Briefing is now complete on the petitions for certiorari in the Blair v. Rent-A-Center appeals that could produce the next blockbuster U.S. Supreme Court arbitration decision. At issue is whether the Federal Arbitration Act (FAA) preempts California’s McGill Rule. Under the McGill Rule, an arbitration agreement that precludes a consumer from pursuing claims for “public” injunctive relief in court or in arbitration is unenforceable under California law.
The petitions, filed on February 27, 2020, contended that the McGill Rule is preempted because the FAA protects the right of parties to choose individualized resolution of their claims, notwithstanding contrary state law, and because the McGill Rule is not a ground “at law or in equity for the revocation of any contract” (the FAA’s savings clause), but instead impermissibly singles out arbitration for special treatment. In their April 24, 2020 opposition briefs, respondents, who initiated the litigation by filing complaints seeking public injunctive relief, argued that that the McGill rule is a generally applicable contract defense that does not interfere with the FAA’s objectives by disfavoring or burdening arbitration. They further contended that the FAA does not require enforcement of an agreement that makes it impossible for consumers to vindicate their rights under state substantive law.
In their reply briefs, filed on May 11, 2020, petitioners countered that while the scope of the FAA’s savings clause has not been definitively determined by the Court, prior opinions strongly suggest that state public policy doctrines such as the McGill Rule are outside the scope of the savings clause because they do not concern the making of a contract or its revocation. They further argued that there is no meaningful distinction between these appeals and AT&T Mobility v. Concepcion, in which the Court held that the FAA preempts state laws that invalidate class action waivers in arbitration agreements.
Petitioners emphasized that the importance of the questions presented in these appeals is underscored by the amicus briefs submitted on their behalf by several industry groups, including the American Bankers Association (ABA) and the Consumer Bankers Association (CBA). In their amicus brief, the ABA and the CBA, represented by Ballard Spahr, argued that review should be granted to preserve consumer-friendly procedures for resolving disputes and to ensure that courts uniformly apply the FAA. No amicus briefs were filed in support of the respondents.
The Court will consider the petitions at its May 28, 2020 conference.
We will continue to keep you updated.