Contracts professors, policymakers, consumer groups and others have become particularly interested in another post-AT&T Mobility LLC v. Concepcion case. The United States Court of Appeals for the Ninth Circuit recently agreed to an en banc rehearing of Kilgore v. Keybank, 673 F.3d 947 (9th Cir. 2012). The issue in this case is whether Concepcion precludes courts from preserving judicial access for public injunctions under state consumer protection statutes by invoking the public policy exemption from the Federal Arbitration Act’s (“FAA”) mandate that courts enforce arbitration agreements according to their terms. The en banc hearing is set for some time in December of this year.
The case is important on many levels. It raises fundamental questions about the reach of FAA preemption in the wake of Concepcion, in which the United States Supreme Court held that the FAA preempted courts from using California unconscionability law to strike a class relief waiver and order class arbitration. Moreover, the case implicates states’ power to protect individuals’ access to meaningful injunctive relief in order to enforce and protect public rights under state statutes, such as consumer protection statutes.
Bottom line: Injunctive relief is practically different from ordering money damages and serves special purposes in enforcing public rights. Concepcion reinforced the FAA’s preemption power to stop states from discriminating against arbitration, but it does not quash all state ability to protect public rights. The United States Supreme Court endorsed the importance of judicial access for public enforcement claims in E.E.O.C. v. Waffle House, Inc., 534 U.S. 279 (2002), in holding that the EEOC could pursue its claims against an employer despite an arbitration clause in the employees’ agreements with their employer. It therefore seems that states should be permitted to allow for similar enforcement of public rights.