CourtCall and ARS Join Forces to Provide Online Dispute Resolution Services

Technology Helps to Drive Down Costs and Expedite Cases

Los Angeles, California—CourtCall, the nation’s leading legal technology provider for remote appearances, and Arbitration Resolution Services Inc., (ARS), a leading technology provider in online dispute resolution, have entered into an agreement which will allow federal, state, county and municipal courts and businesses across the country the option of sending cases to online arbitration and mediation.

“We are very excited about the alliance with ARS,” said Robert V. Alvarado, Jr., Esq., CEO of CourtCall. “ARS has built an excellent platform for arbitration and mediation, and we see great potential for growth in this area, as more and more courts and attorneys embrace this innovative technology.”

“This partnership is, without a doubt, going to speed up the wheels of justice and move cases through the dockets,” said Mark Norych, president and general counsel of ARS. “So many simple matters get tied up in time-consuming and expensive litigation, and having the ability to more efficiently settle disputes is a win for all parties. CourtCall is a technology leader in facilitating hearings and depositions by telephone and video conferencing, so incorporating our online dispute resolution services into their offering is a very logical and natural fit.”

CourtCall is the premier company in the United States providing telephonic and video conferencing services to more than 2,000 courtrooms across the nation and Canada. The company’s Remote Appearance Platform allows attorneys, plaintiffs, defendants, witnesses and interpreters to make virtual court appearances. The obvious benefits are a tangible savings in travel time and expense, as well as reduction in traffic, parking and security in and around courthouses. Since its inception, CourtCall has facilitated millions of appearances before thousands of judges on behalf of hundreds of thousands of lawyers.

ARS is revolutionizing the field of dispute resolution through its cloud-based ADR and ODR programs. ARS offers its users virtual arbitration and mediation services in the comfort of their own businesses, offices or homes without ever having to make a personal appearance. Its combination of a digital evidence submission process along with video and telephonic conferencing, now powered by CourtCall, makes resolving client/customer/business disputes a very simplified, cost-effective and private alternative to litigation.

More information about ARS and CourtCall can be found at www.arbresolutions.com and www.courtcall.com.




Arbitration Resolution Services, Inc. Welcomes David Berkowitz and Kevin Pike to Advisory Board

Coral Springs, Florida – April 25, 2017 Arbitration Resolution Services, Inc. (ARS) has announced two key additions to its Advisory Board, David Berkowitz and Kevin Pike.

David Berkowitz invested in e-commerce early on, and was part of the team that launched the PayPal Here mobile system in 2012. He is also the founder and President of a B2B electronics value-added reselling venture and president of Summa Capital, Inc. Mr. Berkowitz previously worked on several projects including: the development of FinTech disruptive technology, EDGARIZEIT, a cloud-based platform for the EDGARization of SEC documents and Fetchly, an SMS lead generation application. A true entrepreneur at heart, Mr. Berkowitz will aide in the advancement of online dispute resolution (ODR).

Kevin Pike has held various positions at the American Arbitration Association, JAMS and Arbitration Forums. He has over 30 years’ experience in the field of alternative dispute resolution (ADR) and brings a depth of insight to the ARS Advisory Board. His current positon is in arbitration with Claim Resource Services.  Mr. Pike speaks regularly at insurance industry and ADR conferences, conducts training webinars, writes articles for various business publications and produces a weekly blog distributed throughout the insurance industry. Mr. Pike continues to advocate for the use of arbitration and mediation by teaching ADR skills to thousands of insurance professionals and attorneys nationwide.

ARS is revolutionizing the field of dispute resolution through its cloud based ADR and ODR programs. ARS offers its users virtual arbitration and mediation services in the comfort of their own businesses, offices or homes without ever having to make a personal appearance. Its combination of a digital evidence submission process along with video and telephonic conferencing makes resolving client/customer/business disputes simplified, cost-effective and private alternative to litigation.




