INTRODUCTION AND SUMMARY OF ARGUMENT
Congress enacted the FAA to stop courts from discriminating against arbitration agreements. Congress did so because it recognized that arbitration is a desirable alternative to more costly and timeconsuming litigation. Here, petitioner AT&T Mobility LLC (ATTM) sought to avail itself of those benefits. The court below held that it could not do so, however, at least not unless ATTM also agreed to allow for class arbitration. The court said that class arbitration was necessary as a matter of California judicial policy, notwithstanding the FAA.
ATTM explains why the decision below disregards the FAA in practice, even if it pretends to adhere to it in form. The Chamber generally agrees with, and will not repeat, ATTM's arguments. This brief identifies further errors in the Ninth Circuit's reasoning.
I. The court below struck ATTM's class-arbitration waiver as unconscionable because the court thought that class arbitration must be available to deter unlawful conduct. That reasoning is erroneous.
First, multiple factors--among them, the availability of other private remedies and the existence of robust public law enforcement authority--dramatically reduce the need for devices like class arbitration that allegedly provide further deterrence.
Second, insofar as a lingering need for deterrence remains, class arbitration does not provide it. Both logic and a wealth of empirical evidence make clear that the threat of class actions, whether through litigation or arbitration, does not discourage unlawful behavior.
Third, a predictable effect of forcing class arbitration on businesses (and consumers) that do not want it is to cause businesses to forgo arbitration entirely.
At least for the many cases in which the requirements for class certification are not met, consumers will then have no place to turn but to prohibitively expensive litigation--or to abandon their claims in frustration.
II. The FAA preempts the attempted application of unconscionability doctrine in this case for at least four reasons. First, the decision below reflects the very hostility to arbitration that the FAA was enacted to counteract. Second, the specialized formulation of the unconscionability doctrine for cases involving class-action waivers in general, and this case in particular, is not a recognizable or defensible application of the general California law of unconscionability. Third, even if it were, the Ninth Circuit and California courts apply that formulation to dispute resolution contracts only, and not to all contracts, as the courts must for the state law to come within the savings clause of Section 2 of the FAA.
Fourth, and overarchingly, by holding that there can be no arbitration that does not also allow for class arbitration, the decision below attacks the very purpose of the FAA: to provide parties a lower-cost alternative to litigation. Class arbitration is enormously more expensive and complex than traditional, bilateral arbitration. At a minimum, the FAA preempts state judicial rules that superimpose onto arbitration agreements a procedure (class arbitration) that is so "fundamental[ly]" and "crucial[ly]" different from bilateral arbitration that some businesses have already chosen to forgo arbitration entirely rather than submit to it. Stolt-Nielsen S.A. v. Animalfeeds Int'l Corp., 130 S. Ct. 1758, 1776 (2010).