July 19, 2013

Ninth Circuit Follows Concepcion and Allows the FAA to Preempt State Law and Permit Arbitration

That bastion of unpredictable decisions, the Ninth Circuit Court of Appeals, followed a somewhat predictable path and recently held that the Federal Arbitration Act preempted a state law that disfavored arbitration.  This is another decision that reinforces the power of Concepcion and the favored status of arbitration, while ruling against the consumer (in this case).

Mortensen v. Bresnan Communications involved a consumer class action brought against an Internet provider for violation of privacy rights due to ad placement, among other causes of action.  The District Court in Montana denied a motion to compel arbitration by Bresnan (under the Internet subscriber agreement) saying the contract of adhesion violated the reasonable expectations/fundamental rights rule in Montana.  The Ninth Circuit overturned the Montana District Court.  The Ninth Circuit looked to the U.S. Supreme Court decision in AT&T Mobility v. Concepcion and held that the Federal Arbitration Act preempted state law, specifically a state law that disproportionately applies to arbitration agreements.  In essence, the parties will be required to use arbitration.

Although this is a consumer class action and not an employment case, the Mortensen decision follows the trend to defer to arbitration and Concepcion.


Category: Arbitration,