NELA, The Employee Rights Advocacy Institute For Law & Policy (The Institute), and the California Employment Lawyers Association (CELA), filed an amicus brief urging the U.S. Court of Appeals for the Ninth Circuit to grant the plaintiffs’ petition for rehearing en banc in Kilgore v. KeyBank, Case No. 09-16703. In this case, where the plaintiffs are seeking only a public injunction to prohibit the defendant from continuing to break state law, a panel of the Ninth Circuit held that an arbitration clause must be enforced even when it would have the effect of preventing consumers from pursuing their rights under a state consumer protection statute. The panel held that while the Federal Arbitration Act (FAA) would block the enforcement of an arbitration clause that strips individuals of federal statutory rights, state statutory rights can be swept away by any form contract. The plaintiffs and amici contend that such a ruling contravenes U.S. and California Supreme Court precedent. Moreover, the Ninth Circuit’s mistaken assertion that the FAA protects only federal and not state statutory rights threatens to allow employers (and other defendants) to force their employees into arbitration agreements that undercut unwaivable state statutory protections.
Our brief argues that the Ninth Circuit’s decision, by insisting that public injunctions must be arbitrated, effectively deprives plaintiffs and the general public of the critically important California substantive statutory rights that simply cannot be enforced in arbitration and were never intended to be covered by the FAA, 9 U.S.C. 1. In addition, we contend that the court seriously misinterpreted the significance of the opt-out provision in the instant arbitration agreement. Relying on a Ninth Circuit decision in Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198 (9th Cir. 2002), the panel concluded that the opt-out clause meant there was no procedural unconscionability. However, unconscionability analysis is based on state law and the California Supreme Court has completely rejected the Ahmed court’s reasoning. Finally, amici argue that the panel’s ruling turns entirely on the U.S. Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion, even though all the briefing in this case occurred several years before Concepcion was decided. Consequently, the Ninth Circuit essentially decided this case without any briefing on the merits, and thus rehearing should be granted to permit such briefing now.
Author: Ellen Lake (CA)