Arbitration Resolution Services, Inc. Appoints New Member of Advisory Board

Arbitration Resolution Services, Inc. (ARS) is pleased to announce that Patricia “Pattie” Porter, well known in the Dispute Resolution Field as “The Texas Conflict Coach”, has joined the Advisory Board of ARS.

ARS has established the new standard for resolving disputes without the need for lengthy or costly litigation. Using a disruptive new approach involving mediation and/or arbitration, parties are able to solve problems without ever having to leave their home, office or business to settle their issues. ARS’s unique blend of proprietary cloud based software combined with telephonic and/or video mediations and arbitration hearings makes filing law suits unnecessary and provides a fair, cost effective and confidential way to resolve disputes.

Ms. Porter, LCSW, AAP, is the founder and host of the global Blog Talk Radio program, “The Texas Conflict Coach”™. A program dedicated to educating the public and consumers about how to manage conflicts constructively and problem solve effectively. Additionally, she is also the current President of the Texas Association of Mediators. Patricia Porter is an adjunct faculty member in the graduate dispute resolution program at Southern Methodist University in Texas. She has worked in mediation, team facilitation, negotiation training, conflict management and abrasive leader coaching for individuals, businesses, governmental agencies and universities. She has worked with the Department of Homeland Security, NASA and Coca Cola to name a few of her clientele.

ARS is honored to have Ms. Porter as a member of our Advisory Board and welcomes her expertise in educating the public and making dispute resolution without litigation the new standard in conflict resolution.




Friedman to Moderate Panel at Online Dispute Resolution Conference Hosted by Pace University

George Friedman to Discuss Online Disputer Resolution at International Conference in New York, NY

SOUTH FLORIDA: George Friedman, Chairman of the Board of Arbitration Resolution Services, will moderate a panel at the upcoming 14th Annual Online Dispute Resolution Conference to be held in conjunction with the Pace School of Law in New York, New York. The conference will be held June 3-5, 2015 and is a program of Pace’s Institute of International Commercial Law. Mr. Friedman will moderate a panel on Online Dispute Resolution (ODR) for Ecommerce. Other topics include the impact of ODR on the future of dispute resolution, how the lawyer’s practice is being shaped by the inclusion of ODR into the dispute resolution field, and how the dispute resolution field is incorporating technology and ODR processes.

Arbitration Resolution Services, Inc. is the pioneer in online legal dispute resolution services. George Friedman, Esq., provides key attributes to this innovative new company as the chair of ARS Board. He has more than 30 years of arbitration experience as the former EVP of Dispute Resolution of the Financial Industry Regulatory Authority (FINRA) and SVP at the American Arbitration Association (AAA). Additionally, ARS provides an extensive panel of arbitrators and mediators on a cloud-based software system that allows individuals or companies to resolve disputes quickly and avoid the costly and time-consuming process of litigation. The company offers arbitration and mediation nationally and across all industries.

For more information or to register for the conference, see http://law.pace.edu/odr-2015.




A.M. Best TV Interviews Mark Norych: Tech Remaking Claims Disputes

Recently, A.M. Best interviewed Mark Norych, EVP, Arbitration Resolution Services for their A.M. Best TV Interview series.

Arbitration Resolution Services’ Norych: Tech Remaking Claims Disputes

Mark Norych said insurance claims professionals are benefiting from a move to telephone and video conferencing as an alternative to in-person dispute resolution. Norych was interviewed at the RIMS 2015 Annual Conference & Exhibition.

 




Legal Aid Society of Palm Beach County Adopts New Online Arbitration Service

The Legal Aid Society of Palm Beach County and Arbitration Services Inc. Team Up To Provide Low Income Individuals Access to Online Arbitration and Mediation Services

PALM BEACH COUNTY, FL:  The Legal Aid Society of Palm Beach County, Inc. announces that innovative online arbitration service will soon be made available to its clients. “Online arbitration will allow us to streamline our process while at the same time offering a much more cost-effective way to resolve legal issues for the disadvantaged citizens of Palm Beach County,” said Bob Bertisch, executive director of the Legal Aid Society of Palm Beach County, Florida.

