SCOTUS AT&T Opinion Par for Rhetorical Course

Par for the Supreme Court course, its opinion in AT&T Mobility is rich with empty rhetoric about arbitration being a creature of contract while being more explicit than ever that what matters in these cases is the Court’s powerful national policy strongly favoring a particular form of arbitration over other ways to resolve disputes.

In finding preempted California contract law holding unconscionable clauses in consumer adhesion contracts mandating bilateral arbitration, the Court’s 5-4 opinion by Justice Scalia breaks only that little bit of new ground. 

The opinion’s principal notable points are (1) to stress more intensively than ever that a primary purpose of federal arbitration law is to promote bilateral arbitration, to streamline dispute resolution, and celebrate the informality of bilateral arbitration against class arbitration and (2) to elaborate the differences between bilateral and class arbitration that the Court assumed everyone knew in last term’s Stolt-Neilsen opinion.  And the Court continues to say that all of this is a matter of contract!

The Court stresses that its jurisprudence treats the federal arbitration statute as expressing both a liberal federal policy favoring arbitration and that arbitration is a matter of contract. Without showing awareness of the inherent conflict in this paired purpose, and parading its rhetorical feathers, the Court said the upshot is to put arbitration agreements on an equal footing with other contracts, including as to defenses.

The Court could not accept the validity of the California unconscionability defense, however, because it did not advance the national policy. Justice Scalia gave a new definition of that national policy, again combining two ideas that are in conflict while pretending they are in harmony: “to ensure enforcement of arbitration agreements according to their terms, so as to facilitate streamlined proceedings” (emphasis added).

The opinion fights tirelessly but unsuccessfully to prove that it has not made up this new version of the national policy. It struggles strenuously but unsuccessfully to persuade us that there is no conflict between its devotion to arbitration and basic principles of Anglo-American contract law.

The opinion gestures about how carefully crafted the contract law it finds preempted to be, but without appreciating contract law aspects of the stance. Instead, the Court commits contradictions that manifest a lack of understanding of contract law and even life. Most strikingly: on page 12 Justice Scalia observes that consumer contracts are totally “adhesive” today yet on page 13 strikes the California law because the aggregate actions it ordains are not “consensual.”

The passages are oblivious to how difficult it is to conceive of an adhesion contract as consensual. There may be ways to reconcile these propositions, but it would require much more honest confrontation with the fact that it is the national policy favoring arbitration alone that is driving things, not contract, not freedom, and not volition.

Perhaps recognizing that its Stolt-Nielsen opinion was facile, declaring differences between bilateral and aggregate arbitration so fundamental that you cannot read the word arbitration to mean the latter, the Court spends four pages explaining the differences. The upshot is that bilateral arbitration is faster, cheaper and more informal than aggregate arbitration and therefore advances the Court’s national policy.

Despite those exertions that rest entirely on the premise that there is a national policy favoring bilateral arbitration, the Court concludes this discussion with this non sequiter: “Arbitration is a matter of contract and the FAA requires courts to honor parties’ expectations.”  The expectations it has delineated and insists on honoring are its own, despite attributing them to contracting parties.

The only unusual thing I found in the opinion is a strange footnote (number 6). The Court tells us that states can find other ways to address concerns about contracts of adhesion, including, it says, “requiring class-action waiver provisions in adhesive arbitration agreements to be highlighted.” It does not cite its Doctor’s Associates opinion, which unanimously held preempted a Montana statute that required an arbitration clause to be highlighted.  Hmmm.

As expected, Justice Breyer’s dissenting opinion does not address or appreciate the gap between what the Court says and does about contracts in its arbitration jurisprudence. It instead fights the majority on the purpose of the statute concerning arbitration as a national  policy, the differences between arbitration and litigation, and the differences between bilateral and aggregate arbitration.

Only Justice Thomas, as usual, offers any serious effort to engage in contract law discussion and analysis. He struggles to map the statute onto the law of contracts. He takes the statutory text literally, though, treating the word “revocation” in its savings clause to recognize only those defenses to arbitration agreements that affect the making of a contract rather than its enforceability or validity. This enables him to concur.

It is a far better ground than the majority offers because it is faithful to contracts and contract law. It was a point made in an amicus brief by a group of contract law professors (including my colleague Greg Maggs), though I do not see that brief cited.  While I would disagree with that exercise in statutory interpretation, at least it is a legitimate discussion about contract law, not mere rhetoric. 

I can now conclude my article reviewing the Court’s jurisprudence in this area, though I don’t need to make many changes, with this disappointing opinion meeting my expectations.

You may also like...

4 Responses

  1. Joe says:

    just calling balls and strikes.

  2. Shag from Brookline says:

    Query whether CJ Taney’s opinion in Charles River Bridge v. Warren Bridge (1837) was cited in any of the opinions in AT&T? I’m thinking that we need a book “Rehabilitating Charles River Bridge” that will avoid the tarnish of Taney’s opinion 20 years later in the Dred Scott case (second worse SCOTUS decision to Lochner!). Now whom might we get to write that book?

  3. Joe says:

    Austin Allen, Mark Graber, et. al. have written books and law review articles that in effect “rehabilitate Dred” to some extent. Not sure if CRB requires rehabilitation as compared to remembrance. Limitation of corporate power, a concern of various Jacksonians judges, would seem timely.

  4. Shag from Brookline says:

    Consider the economic results had CRB v. Warren been decided in favor of CRB (and thus Harvard College). Perhaps Taney can be rehabilitated individually because of the CRB decision, but Dred Scott and related decisions by Taney’s court constitute major blots. I join Joe’s last sentence.

    Back in my law school days in the early 1950s, there wasn’t that much focus on states’ rights. The UCC was yet to come. There were some uniform statutes that the legal profession worked on to facilitate commerce, providing, with adoption by the states, some uniformity for expanding commercial transactions. At the time I studied Bills & Notes, Sales, etc, I didn’t focus on states rights. But imagine the potential chaos without such uniform statutes for basically routine commercial transactions. Apparently attempts at such uniformity at the national level might not have passed constitutional muster. But states were not legally obliged to adopt the uniform statutes. Consider how long it took Louisiana to accept much of the UCC. I have great admiration for the legal profession’s role with uniform statutes. But federalism ain’t beanbag.