Arbitration Where You’re Not Expecting It

In the decade since the Supreme Court decided AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) and American Express Co. v. Italian Colors Restaurants, 570 U.S. 228, 233 (2013), arbitrability has become a threshold question for class action practitioners. On the plaintiffs’ side, a cautious practitioner might avoid bringing a claim that falls within an enforceable arbitration clause. And on the defendants’ side, the first move will be to invoke an arbitration clause with a class waiver whenever there is contractual privity between a plaintiff and a defendant. Arbitrability thus becomes a quasi-dispositive question, independent of a case’s merits.

The Supreme Court’s broad interpretation of the Federal Arbitration Act (FAA) is robust as ever. As a result, arbitrability questions have moved away from systemic policy questions about whether arbitration is permissible or unconscionable. The more recent arbitration cases—such as Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019), and Henry Schein Inc. v. Archer & White Sales Inc., No. 19-963 (schedule for argument December 8, 2020)—instead often turn on interpreting arbitration clauses’ scope.

A recent Third Circuit decision provides guidance for practitioners on how broadly courts read arbitration clauses. See generally In re Remicade (Direct Purchaser) Antitrust Litigation, 938 F.3d 515 (3d Cir. 2019), reh’g den. (Oct. 21, 2019). As Remicade shows, even sophisticated parties often do not realize the breadth of the arbitration clauses in their contracts.