Legal Aid will utilize the Arbitration Resolution Services, Inc. (ARS) proprietary cloud-based software, Arb-IT™, which will reduce costs and speed the process of resolving legal disputes, ultimately allowing Legal Aid to better serve its growing clientele. “ARS is at the cutting edge of addressing the issues in efficiently and fairly resolving disputes in our society. Adopting this technology will allow us to help many more people with the same resources,” said Bertisch.

Arbitration Resolution Services offers simple and cost-effective binding arbitration for business and consumers. Through its proprietary cloud-based software, Arb-IT™, ARS brings the ease of e-commerce to the resolution of disputes for claims involving insurance companies, independent contractors, manufacturers and retailers, banks and mortgage companies, landlords and tenants, and much more.

The Legal Aid Society of Palm Beach County was founded in 1949 for the purpose of providing free legal advice to the economically disadvantaged. The Society has grown from an office of one attorney to a staff of 85 over the past 65 years. As one of the first social services agencies to serve Palm Beach County, it continues to be recognized as a growing and dynamic organization that personalizes human and social needs within the legal framework.

“The Legal Aid Society will offer online mediation and arbitration through ARS to individuals who seek advice and/or are represented by the Legal Aid Society,” said Mark Norych, Esq., executive vice president and general counsel for ARS. “By utilizing the ARS system, the Legal Aid Society will be able to provide more citizens with low-cost assistance by steering their cases to our online platform, avoiding the time and expense that it takes to litigate a matter in court.”

Tom Weber, president and CEO of Arbitration Resolution Services adds, “We believe our services perfectly complement the mission of the Legal Aid Society. We understand the value of appropriate access to the judicial system for all members of society.”


 

The Legal Aid Society of Palm Beach County is committed to providing high quality civil legal advice, representation and education to the disadvantaged of Palm Beach County so as to protect their personal safety, enhance their opportunities and living conditions and promote self-sufficiency. www.legalaidpbc.org.

Arbitration Resolution Services, Inc. (ARS) provides an online system where individuals and businesses may resolve disputes through mediation and/or binding arbitration conducted by unbiased and knowledgeable professionals. The ARS proprietary software is a fully automated, affordable, fast and convenient method for reaching a settlement without courts, high costs and lengthy process. www.arbresolutions.com.




Now Individuals and Businesses Have an Alternative to Costly Court Proceedings

Arbitration Resolution Services, Inc. Launches New Website that Facilitates Fast and Affordable Resolution to Legal Disputes

SOUTH FLORIDA: Due to the time and expense of navigating the complex legal system, lower and middle income individuals as well as many small businesses have virtually no access to appropriate legal remedies. Even more alarming is that courts are now seeing those who must respond to legal claims, such as filing responses and appearing in court, in increasingly large numbers unrepresented and not knowing what they need to do to achieve a favorable legal outcome. Too often these people and businesses come away from court having to deal with lost work/business and high court bills.

But now, individuals and businesses have a fast and affordable way to drive down the dragged out timeframe and legal costs to resolve their disputes. Whether it be a contractual dispute, a workplace issue or property damage, resolution can be just a click away with Arbitration Resolutions Services, Inc. (ARS). ARS provides mediation or binding arbitration without the hassle and expense of lawyers and lengthy lawsuits. Through its newly launched website and proprietary cloud-based software, Arb-IT™, ARS brings the ease of e-commerce to the resolution of disputes for claims involving insurance companies, independent contractors, manufacturers and retailers, banks and mortgage companies, landlords and tenants, and much more. Not only is the service convenient, it is more time and cost effective than litigation. Most cases reach conclusion in 60 days or less and at less than 20% of the cost of litigating in court.

