By: WISCONSIN LAW JOURNAL STAFF//April 27, 2011//
Civil Procedure
Arbitration; preemption
A state rule that mandatory arbitration is unconscionable, because it does not permit classwide proceedings, is preempted by the Federal Arbitration Act.
Class arbitration, to the extent it is manufactured by Discover Bank rather than consensual, interferes with fundamental attributes of arbitration. The switch from bilateral to class arbitration sacrifices arbitration’s informality and makes the process slower, more costly, and more likely to generate procedural morass than final judgment. And class arbitration greatly increases risks to defendants. The absence of multilayered review makes it more likely that errors will go uncorrected. That risk of error may become unacceptable when damages allegedly owed to thousands of claimants are aggregated and decided at once. Arbitration is poorly suited to these higher stakes. In litigation, a defendant may appeal a certification decision and a final judgment, but 9 U. S. C. §10 limits the grounds on which courts can vacate arbitral awards.
584 F. 3d 849, reversed and remanded.
Local effect: The opinion overrules Wisconsin precedent to the contrary. Cottonwood Fin. Ltd. v. Estes, 2010 WI APP 75, 325 Wis.2d 749, 784 N.W.2d 726 (cert. pending).
09-893 AT&T Mobility LLC v. Concepcion
Scalia, J.; Thomas, J., concurring; Breyer, J., dissenting.