WEBVTT - Supreme Court Backs Businesses, Curbs Class Arbitration

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcast. Businesses one over

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<v Speaker 1>workers at an ideologically divided Supreme Court this week, the

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<v Speaker 1>Justice has voted five to four with the Conservative Justice

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<v Speaker 1>is in the majority that the workers at a California

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<v Speaker 1>lighting retailer could not band together in arbitration to get

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<v Speaker 1>compensation from their employers failure to protect their data. Joining

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<v Speaker 1>me is Mark Rifkin, a senior partner Wolf Hollden Stain.

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<v Speaker 1>He is the securities and class action attorney. So, Mark,

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<v Speaker 1>this isn't the type of case that we're familiar with.

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<v Speaker 1>Can we sue or do we have to arbitrate? This

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<v Speaker 1>was can we arbitrate as a group? That's right, June.

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<v Speaker 1>And this is not the first time the Supreme Court

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<v Speaker 1>has written on this. The law has of all a

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<v Speaker 1>little bit, but since two thousand three, there have been

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<v Speaker 1>three or four cases having to do with this issue,

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<v Speaker 1>and and we've seen it grown to the point now

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<v Speaker 1>where I think the Court, at least as it's currently constituted,

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<v Speaker 1>the pro business faction of the Court is going to

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<v Speaker 1>protect businesses and and compel individual arbitrations almost at any expense.

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<v Speaker 1>The Chief Justice wrote the majority opinion, what was the

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<v Speaker 1>reasoning of the conservatives? So the Chief Justice said that

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<v Speaker 1>the f a A. The Federal Arbitration Act, essentially pre

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<v Speaker 1>empt any state law, including the California state law, that

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<v Speaker 1>would interpret a contract against the draft an ambiguous contracted

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<v Speaker 1>against the drafter. And that's a bit of a reversal

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<v Speaker 1>from what we have generally seen from the Court in

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<v Speaker 1>terms of how they approach state law rights. And it's

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<v Speaker 1>certainly a change from the two thousand three decision in

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<v Speaker 1>green Tree Financial versus Basil, where the Court left to

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<v Speaker 1>the arbitrators the question of whether an arbitration could or

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<v Speaker 1>could not proceed on a class wide basis. Justice the

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<v Speaker 1>Lena Kagan said that the majority had gone well beyond

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<v Speaker 1>what they've done in previous rulings. So Roberts also said

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<v Speaker 1>that class arbitrations where it odds with the basic goals

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<v Speaker 1>of arbitration, which he said were speed and simplicity. Is

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<v Speaker 1>that true? How does class arbitration work. Class arbitration works

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<v Speaker 1>uh much the same way that it would in a courtroom. Uh.

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<v Speaker 1>It adds a layer of complication to an arbitration, but

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<v Speaker 1>plenty of other procedures adding layers of complications to arbitrations too.

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<v Speaker 1>And I think where the where the court is deeply

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<v Speaker 1>divided is the extent to which arbitration on a class

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<v Speaker 1>wide basis is a question of absolute consent or or

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<v Speaker 1>clear consent, or whether it's the sort of thing that

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<v Speaker 1>a state court or state law can can supply in

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<v Speaker 1>the case of an agreement that's at least ambiguous. The

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<v Speaker 1>first of these cases, the Basil case, there was no

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<v Speaker 1>agreement to arbitrate on a class wide asis. The Court

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<v Speaker 1>said it was up to the arbitrators to determine, and

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<v Speaker 1>the arbitrators in fact determined in that instance that h

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<v Speaker 1>class wide arbitration will be allowed. It's not inconsistent with

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<v Speaker 1>the purpose of the Federal Arbitration Act to allow class

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<v Speaker 1>wide arbitration. Now, I take it from from what you

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<v Speaker 1>said since the departure that all four the liberal justices

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<v Speaker 1>felt the need to write descents to send a message.

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<v Speaker 1>They don't always do that or often do that. What

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<v Speaker 1>did you get from their descents. Well, a few things. First,

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<v Speaker 1>I think it's it's highly unusual that there are four

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<v Speaker 1>descents in a case that really should not involve too

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<v Speaker 1>much consternation. I thought some of the language was extremely provocative. Uh.

