A small Supreme Court arbitration case

Over the past few years, we've seen sweeping arbitration decisions from the Court like Concepcion and Italian Colors making it much harder for plaintiffs to avoid forced arbitration and get their day in court. By contrast, this week's arbitration case (a loss for the consumer, as is typical) is of far less consequence.

DirecTV v. Imburgia was about a pre-Concepcion TV service contract that included a binding arbitration clause with an exception if "the law of your [i.e. the consumer's] state" makes such a clause unenforceable. That exception described California law prior to the Supreme Court's 2011 decision in Concepcion holding California contract law on this subject preempted by the Federal Arbitration Act. The question the Supreme Court answered here was whether the parties' pre-Concepcion contractual term still incorporated pre-Concepcion California law on arbitration. A 6-3 majority answered no, holding that as a matter of ordinary meaning, California law itself, and the FAA, "the law of your state" must refer only to valid state law, not law that turned out to be invalid because of the FAA. In the principal dissent, Justice Ginsburg criticized not only the narrow holding here but the Court's entire line of decisions extending special protection to arbitration clauses: "These decisions have predictably resulted in the deprivation of consumers’ rights to seek redress for losses, and, turning the coin, they have insulated powerful economic interests from liability for violations of consumer protection laws."

Fortunately, today's decision is likely to be limited in scope, because the rule of law to which DirecTV's contract referred is an anachronism after Concepcion. Or, put another, more depressing way: Concepcion was sufficiently sweeping that in this week's decision the Court had little left to do.


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