Signing up for the ARS service is quick and easy. And free! All you need to do is provide your name and email address via the company’s secure website, https://www.arbresolutions.com, which launched in March 2015. Next, gather photographs and other evidence. Simply upload the files via Arb-IT™, describe your claim, and identify the respondent(s). ARS will then assign an arbitrator or mediator to the case. In arbitration, the documents are reviewed by an arbitrator who will then review the information provided by both parties and render a binding decision. If using mediation, the mediator will attempt a resolution.

Arbitration Resolution Services, Inc. is the pioneer in online legal dispute resolution services. George Friedman, Esq., provides key attributes to this innovative new company as the chair of ARS Board. He has more than 30 years of arbitration experience as the former EVP of Dispute Resolution of the Financial Industry Regulatory Authority (FINRA) and SVP at the American Arbitration Association (AAA). Additionally, ARS provides an extensive panel of arbitrators and mediators on a cloud-based software system that allows individuals or companies to resolve disputes quickly and avoid the costly and time-consuming process of litigation. The company offers arbitration and mediation nationally and across all industries.




Fixing Mandatory Securities Arbitration: What Part about “Customer Choice” was Unclear?

By George H. Friedman*

[This was originally published in the author’s blog at the Securities Arbitration Commentator]

I recently authored a post in my blog at the Securities Arbitration Commentator, CFPB Issues Final Report on Arbitration, Telegraphing a Ban or Limits on Arbitration. Should SEC follow Suit? While the short answer was “no,” I did go on to explain my thinking. The blog post touched off a lively discussion on LinkedIn in which critics contended that my support of mandatory predispute arbitration agreements (“PDAAs”) in the customer-broker/investment adviser context was misplaced. My response was “I advocate for customer choice on whether to arbitrate. Read what I wrote!” Turns out the commenters and I don’t differ on whether customers should have a choice. We just disagree on timing.

What I Said

In response to whether SEC should use its Dodd-Frank power to limit or abolish PDAA use if CFPB as expected does so, I said it should not. I explained my thinking, pointing out that: 1) Dodd-Frank treats securities arbitration differently than the consumer contracts regulated by CFPB (Dodd-Frank section 921 does not require the SEC to do anything about PDAAs in customer-broker contracts); 2) securities arbitration is already regulated by the SEC; 3) the two main problems cited in the CFPB Report – class action waivers and hidden arbitration clauses – don’t exist at FINRA; and 4) FINRA’s program is fair!

My Plan

I then elaborated on what SEC might do should it decide to exercise its authority under Dodd-Frank section 921, opining that four simple provisions would make for a good rule:

  1. Customer choice, but before a dispute arises: the customer should have a choice about whether to submit disputes to arbitration, but this choice should be made when the contract is signed. Requiring all parties to agree to arbitration after a dispute arises – could actually harm customers because businesses offering services would sometimes decline to arbitrate, making the dispute resolution process unpredictable for the customer.
  1. Clear, knowing, and voluntary agreement to arbitrate: To ensure that customers knowingly and voluntarily agree to arbitrate, SEC’s rule should require that the individual separately initial/click the arbitration agreement. Rule 2268 already governs the content and placement of arbitration clauses.
  1. Promote web-based arbitration systems: an arbitration system that steers consumers to travel to a “brick and mortar” arbitration hearing to resolve disputes that typically involve modest amounts is not a good idea. It’s a particularly poor one when the consumer’s interactions with the business have been entirely online. Customers should have the option of using an online ADR system.
  2. Establish procedural fairness criteria: the new rules should also require that any customer arbitration system adhere to basic standards of procedural fairness. As I’ve already stated, FINRA’s program is that model.

So, what’s the Problem?

My critics have a problem with the first part of my plan. It cannot be because some aspect of “the customer should have a choice about whether to submit disputes to arbitration” was unclear. No, dear readers, the problem lies in this part:

… but this choice should be made when the contract is signed. Requiring all parties to agree to arbitration after a dispute arises – could actually harm customers because businesses offering services would sometimes decline to arbitrate, making the dispute resolution process unpredictable for the customer.

