Yesterday, the Supreme Court heard oral argument on Concepcion v. AT&T, which posed the question of whether the Ninth Circuit had properly disregarded AT&T’s consumer arbitration clause as unconscionable because it did not allow classwide arbitrations. As I mentioned yesterday, much of the advance reporting and commentary (with a few exceptions) painted the argument as the harbinger of an apocalyptic battle over the future of the consumer class action.
The reality was more sedate. Most reports on the argument (which Slate’s Dahlia Lithwick described as "some kind of hideous jargon spill in the Gulf of Mexico") have stressed that the Court treated this primarily as an issue of federalism, specifically when to interfere with state law. Justice Scalia, usually considered the one of the most conservative (and therefore both pro-business and pro-state) Justices, focused his questioning heavily on issues of federalism. Specifically, he asked:
Are we going to tell the State of California what it has to consider unconscionable?
It may be a good unconscionability doctrine or it may be a bad unconscionability doctrine, but it’s the state’s unconscionability doctrine.
Justice Alito (aided by some questions from Chief Justice Roberts) focused more on whether unconscionability can properly include unfairness to parties not currently before the court:
Traditional unconscionability in California and elsewhere focuses on unfairness to the party who is before the tribunal. So here it would be unfairness to the Concepcions, rather than unfairness to other members of the class who are not before the court.
What does this mean for the future of arbitration clauses? Several studies have shown that the more questions the Justices ask of a side, the likelier it is to lose. In this case, at least according to published news reports, counsel for AT&T had to answer more and tougher questions than Deepak Gupta of Public Citizen, counsel for the respondent. While some of the questions Justices Alito and Roberts asked indicate a possible line of argument for upholding AT&T’s arbitration clause, the early money would favor an opinion affirming the Ninth Circuit. Given that Circuit’s reputation, that would make this opinion truly noteworthy. Of course, the Court will have the last word sometime in Spring 2011.
NOTE – This entry has been corrected. It originally misidentified Public Citizen as "Public Justice."