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<v Speaker 1>Some of the ways that the Court described the disagreement

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<v Speaker 1>suggests to me a very deeply divided court between in

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<v Speaker 1>this case, between a pro business faction and the pro

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<v Speaker 1>consumer and pro worker faction. I don't I don't like

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<v Speaker 1>to think of them as liberals or conservatives, although that

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<v Speaker 1>may be the way they also line up. But but

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<v Speaker 1>there is a clear pro business wing of the court

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<v Speaker 1>and a clear pro consumer, pro worker wing of the court,

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<v Speaker 1>and and we are seeing more and more evidence of

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<v Speaker 1>the division between them. Yes, Justice Ruth Bader Ginsburg, quoting

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<v Speaker 1>in earlier descent, said the decision was the court's latest

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<v Speaker 1>effort quote to deny employees and consumers effective relief against

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<v Speaker 1>powerful economic entities. Let's talk about some of those earlier decisions.

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<v Speaker 1>This is the latest in a line of Supreme Court

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<v Speaker 1>decisions that have backed arbitration. Tell us about the progression

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<v Speaker 1>of these cases. So let's begin at the very beginning,

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<v Speaker 1>which is when when the Federal Arbitration Act was first enacted,

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<v Speaker 1>it was primarily meant to allow businesses to be able

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<v Speaker 1>to settle disputes in a reasonably efficient, speedy way without

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<v Speaker 1>need to go to court. And so when Congress passed

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<v Speaker 1>the f A, and they did it really at the

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<v Speaker 1>behest of the business community. It's now become not so

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<v Speaker 1>much a tool of business disputes, but it's become a

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<v Speaker 1>way for businesses to be able to limit their exposure

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<v Speaker 1>to um, whether it's workers or consumers or individuals, to

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<v Speaker 1>limit their exposure in a way that does away with

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<v Speaker 1>class actions and really keeps the playing field very un leveled.

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<v Speaker 1>I think that the descent gets exactly to the heart

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<v Speaker 1>of that issue, because you have a huge corporation, oftentimes

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<v Speaker 1>spending shareholder money, not even its own money, and they're

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<v Speaker 1>aligned against an individual with a relatively small claim. And

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<v Speaker 1>most of these arbitration agreements provide that if if the

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<v Speaker 1>arbitration were to proceed on a class wide basis, then

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<v Speaker 1>the arbitration agreement itself would be null and void. This

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<v Speaker 1>one did not. It had no provision in it that

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<v Speaker 1>addressed class arbitration one way or another, but it did

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<v Speaker 1>refer to procedures that allowed arbitrations to proceed on a

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<v Speaker 1>class wide basis, and so the division in the court

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<v Speaker 1>was whether that created an ambiguity such that the California

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<v Speaker 1>state law of the contra preferendum law would allow the

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<v Speaker 1>court to interpret that ambiguity against the draft or against

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<v Speaker 1>the company and give the individual workers the right to

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<v Speaker 1>proceed on a class wide basis, which is a realistic,

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<v Speaker 1>practical manner is the only way these cases can proceed.

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<v Speaker 1>And the divided court said no, So how big a

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<v Speaker 1>loss is this for consumers or employees? A scale of

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<v Speaker 1>one to ten? Is it huge? Is it three? It's incremental.

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<v Speaker 1>I mean, we we've seen this constant drumbeat. Now this

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<v Speaker 1>is not new news. Um. I think to some of

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<v Speaker 1>the justices on the on the pro individual side, it's

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<v Speaker 1>a bridge too far. And I think the fact that

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<v Speaker 1>we saw for very strong dissents suggests that they're really

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<v Speaker 1>reaching the limit of their willingness to sit quietly and

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<v Speaker 1>watch the rights of individuals eroded in a very business

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<v Speaker 1>friendly Supreme Court. But in terms of the change we've

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<v Speaker 1>we've come a long way since two thousand three when

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<v Speaker 1>the Court decided basil on this class action question. We

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<v Speaker 1>went from that to Stults Nielsen, where the court says, look,

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<v Speaker 1>if if the agreement is silent on whether a class

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<v Speaker 1>can arbitrate or not, and the parties agree that that

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<v Speaker 1>silence implies there was no agreement on the issue, then

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<v Speaker 1>we won't require class wide arbitration. To concepcion, where the

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<v Speaker 1>court says class action waivers are valid and enforceable. Now

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<v Speaker 1>to the Lamps Plus case, where the court says, in silence,

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<v Speaker 1>we're not going to allow it, and even in ambiguitus,

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<v Speaker 1>in cases of ambiguity, we're not going to allow it.

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<v Speaker 1>All right, Thanks so much, Mark, it's a pleasure having

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<v Speaker 1>you here again. That's Mark Rifkin, senior partner at Wolf

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<v Speaker 1>Called and stay. Thanks for listening to the Bloomberg Law Podcast.

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<v Speaker 1>You can subscribe and listen to the show on Apple Podcasts, SoundCloud,

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<v Speaker 1>and on Bloomberg dot com slash podcast. I'm June Brosso.

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<v Speaker 1>This is Bloomberg