Their point is that retail customers usually don’t have lawyers when they open brokerage accounts, and as a result they will get hoodwinked into agreeing to arbitrate. My point is that after a dispute arises, all parties are usually represented by counsel and typically one party or the other by that point has a strategic or tactical reason not to arbitrate. In plain English, no one will agree to arbitrate after a dispute arises, and that would be bad for all concerned, especially customers.[1] I should elaborate on why I think this is a problem.

Timing is Everything

I blogged recently on the proposed Arbitration Fairness Act of 2015, opining that it’s still a bad idea. Let me borrow heavily from that blog post:

  • The bill would require both sides to agree to arbitration after a consumer dispute arises. First, assuming all sides will agree to arbitrate after a dispute arises is a fool’s paradise. Research shows clearly that, at that juncture, one side or the other has a strategic or tactical reason not to agree to arbitration. [2] And assuming that it will always be the consumer that rejects arbitration is wrong. That door would swing both ways. A business could decide to go scorched-earth litigation on a case by case basis, dragging consumers through protracted and costly litigation.
  • The dispute resolution process would become unpredictable. A consumer would have no way of knowing which disputes would go to arbitration and which would end up in court.
  • Dispute resolution providers may not be there. With caseloads becoming unpredictable and sporadic, alternate dispute resolution providers might find it untenable to maintain their fora. This is not theoretical; it’s already been discussed by a high-ranking FINRA official. Then-FINRA President Linda Fienberg at an SEC Investor Advisory Committee meeting in 2010, “… expressed concern that, if the small claims came to arbitration while the larger claims were pursued in court, FINRA’s arbitration forum would lose money as it relies on the filing fees and costs of the larger claims to fund its operations.”[3] As I wrote in the Securities Arbitration Commentator two years ago, when you break the glass and ring the fire alarm, you want to be sure there’s a fire brigade to respond.[4]
  • Costs would rise. And who would bear the cost of all this uncertainty? The consumer.
  • And litigation stinks. Also, let’s think about where these disputes would end up if PDAAs are banned – in court. Going to court is terrible for all parties, especially consumers. Granted, in some parts of the country litigation is relatively quick and inexpensive, and a consumer occasionally gets a large jury verdict against a business,[5] but in general it takes a long time, is very costly, and is subject to both extensive discovery and relatively liberal dismissal standards. If arbitration is eliminated, I stand by my stated belief that litigation would be a poor way for the parties to resolve their differences.

Sticking to My Guns

Friedmans are a stubborn breed. So is my Mom’s side of the family – perhaps more so. Accordingly, I stand by my previous statements:

  • The customer should have a choice about arbitration, but at the time the contract is signed or clicked.
  • Hoping for a post-dispute agreement is a pipedream and would actually harm consumers.
  • The customer should knowingly agree to arbitrate.
  • The customer should not be denied an account if they opt not to agree to arbitration.
  • Any arbitration system would have to meet established fairness criteria.

Readers of course are free to disagree with my views. I’ve built an ADR career spanning four decades based on the premise that reasonable people can disagree. But if you challenge me on the facts, you’d better get yours lined up.

Conclusion

Borrowing from yet another one of my blog posts, the supporters of consumer arbitration — typically businesses such as brokerage firms — and those that hate it — typically consumer rights advocates — are locked in a polarized death embrace, with each side demanding that their view prevail. Opponents of consumer arbitration want mandatory PDAAs banned outright. Supporters want arbitration left alone. I suggest that by insisting that they get what they want – instead of what they need – they are both wrong. As the Rolling Stones song says, “You can’t always get what you want, but if you try sometimes, you just might find you get what you need.” My approach gives both sides what they need: a fair system that gives consumers the choice they want and businesses the predictability and risk management they crave. Or, somewhat like another song says, “all we are saying is give choice a chance.”

