Updated 1/14: Supreme Court Declines California Consumer Arbitration Case

It has been a full term since the U.S Supreme Court has granted certiorari in an arbitration case, but the Supreme Court this morning turned down its chance to bring one on before the current term ends in June.

The Court declined to hear Comcast Cable Communications LLC v. Ramsey, No. 24-365. The question presented was whether the Federal Arbitration Act preempts the state’s  McGill rule.  This morning’s order is available here.

The California Supreme Court in McGill v. Citibank N.A., 393 P.3d 85 (2017) (available at https://bit.ly/3DRKgMc), had found that an arbitration provision waiving the ability to seek “public injunctive relief” in any forum is unenforceable. The McGill rule followed from a “maxim[] of jurisprudence,” states the Comcast cert petition, that “[a]ny one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement.” Cal. Civ. Code § 3513.

Defense attorneys have argued that McGill’s application by California courts has been too broad, allowing far too many individual claims to evade arbitration that had been agreed to in initial contracts. Plaintiffs say that McGill preserves consumers' recourse and doesn’t interfere with FAA arbitration rights.

The Comcast argument was a straightforward Federal Arbitration Act analysis, claiming McGill interfered with the law:

1. The petition argued that the FAA was enacted in 1925 to combat “judicial hostility” targeted at arbitration agreements, citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (available at https://bit.ly/4hcwNNu).
2. It also argued that FAA Section 2 “places arbitration agreements on an equal footing with other contracts, . . . and requires courts to enforce them according to their terms.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67 (2010) (https://bit.ly/4fSx2fp).
3. Therefore, the cable company maintained--using the Supremacy Clause of the U.S. Constitution as its vehicle--that the FAA also preempts state-law contract defenses “that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” Concepcion, 563 U.S. at 339.

Petitioner Comcast argued that McGill’s prohibition on waivers of public injunctive relief expressly targets arbitration agreements, interferes with the fundamental attributes of arbitration, and otherwise falls outside Section 2’s “saving” clause exempting certain matter from FAA application.

The petitioner also argued that the case illustrates how McGill is thwarting arbitration of everyday consumer claims in California because the consumer respondent and Comcast had agreed to arbitrate, and the respondent hadn’t elected to opt out of arbitration.

Respondent Ramsey’s reply brief countered that Comcast’s “assertion that McGill has effectively eliminated arbitration in California consumer cases is patently false.”

The  Washington Legal Foundation and the Retail Litigation Center Inc., two Washington, D.C.-based business-supported legal organizations, each filed amicus curiae briefs in support of the petitioner, urging the Supreme Court to take the case.

In the previous 2023-2024 term, the Supreme Court heard and decided three arbitration cases.  The arguments and results are detailed here on CPR Speaks.

The full Supreme Court docket for Comcast v. Ramsey, including party and amicus briefs, is available on the Court’s website at https://bit.ly/3E1IUyh.

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Comcast wasn't the only arbitration cert denial in Monday's order list. Tenneco Inc. v. Parker, 24-559, also ended up in the rejection pile.  The case is unusual in that a presumably disfavored Scotus doctrine, "effective vindication," was permitted to be used by a federal district court and the Sixth U.S. Circuit Court of Appeals. 

The lower courts found that an Employee Retirement Income Security Act plan requiring an individual arbitration procedure "prohibited the participants from seeking the plan-wide remedies," according to the cert petition.

Although the Supreme Court rejected the use of the effective vindication doctrine in Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228 (2013) (available here), a case involving the cost of arbitrating an antitrust matter with small individual claims, Tenneco had pointed out in its failed cert petition that four federal circuits have allowed the doctrine to overrule Federal Arbitration Act requirements--all Erisa cases allowing the benefits statute to supercede the FAA.

The result is that the Court let the use of the effective vindication doctrine in Erisa cases stand in the Sixth Circuit, and declined to resolve a split in circuit treatments alleged by Tenneco.

You can find the Court's Tenneco v. Parker docket page with the briefs here.

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The author is CPR’s 2024-2025 full-year intern as part of CPR’s consortium program with the ADR Program at the Howard University School of Law in Washington, D.C. Alternatives to the High Cost of Litigation editor Russ Bleemer contributed to this report.

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