Claims — continued from Page 8
The Court explained that the overarch- ing purpose of the FAA is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings. That purpose could only be achieved if the arbitration clause, and the associated class action and class arbitration waivers, were given effect.
After Concepcion Since Concepcion, plaintiffs have tried
and tried to circumvent class action waivers and class arbitration waivers con- tained in their contracts. These efforts have been almost entirely unsuccessful.
• The “Vindication of Rights” theory One theory to avoid arbitration that
has been tried and rejected repeatedly is the vindication of rights theory. Under this theory, plaintiffs assert that the class- action waiver or class arbitration waiver should not be enforced because it would result in the plaintiff ’s and other putative class members’ rights not being vindicat- ed because of the excessive cost of the arbitration. In the face of the FAA, this vindication of rights is not enough to avoid enforcement of the clause. Exemplary of the analysis on this
point is the district court’s decision com- pelling arbitration in Hendricks v. AT&T
Mobility, LLC, No. 11-00409 CRB, 2011 U.S. Dist LEXIS 124015 (N.D. Cal. Oct. 26, 2011). In this other case against AT&T, plaintiff argued that the agree- ment is unenforceable because it would impose excessive costs that would pre- vent him from vindicating his rights. He claimed that despite AT&T’s claim that it provides a “cost-free” arbitration, there are “two giant loopholes that AT&T rou- tinely exploits to avoid paying arbitra- tion filing fees.” The Court ultimately rejected the arguments based upon these loopholes, but the legal analysis is illuminating. For his argument, plaintiff relied on
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the California Supreme Court’s decision in Armendariz v. Found. Health Psychcare Servs., Inc.(2000) 24 Cal. 4th 83, 110-11 and the U.S. Supreme Court’s decision in Green Tree Financial Corp.-Alabama v. Randolph (2000) 531 U.S. 79. Armendariz set standards for procedural and substan- tive unconscionability in the context of employer-mandated arbitration agree- ments, and decided whether there were “reasons, based on general contract law principles, for refusing to enforce the present arbitration agreement.” Consistent with these principles, the Armendariz Court concluded that “when an employer imposes mandatory arbitra- tion as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.” (24 Cal.4th at 110-11.) Hendricks relied on similar language in Green Tree that ““[i]t may well be that the existence of large arbitration costs could preclude a litigant ... from effectively vin- dicating her federal statutory rights in the arbitral forum.” (Green Tree, 531 U.S. at 90.) But the Hendricks Court noted that Green Tree also held that “the ‘risk’ that [a litigant] will be saddled with pro- hibitive costs is too speculative to justify the invalidation of an arbitration agree- ment.” (Id. at 91.) Hendricks also observed that “Green Tree speaks to the vindication of federal
See Claims, Page 14
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