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*George H. Friedman, an ADR consultant and Chairman of the Board of Directors of Arbitration Resolution Services, Inc., retired in 2013 as FINRA’s Executive Vice President and Director of Arbitration, a position he held from 1998. In his extensive career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President from 1994 to 1998. He is an Adjunct Professor of Law at Fordham Law School. Mr. Friedman serves on the Board of Editors of the Securities Arbitration Commentator. He is also a member of the AAA’s nation roster of arbitrators. He holds a B.A. from Queens College, a J.D. from Rutgers Law School, and is a Certified Regulatory and Compliance Professional (Wharton-FINRA Institute)

 

[1] If what my detractors were really suggesting is that FINRA Rule 12200, which gives customers the right to unilaterally require arbitration with their broker, would survive abolition of PDAAs, they are dreaming. That’s a subject for another blog post.

[2] See generally Black, Barbara, How to Improve Retail Investor Protection After the Dodd-Frank Wall Street Reform and Consumer Protection Act, 13:1 Univ. of Pa. L. Rev. 59, 104 – 106 (2011), available at https://www.law.upenn.edu/journals/jbl/articles/volume13/issue1/Black13U.Pa.J.Bus.L.59%282010%29.pdf <visited April 15, 2015>.

[3] See Securities and Exchange Commission Investor Advisory Committee – Minutes of May 17, 2010 Meeting, available at http://www.sec.gov/news/otherwebcasts/2010/iac051710-minutes.pdf <visited April 15, 2015>.

[4] Friedman, George, The Arbitration Fairness Act: a Well-intentioned but Potentially Dangerous Overreaction to a Legitimate Concern, 2013:1 Securities Arbitration Commentator 1 (June 2013), available at http://www.proffriedman.com/files/SAC_AFA_Article__final_06-2013_.pdf <visited April 15, 2015>.

[5] See, e.g., Barlyn, Suzanne, South Carolina jury awards $8.1 million to investor who was misled by BB&T (June 30, 2014), available at http://www.reuters.com/article/2014/07/01/us-adviser-verdict-exclusive-idUSKBN0F52RF20140701 <visited April 15, 2015>.




South Florida Tech Start-Up Offers Affordable Nationwide Access to Legal Services

Fast and Affordable Resolution to Legal Disputes is Just a Click Away

SOUTH FLORIDA: Arbitration Resolution Services, Inc. (ARS) is the pioneer in online legal dispute resolution services. After two years of software development including alpha and beta testing and pilot programs, the start-up venture already has a number of active arbitrations and mediations in several states, according to Thomas Weber, president and CEO.

“We are on the verge of revolutionizing not only the process of arbitration and mediation, but also helping businesses and consumers to reach settlements with much less time, effort, expense and stress,” said Weber. “We expect that online arbitration will soon be as widely accepted as virtual meetings and online shopping.”

Executive vice president Mark Norych remarked that the widespread use of online arbitration will save taxpayer dollars as well. “Our court system is overburdened, and the legal process can be painfully slow,” he said. “Taking advantage of the option to arbitrate matters online will alleviate the backlog of cases on the dockets, which will ultimately save tax dollars and help our justice system to function more efficiently.”

What It Does

ARS offers simple and cost-effective binding arbitration for businesses and consumers, all without ever having to leave their homes, offices or businesses. Through its proprietary cloud-based software, Arb-IT™, ARS brings the ease of e-commerce to the resolution of disputes for claims involving insurance companies, independent contractors, manufacturers and retailers, banks and mortgage companies, landlords and tenants, and much more. Not only is the service convenient, it is more time and cost effective than litigation. Most cases reach conclusion in 60 days or less and at roughly 20% of the cost of hiring a lawyer and going to court.

ARS provides access to an extensive network of arbitrators and mediators through a cloud-based software system that allows individuals or companies to resolve disputes quickly and avoid the costly and time-consuming process of litigation. The company offers arbitration and mediation nationally across almost all industries.

