Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcast. Businesses one over
Speaker 1: workers at an ideologically divided Supreme Court this week, the
Speaker 1: Justice has voted five to four with the Conservative Justice
Speaker 1: is in the majority that the workers at a California
Speaker 1: lighting retailer could not band together in arbitration to get
Speaker 1: compensation from their employers failure to protect their data. Joining
Speaker 1: me is Mark Rifkin, a senior partner Wolf Hollden Stain.
Speaker 1: He is the securities and class action attorney. So, Mark,
Speaker 1: this isn't the type of case that we're familiar with.
Speaker 1: Can we sue or do we have to arbitrate? This
Speaker 1: was can we arbitrate as a group? That's right, June.
Speaker 1: And this is not the first time the Supreme Court
Speaker 1: has written on this. The law has of all a
Speaker 1: little bit, but since two thousand three, there have been
Speaker 1: three or four cases having to do with this issue,
Speaker 1: and and we've seen it grown to the point now
Speaker 1: where I think the Court, at least as it's currently constituted,
Speaker 1: the pro business faction of the Court is going to
Speaker 1: protect businesses and and compel individual arbitrations almost at any expense.
Speaker 1: The Chief Justice wrote the majority opinion, what was the
Speaker 1: reasoning of the conservatives? So the Chief Justice said that
Speaker 1: the f a A. The Federal Arbitration Act, essentially pre
Speaker 1: empt any state law, including the California state law, that
Speaker 1: would interpret a contract against the draft an ambiguous contracted
Speaker 1: against the drafter. And that's a bit of a reversal
Speaker 1: from what we have generally seen from the Court in
Speaker 1: terms of how they approach state law rights. And it's
Speaker 1: certainly a change from the two thousand three decision in
Speaker 1: green Tree Financial versus Basil, where the Court left to
Speaker 1: the arbitrators the question of whether an arbitration could or
Speaker 1: could not proceed on a class wide basis. Justice the
Speaker 1: Lena Kagan said that the majority had gone well beyond
Speaker 1: what they've done in previous rulings. So Roberts also said
Speaker 1: that class arbitrations where it odds with the basic goals
Speaker 1: of arbitration, which he said were speed and simplicity. Is
Speaker 1: that true? How does class arbitration work. Class arbitration works
Speaker 1: uh much the same way that it would in a courtroom. Uh.
Speaker 1: It adds a layer of complication to an arbitration, but
Speaker 1: plenty of other procedures adding layers of complications to arbitrations too.
Speaker 1: And I think where the where the court is deeply
Speaker 1: divided is the extent to which arbitration on a class
Speaker 1: wide basis is a question of absolute consent or or
Speaker 1: clear consent, or whether it's the sort of thing that
Speaker 1: a state court or state law can can supply in
Speaker 1: the case of an agreement that's at least ambiguous. The
Speaker 1: first of these cases, the Basil case, there was no
Speaker 1: agreement to arbitrate on a class wide asis. The Court
Speaker 1: said it was up to the arbitrators to determine, and
Speaker 1: the arbitrators in fact determined in that instance that h
Speaker 1: class wide arbitration will be allowed. It's not inconsistent with
Speaker 1: the purpose of the Federal Arbitration Act to allow class
Speaker 1: wide arbitration. Now, I take it from from what you
Speaker 1: said since the departure that all four the liberal justices
Speaker 1: felt the need to write descents to send a message.
Speaker 1: They don't always do that or often do that. What
Speaker 1: did you get from their descents. Well, a few things. First,
Speaker 1: I think it's it's highly unusual that there are four
Speaker 1: descents in a case that really should not involve too
Speaker 1: much consternation. I thought some of the language was extremely provocative. Uh.
