Tag: Cato Supreme Court Review

Supreme Court Rules That Arbitration Provisions Should Be Enforced

A few readers have now asked me about the “libertarian” reaction to yesterday’s Supreme Court ruling that allows companies to use boilerplate contract provisions that require consumers to arbitrate any disputes individually rather than coming together as a class action for arbitration purposes (let alone being able to bring claims into court).  That is, where an individual claim isn’t worth that much money (about $30 in yesterday’s case of AT&T Mobility v. Concepcion), no lawyer will take the case and so only by having a class file collectively, the argument goes, will justice be served.

The ruling broke down 5-4 on “conventional” lines, with an opinion by Justice Scalia, joined by the Chief Justice and Justices Kennedy, Thomas, and Alito, holding that the Federal Arbitration Act trumped (“preempted” by operation of the Constitution’s Supremacy Clause) California law that was more favorable to the plaintiffs.   Justice Thomas also filed a concurrence, noting that “state public policy against arbitration” is not enough to revoke a contract with an arbitration agreement.  Justice Breyer dissented, joined by Justices Ginsberg, Sotomayor, and Kagan, arguing that certain class action waivers are unenforceable.

Here’s some more background (edited from a useful summary I received in a Heritage Foundation email):  A cellular telephone contract between the parties provided for arbitration of all disputes, but did not permit classwide arbitration.  After the Concepcions were charged sales tax on the retail value of phones provided for free under their service contact, they sued AT&T, and their suit was consolidated with a class action alleging false advertising and fraud.  The district court denied AT&T’s motion to compel arbitration.  The Ninth Circuit affirmed, reasoning that the Federal Arbitration Act, which makes arbitration agreements valid and enforceable except on such grounds as exist to revoke any contract, did not require arbitration because the prohibition on classwide proceedings was “unconscionable” under California law.  The Supreme Court reversed, stating that arbitration agreements must be placed on equal footing with other contracts and California’s rule was preempted by the FAA and its strong federal policy favoring informal arbitration.

I’ll leave it to my colleagues Walter Olson, our expert on civil litigation, and Roger Pilon, who has written and spoken extensively on preemption, to comment on the particulars of the opinion if they wish.  What I will say generally is that (1) we at Cato take the enforceability of contracts quite seriously, but (2) preemption is a very technical area of law that has to be examined on a case-by-case, statutory-provision-by-statutory-provision basis. See, for example, this Cato Supreme Court Review article from a few years ago, and also the relevant section of last year’s “Looking Ahead” essay that presciently previewed the Concepcion case (kudos to Erik Jaffe!).  Finally, Roger will be writing an article piece on this term’s preemption cases for the next Review – but you’ll have to wait till Constitution Day in September for that!

On the Right to Discriminate

In his post this morning, “Kagan on Military Recruitment,” Cato adjunct scholar Mark Moller touches on Cato’s 2005 amicus brief in Rumsfeld v. FAIR, which he co-authored when he was with us as editor-and-chief of the Cato Supreme Court Review – a duty he performed splendidly before moving off to the legal academy. In mentioning the brief, however, Mark says that he recalls that the position it took was controversial within Cato, that it might still be, and that Cato’s legal shop might take a different view were the case presented today.

I don’t recall that the position we took was controversial within Cato, but then it was five years ago, memories fade, and much has happened in the meantime, including the filing of a brief just three months ago that nicely complements the earlier position we took. In Rumsfeld v. Fair we argued that the government could not condition a private university’s eligibility for federal grants, as the Solomon Amendment did, on the university’s giving up one of its rights, namely, its right to freedom of association. The law school plaintiffs, citing the military’s “Don’t ask, don’t tell” policy, sought to exclude military recruiters from campus. Pursuant to their nondiscrimination policies, that is, the law schools sought to discriminate against those they thought to be wrongly discriminating. In our brief we took no position on the policy Congress had set for the military (that question was not before the Court), nor on the rights of public universities in this matter – nor did we address the question whether Congress, under its raise-and-support-armies power, could directly order schools to admit recruiters, as the Court ultimately held.

Well we now have the public school version of that issue before us, and the Court, in Christian Legal Society v. Martinez. And our brief in this case, written by Cato adjunct scholar Richard Epstein, argues that a public law school – Hastings, in this case – cannot condition the receipt of benefits it extends to all other student groups on CLS’s giving up its right to freedom of association. CLS, a private student group, excludes nonbelievers from its membership, which is its right. As a public institution, we argue, Hastings must treat all equally.

Thus, the principle in the two cases is the same. Private parties, pursuant to their right to freedom of association, may discriminate, whether we agree with their grounds for doing so or not. Public institutions, which belong to all of us, may not discriminate except on grounds narrowly tailored to their functions. Unfortunately, in numerous respects, that’s not our current law. For more, see here.

Law Students: Use Your Deferment to Work for Liberty!

Many law firms continue to ask their incoming first-year associates to defer their start dates (from a few months to a full year) and are offering stipends to these deferred associates to work at public interest organizations. The Cato Institute has been running a successful deferred associates program and we always consider applications on a rolling basis.

We invite third-year law students and others facing firm deferrals to apply to work at our Center for Constitutional Studies. This is an opportunity to assist projects ranging from Supreme Court amicus briefs to policy papers to the Cato Supreme Court Review. Start and end dates are flexible. Interested students and recent graduates should email a cover letter, resume, transcript, and writing sample, along with any specific details of their deferment (timing, availability of stipend, etc.) to Jonathan Blanks at jblanks [at] cato [dot] org.

Please feel free to pass the above information to your friends and colleagues. For information on Cato’s programs for non-graduating students, contact Joey Coon at jcoon [at] cato [dot] org (jcoon [at] cato [dot] org.)