael Foreman
Audrey Wiggins
LAWYERS’ COMMITTEE FOR CIVIL RIGHTS
UNDER LAW
1401 New York Avenue N.W., Suite 400
Washington, D.C. 20005-2124
Telephone: 202-662-8600

Paul W. Mollica

MEITES, MULDER, BURGER & MOLLICA
208 South LaSalle Street, Suite 1410
Chicago, Illinois 60604

Telephone: 312-263-0272

Caryn Becker

LIEFF, CABRASER, HEIMANN &
BERNSTEIN, LLP

Embarcadero Center West

275 Battery Street, 30th Floor

San Francisco, California 94111-3339

Telephone: 415-956-1000

25

Dennis C. Hayes
General Counsel
Yolanda Y. Riley
NATIONAL ASSOCIATION FOR THE
ADVANCEMENT OF COLORED PEOPLE
4805 Mt. Hope Drive, Fifth Floor
Baltimore, Maryland 21215
Telephone: 410-486-9191

Elaine R. Jones

Director-Counsel

Norman J. Chachkin

Robert H. Stroup

NAACP LEGAL DEFENSE & EDUCATIONAL
FUND, INC.

99 Hudson Street, 16th Floor

New York, New York 10013-2897

Telephone: 212-965-2200

Vincent A. Eng

NATIONAL ASIAN PACIFIC AMERICAN LEGAL
CONSORTIUM

1140 Connecticut Avenue, N.W., Suite 1200

Washington, D.C. 20036

Telephone: 202-296-2300

Judith L. Lichtman

Jocelyn C. Frye

NATIONAL PARTNERSHIP FOR WOMEN &
FAMILIES

1875 Connecticut Avenue, N.W., Suite 710

Washington, DC 20009

Teiephone: 202-986-2600

Attorneys for Amici Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0614%3A20. Public record. Not legal advice.