Speaker 1: Some of the ways that the Court described the disagreement
Speaker 1: suggests to me a very deeply divided court between in
Speaker 1: this case, between a pro business faction and the pro
Speaker 1: consumer and pro worker faction. I don't I don't like
Speaker 1: to think of them as liberals or conservatives, although that
Speaker 1: may be the way they also line up. But but
Speaker 1: there is a clear pro business wing of the court
Speaker 1: and a clear pro consumer, pro worker wing of the court,
Speaker 1: and and we are seeing more and more evidence of
Speaker 1: the division between them. Yes, Justice Ruth Bader Ginsburg, quoting
Speaker 1: in earlier descent, said the decision was the court's latest
Speaker 1: effort quote to deny employees and consumers effective relief against
Speaker 1: powerful economic entities. Let's talk about some of those earlier decisions.
Speaker 1: This is the latest in a line of Supreme Court
Speaker 1: decisions that have backed arbitration. Tell us about the progression
Speaker 1: of these cases. So let's begin at the very beginning,
Speaker 1: which is when when the Federal Arbitration Act was first enacted,
Speaker 1: it was primarily meant to allow businesses to be able
Speaker 1: to settle disputes in a reasonably efficient, speedy way without
Speaker 1: need to go to court. And so when Congress passed
Speaker 1: the f A, and they did it really at the
Speaker 1: behest of the business community. It's now become not so
Speaker 1: much a tool of business disputes, but it's become a
Speaker 1: way for businesses to be able to limit their exposure
Speaker 1: to um, whether it's workers or consumers or individuals, to
Speaker 1: limit their exposure in a way that does away with
Speaker 1: class actions and really keeps the playing field very un leveled.
Speaker 1: I think that the descent gets exactly to the heart
Speaker 1: of that issue, because you have a huge corporation, oftentimes
Speaker 1: spending shareholder money, not even its own money, and they're
Speaker 1: aligned against an individual with a relatively small claim. And
Speaker 1: most of these arbitration agreements provide that if if the
Speaker 1: arbitration were to proceed on a class wide basis, then
Speaker 1: the arbitration agreement itself would be null and void. This
Speaker 1: one did not. It had no provision in it that
Speaker 1: addressed class arbitration one way or another, but it did
Speaker 1: refer to procedures that allowed arbitrations to proceed on a
Speaker 1: class wide basis, and so the division in the court
Speaker 1: was whether that created an ambiguity such that the California
Speaker 1: state law of the contra preferendum law would allow the
Speaker 1: court to interpret that ambiguity against the draft or against
Speaker 1: the company and give the individual workers the right to
Speaker 1: proceed on a class wide basis, which is a realistic,
Speaker 1: practical manner is the only way these cases can proceed.
Speaker 1: And the divided court said no, So how big a
Speaker 1: loss is this for consumers or employees? A scale of
Speaker 1: one to ten? Is it huge? Is it three? It's incremental.
Speaker 1: I mean, we we've seen this constant drumbeat. Now this
Speaker 1: is not new news. Um. I think to some of
Speaker 1: the justices on the on the pro individual side, it's
Speaker 1: a bridge too far. And I think the fact that
Speaker 1: we saw for very strong dissents suggests that they're really
Speaker 1: reaching the limit of their willingness to sit quietly and
Speaker 1: watch the rights of individuals eroded in a very business
Speaker 1: friendly Supreme Court. But in terms of the change we've
Speaker 1: we've come a long way since two thousand three when
Speaker 1: the Court decided basil on this class action question. We
Speaker 1: went from that to Stults Nielsen, where the court says, look,
Speaker 1: if if the agreement is silent on whether a class
Speaker 1: can arbitrate or not, and the parties agree that that
Speaker 1: silence implies there was no agreement on the issue, then
Speaker 1: we won't require class wide arbitration. To concepcion, where the
Speaker 1: court says class action waivers are valid and enforceable. Now
Speaker 1: to the Lamps Plus case, where the court says, in silence,
Speaker 1: we're not going to allow it, and even in ambiguitus,
Speaker 1: in cases of ambiguity, we're not going to allow it.
Speaker 1: All right, Thanks so much, Mark, it's a pleasure having
Speaker 1: you here again. That's Mark Rifkin, senior partner at Wolf
Speaker 1: Called and stay. Thanks for listening to the Bloomberg Law Podcast.
Speaker 1: You can subscribe and listen to the show on Apple Podcasts, SoundCloud,
Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.
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