How It Works

Signing up for the service is quick, easy and free. All that is needed is a name and email address provided through the company’s secure website, https://www.arbresolutions.com. Simply upload the files containing photographs, documents and other evidence via Arb-IT™, describe the claim, and identify the respondent(s). ARS will then assign an arbitrator or mediator to the case. In arbitration, the documents are reviewed by an arbitrator who makes a binding decision. In mediation, a mediator works with the parties to help them reach a settlement. Next, the arbitrator will review all feedback from the application and respondent(s) and render a binding decision. If using mediation, the mediator will attempt a resolution.

The Founders

  • Thomas Weber, president and CEO, has more than 30 years of experience in operations and complex project management serving as executive vice president for Ocwen Financial Corporation.
  • Mark Norych, executive vice president and general counsel for ARS, brings more than 30 years of collection, litigation and arbitration services experience to this innovative new company.
  • George Friedman, chairman of the board, is former executive vice president of dispute resolution of the Financial Industry Regulatory Authority and former senior vice president at the American Arbitration Association. He is also an adjunct professor of law at Fordham Law School where he teaches alternative dispute resolution.
  • Randy Wood, chief operations officer and also a member of the board, was co-founder of Citrix, a global software company that has grown into a multi-billion-dollar publicly-traded Fortune 500 company.



SCOTUS Grants Cert. in another Class Action Waiver Case: Now What?

[This was originally published in the author’s blog at the Securities Arbitration Commentator]

For those who thought the Supreme Court in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), laid to rest any questions about whether the Federal Arbitration Act (“FAA”) preempts state laws barring class action waivers in a consumer predispute arbitration clause, think again. The Court on March 23rd granted certiorari in another class action waiver case, DIRECTV v. Imburgia, No. 14-462 (2014), which involves a California case, Imburgia v. DIRECTV, 225 Cal.App.4th 338 (2014). The petition for cert. was granted without explanation in an Order dated March 23rd.

Back to the Future: a Refresher on Concepcion

Let’s go back a few years. Concepcion was is another unconscionability case that also involved a class action waiver. The underlying case was a class action lawsuit brought by customers who were induced to sign up for cell phone service by getting a “free phone” for which they were charged sales tax. Their contracts had a PDAA and a class action waiver. The customers resisted arbitration on the ground that the arbitration clause/class action waiver was an unconscionable contract of adhesion and was unenforceable under California law. The Ninth Circuit held that California’s decisional law on unconscionability of agreements barring class action participation, articulated in Discover Bank v. Superior Court, 36 Cal.4th 148, 113 P.3d 1100 (2005), was not preempted by the FAA. Said the Ninth Circuit, “The FAA does not bar federal or state courts from applying generally applicable state contract law principles and refusing to enforce an unconscionable class action waiver in an arbitration clause.”

The Supreme Court reversed, holding that California’s rule of law had a disparate impact on arbitration agreements and was preempted because “Although [FAA] § 2’s saving clause preserves generally applicable contract defenses, nothing in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives.” Essentially, because the California rule of law had a disparate impact on arbitration agreements, it was preempted by the FAA.

DIRECTV is Not on All Fours with Concepcion

One rarely knows why SCOTUS decides to grant cert., but sometimes looking at the opinion below sheds some light on the subject. The facts in DIRECTV at first blush appear to be very similar to Concepcion, but on closer analysis are not. The contracts contained a PDAA and class action waiver. Aggrieved consumers attempted to bring a class action over allegedly illegal early termination fees, and DIRECTV countered that the contract required individual arbitrations. So far, this is pretty standard fare and at a basic level similar to the facts in Concepcion.

So, what’s different? First, we should remember that a core issue in Concepcion was whether to require a class-wide arbitration, something not at issue in DIRECTV. Also, the contract in DIRECTV contained somewhat unusual language. Specifically, it provided: “The interpretation and enforcement of this Agreement shall be governed by the rules and regulations of the Federal Communications Commission, other applicable federal laws, and the laws of the state and local area where Service is provided to you. This Agreement is subject to modification if required by such laws. Notwithstanding the foregoing, Section 9 [the PDAA]shall be governed by the Federal Arbitration Act.” But, the class action waiver adds “If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.” California law, for example Consumers Legal Remedies Act (“CLRA”), Civ. Code, § 1750 et seq., expressly bars class action waivers.

