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Two recent California Appellate Court decisions address class arbitration waivers post-AT&T Mobility v. Concepcion, the 2011 U.S. Supreme Court case that dramatically curtailed parties’ ability to challenge class action waivers in arbitration agreements. In Caron v. Mercedes-Benz Financial Services USA, LLC, No. G044550 (June 29, 2012), the Court reviewed a trial court decision denying a motion to compel, based on the anti-class-action-waiver provision of California’s Consumer Legal Remedies Act. The Appellate Court reversed, citing Concepcion, and holding that the CLRA is pre-empted by the FAA, because it acts as an obstacle to the FAA’s intention of enforcing arbitration agreements.

Likewise, in Truly Nolen of America v. Superior Court, No. D060519 (Aug. 9, 2012), the Appellate Court reversed an order allowing class-wide arbitration. The trial court had granted a motion to compel arbitration of a putative class action labor dispute, but denied the employer’s motion to direct individual arbitration, instead allowing class-wide arbitration of the claims. The employer appealed and the Appellate Court reversed, citing Concepcion. However, it remanded with instructions that the trial court hear arguments and evidence on whether the arbitration agreement in fact contained an implied right to class-wide arbitration, as argued by the plaintiff class, including extrinsic evidence of intent, if necessary, and to then rule anew on the issue of whether class-wide arbitration should be allowed.

This post written by John Pitblado.

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A lawsuit involving a reinsurance dispute has been voluntarily dismissed so that it may proceed in arbitration. On July 14, 2011, Liberty Mutual petitioned a court to appoint an umpire and compel arbitration pursuant to its reinsurance agreement with Continental Insurance under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act. The dispute between the two parties arose after Liberty Mutual sought reimbursement from its reinsurer, Continental for amounts paid to a policyholder. Although the parties agreed that their contracts required them to arbitrate, and each had successfully chosen one arbitrator, they were unable to choose an umpire. Because their contracts did not specify a selection process for the umpire and the parties were unable to come to an agreement themselves, Liberty Mutual sought judicial intervention, asking for an order appointing one of five disinterested industry umpires or, alternatively, a retired Massachusetts judge. Although both parties submitted memoranda on the issue and the court held a hearing on the motion, the parties thereafter stipulated to a dismissal of the action and, pursuant to this, the court dismissed the action with prejudice. Liberty Mutual Insurance Co. v. Continental Insurance Co., Case No. 11-cv-11245-MBB (USDC D.Mass. May 7, 2012).

This post written by Brian Perryman.

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