AT&T Mobility LLC v. Concepcion - Oral Argument - November 09, 2010

AT&T Mobility LLC v. Concepcion

Media for AT&T Mobility LLC v. Concepcion

Audio Transcription for Opinion Announcement - April 27, 2011 in AT&T Mobility LLC v. Concepcion

Audio Transcription for Oral Argument - November 09, 2010 in AT&T Mobility LLC v. Concepcion

John G. Roberts, Jr.:

We will hear argument first this morning in Case 09-893, AT&T Mobility v. Concepcion.

Mr. Pincus.

Andrew J. Pincus:

Thank you, Mr. Chief Justice, and may it please the Court:

The Ninth Circuit concluded in this case that a State law may mandate the use of a particular procedure in arbitration as long as the law also requires the use of that same procedure in litigation.

That interpretation of section 2 of the Federal Arbitration Act would permit a State to oppose in arbitration any procedure employed in court and thereby require arbitration to be a carbon copy of litigation, precisely what the Act was designed to prevent.

Section 2 of the Federal Arbitration Act provides that an arbitration agreement may be held unenforceable under State law only if the State law rule being invoked to invalidate the agreement qualifies as a ground that exists in law or equity for the revocation of any contract.

Respondent argues that, because California's Discover Bank rule does not facially discriminate against arbitration, it falls within the savings clause.

But the plain language of the savings clause makes clear that it is not limited to statutes that discriminates facially against arbitration.

By referring to "any contract", it makes clear that, as this Court has said, the rule must be applicable to contracts generally.

Antonin Scalia:

What if -- what if a State finds it unconscionable to have an arbitration clause in an adhesion contract which requires the arbitration to be held at a great distance from -- from where the other party is and requires that party to pay the cost of the arbitration?

Can a State not find that to be unconscionable?

Andrew J. Pincus:

It can, Your Honor, and--

Antonin Scalia:

Well, that wouldn't apply to other -- to other contracts.

Andrew J. Pincus:

--But the legal doctrine that the State is applying there, as States have and as we discuss in our brief, is a doctrine that applies a general principle of unconscionability with principles elucidating how it applies that apply evenhandedly across the board.

Antonin Scalia:

Are we going to sit in judgment?

I know you say -- you say it has to shock the conscience, but if a State wants to apply a lesser standard of unconscionability, can we strike that down?

Andrew J. Pincus:

If it wants to apply a lesser standard to arbitration clauses, yes, absolutely you can, because that would -- that would violate what is at the core of the provision, which is discrimination against State law.

If a State -- if a State enacted -- if the legislature enacted a statute and it was headed arbitration -- unconscionability, rather, and section 1 of that statute had general principles to be applied to all contractual provisions to determine unconscionability: It must shock the conscience, the question is addressed with respect to the party before the court against whom the contract is going to be applied, and the third principle is unconscionability is decided ex ante.

And then section B said -- I'm sorry?

Sonia Sotomayor:

What's the difference, then, with the act that you are positing?

A State comes in -- or I should ask: Is there no difference between a State saying these terms in a contract are unconscionable, making the petitioner always pay the fees and making him or her arbitrate in a different State -- that is unconscionable -- or a general rule of State law that says in a contract of adhesion the stronger party can't impose undue cost or expenses on the other side to vindicate their rights, whether it's in litigation and/or arbitration.

In your mind, there is no difference between those two things, between these two approaches to the issue?

Andrew J. Pincus:

I don't think so, Justice Sotomayor.

Maybe if I could finish with my example, it may elucidate the distinction that I'm trying to draw.

Antonin Scalia:

So how do you address Justice Scalia's -- if you are saying there is no difference between those two things, then how can a State find those terms unconscionable?

Under what theory, general theory of law, would they be--

Andrew J. Pincus:

I think the critical question is: Is the State applying the same principles to arbitration, of unconscionability to arbitration agreements, as to other agreements?

And in my example I was positing a first provision that laid out three principles that would be applied.

If part B of that section, or part 2 of that section, said with respect to arbitration agreements, on the other hand, we are going to require that the procedures be equivalent to what is in court, we are going to look at the time the dispute arises rather than ex ante, and we are going to look at the effect on everyone, then I think it would be quite clear that that would be discrimination.

Antonin Scalia:

--That is bad, absolutely, but that's not what the State is going to do.