2011 Arbitration Highlights: US Supreme Court Case Law

Welcome to Disputing’s Blog 2011 Year-End Highlights. During this year, the U.S. Supreme Court decided several cases related to arbitration:

• On April 27, 2011, in a 5-4 decision, the United States Supreme Court ruled that the Federal Arbitration Act preempted California law with regard to class arbitration in AT&T Mobility, LLC v. Concepcion, 09-893, (April 27, 2011).

• On May 17, 2011, the U.S. Supreme Court denied certiorari (No. 10-1213) to Trustmark Ins. Co. v. John Hancock Life Ins. Co., 631 F.3d 869 ( 7th Cir. 2011). The Seventh Circuit had held that an arbitration panel has authority to determine what a confidentiality agreement requires when the agreement was closely related to an insurance arbitration that was already underway.

• On June 14, 2011, the U.S. Supreme Court granted certiorari to Affiliated Computer Services, Inc. v. Fensterstock, No. 09-1562-cv. In Fensterstock v. Education Finance Partners, Inc., No. 08-CV-3622, 2009 U.S. Dist. LEXIS 30457 (S.D.N.Y. 2009) the U.S. District Court for the Southern District of New York had held that an arbitration agreement containing a class action waiver within a student loan promissory note is unconscionable and unenforceable as a matter of California law.

• In October, 2011, the U.S. Supreme Court denied cert to Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011). In Nafta Traders, the Texas Supreme Court had held that the Federal Arbitration Act (“FAA”) did not preempt enforcement of an agreement for expanded judicial review of an arbitration award enforceable under the Texas Arbitration Act (“TAA”). Such enforcement was consistent with the FAA’s purpose of ensuring that private arbitration agreements were enforced according to their terms.

• On November 7, 2011, the U.S. Supreme Court held that courts must enforce arbitration agreements even if the plaintiff’s Complaint contains nonarbitrable claims. In KPMG LLP v. Cocchi, 565 U.S. ___ ( 2011) the Fourth District Court of Appeal of the State of Florida upheld a trial court’s refusal to compel arbitration in a lawsuit involving claims brought against the auditing firm KPMG LLP (“KPMG”) by investors owners of a limited partnership (“Respondents”) who were defrauded by Bernie Madoff. Respondents alleged four causes of action: negligent misrepresentation; violation of the Florida Deceptive and Unfair Trade Practices Act; professional malpractice; and aiding and abetting a breach of fiduciary duty.

• On November 14, 2011 the U.S. Supreme Court remanded Branch Banking and Trust v. Gordon for the Eleventh Circuit to reconsider its decision in light of AT&T Mobility LLC v. Concepcion, 563 U. S. ___ (2011). In Gordon v. Branch Banking & Trust, 419 Fed. Appx. 920 (11th Cir. Fla. 2011) the Eleventh Circuit had ruled that an arbitration provision in a consumer checking account agreement was unenforceable because the arbitration provision’s non-severable waiver of the right to a class action was substantively unconscionable under Georgia law.

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by Victoria VanBuren
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