Who’s on First?

What did the parties’ agreement provide? Either California’s law trumped the FAA or the FAA trumped California’s law. A unanimous Court of Appeal embraced the former, ruling “To summarize: Section 9 of the 2007 customer agreement provides that ‘if … the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire Section 9 is unenforceable.’ The class action waiver is unenforceable under California law, so the entire arbitration agreement is unenforceable. The Superior Court therefore properly denied the motion to compel arbitration.”

The Court acknowledged that its holding was contrary to Murphy v. DIRECTV, Inc., 724 F.3d 1218 (9th Cir. 2013), where the Ninth Circuit — interpreting the same language — went the opposite way. Said the DIRECTV court, “We find the analysis in Murphy unpersuasive… Rather, as we have already observed, if the customer agreement expressly provided that the enforceability of the class action waiver ‘shall be determined under the (nonfederal) law of your state without considering the preemptive effect, if any, of the FAA,’ then that choice of law would be enforceable; Murphy cites no authority to the contrary. Consequently, the dispositive issue is whether the parties intended to make that choice” [footnote omitted]. The California Supreme Court declined to review the case.

What will SCOTUS do?

This one is not as easy to predict. Clearly, the Court perceives a need to clear up the conflicting rulings. But, to me it seems the issue boils down to whether the parties can contractually alter the impact of the FAA. On this issue the Court seems to have gone both ways. In Volt Information Sciences, Inc. v. Stanford University, 489 U.S. 468 (1989), the Court held that the FAA requires courts to enforce the parties’ arbitration agreement according to its terms, including their agreement to apply a state law that might not be arbitration-friendly. In fact, the Concepcion Court acknowledged that the parties could agree to arbitration schemes that states could not impose on them. “Parties could agree to arbitrate pursuant to the Federal Rules of Civil Procedure, or pursuant to a discovery process rivaling that in litigation. Arbitration is a matter of contract, and the FAA requires courts to honor parties’ expectations… But what the parties in the aforementioned examples would have agreed to is not arbitration as envisioned by the FAA, lacks its benefits, and therefore may not be required by state law” [citations omitted].

On the other hand in Hall Street Associates, LLC v. Mattel, Inc., 552 U.S. 576 (2008), the Court ruled that the parties could not contractually agree to expand the scope of review of arbitration awards under the FAA. And of course, most of us thought that Concepcion had nailed down the class action waiver preemption issue.

The pleadings thus far are interesting. The Petition for Certiorari does not cite either Volt or Hall Street, while firing away on Concepcion and Murphy. The Respondents’ Brief, however, extensively cites Volt and the Petitioner’s Reply Brief circles back to discuss Volt.

That said, given that we are on the cusp of a new baseball season, and in light of my lifetime .800 batting average predicting Supreme Court rulings, I’ll go out on a limb and predict that “John Roberts and the Supremes” will reverse the DIRECTV Court. Yes, I know what Volt says, but that case was decided more than 25 years ago. I look at these things as a continuum. The more recent cases clearly support FAA supremacy. Also, I don’t think the Court granted cert. just to interpret a very unusual, one-off arbitration clause. We can compare notes next fall, when this case is expected to be heard. I reserve the right to amend my prediction after the case is fully briefed and argued!

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*George H. Friedman, an ADR consultant and Chairman of the Board of Directors of Arbitration Resolution Services, Inc., retired in 2013 as FINRA’s Executive Vice President and Director of Arbitration, a position he held from 1998. In his extensive career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President from 1994 to 1998. He is an Adjunct Professor of Law at Fordham Law School. Mr. Friedman serves on the Board of Editors of the Securities Arbitration Commentator. He is also a member of the AAA’s national roster of arbitrators. He holds a B.A. from Queens College, a J.D. from Rutgers Law School, and is a Certified Regulatory and Compliance Professional (Wharton-FINRA Institute).