The issues in Shroyer v. New Cingular Wireless Servs., Inc., 2007 U.S. App. LEXIS 19560 (9th Cir. Aug. 17, 2007), were whether (i) a class arbitration waiver in Cingular's standard contract was unconscionable, and (ii) the Federal Arbitration Act preempted a holding that the waiver was unenforceable. The Ninth Circuit held the waiver to be unconscionable under California law and ruled that the invalidation of the contract provision was not preempted by the FAA. The unconscionability finding was predictable under California precedent because, as a contract of adhesion, the standard Cingular contract could be deemed procedurally unconscionable and, by precluding class arbitration of what would individually be uneconomic cases, it could be deemed ‛unfairly one-sided.“ The preemption argument is the one that warrants Supreme Court review. Cingular made a series of arguments, among them that by requiring companies to permit class wide arbitration would (i) discourage arbitration altogether, given the absence of appellate review (both as to class certification and the merits) and (ii) frustrate the ostensible benefits of arbitration — among them speed and simplicity (two goals often elusive even in non-class arbitrators of any magnitude). The Ninth Circuit plausibly responded to these arguments — e.g., that to permit consumers to bring class arbitration proceedings ‛is actually ‘encouraging alternative dispute resolution outside the courtroom’“ and that ‛[t]here is no reason to believe that the principal consideration of judicial economy that underlies the class action mechanism in Rule 23 would not operate similarly in the context of class arbitration“ (citing the American Arbitration Association class arbitration rules). The issue of class arbitration has been in flux since the Greentree decision, and it would benefit from Supreme Court attention.
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