on Dec 21, 2010 at 11:52 am
In a forthcoming article in the Notre Dame Law Review, The Litigation-Arbitration Dichotomy Meets the Class Action, Professor Richard Nagareda draws interesting connections between the question whether state law can bar use of the class action device in federal court â€“ the issue in last Termâ€™s Shady Grove v. Allstate Insurance Co. â€“ and whether arbitration clauses can prohibit participation in class actions altogether â€“ the question before the Court this term in AT&T Mobility LLC v. Concepcion.Â (Full disclosure:Â I authored an amicus brief for petitioner in the Shady Grove case.)
Nagareda makes a compelling case for parallel treatment, despite the fact that Shady Grove turns on the Erie doctrine, while Concepcion is about the Federal Arbitration Act.Â He points out that Erie and the FAA both seek to manage the relationship between competing sources of law.Â Shady Grove required the Supreme Court to decide whether state or federal law governed the availability of class actions in federal court; Concepcion asks it to draw the line between state-law unconscionability doctrine and the FAA command that the parties arbitrate disputes in accordance with their contract terms.Â Nagareda points out that as a result of the Class Action Fairness Act, many more class actions will be heard in federal court under Federal Rule of Civil Procedure 23.Â He concludes that if Rule 23 class actions are viewed merely as a joinder device, as Shady Grove suggests, then arbitration clauses that prohibit participation in class actionsÂ should notÂ be viewed as unconscionable.Â For Professor Nagareda, these cases illustrate a convergence between litigation and arbitration that has gone mostly unrecognized by courts and commentators.
Although I do not agree with all of Professor Nagaredaâ€™s conclusions — for instance, I think a stateâ€™s conception of its own class action device as a means to deter future wrongdoingÂ remains relevant to the unconscionability question, in part because some of these class actions will continue to be heard in state courts — I nonetheless recommend this as a fascinating article that seeks to synthesize the Courtâ€™s approach to class actions in divergent contexts.
Sadly, Professor Nagareda passed away just a few months ago, and so we will not benefit from his brilliant insight into these issues in the future.