SCOTUS to decide Coinbase Arbitrability

Last week, the U.S. Supreme Court granted cert and agreed to hear a cryptocurrency case that would move a dispute with users of a cryptocurrency exchange out of courts and into private arbitration. At issue is whether upon creating their Coinbase accounts, users agreed to resolve disputes through arbitration. A subsequent agreement related to a Dogecoin sweepstakes stipulated that any issues related to the contest must be addressed in state court. Users later accused Coinbase of violating California’s false advertising law by luring them into a sweepstakes offering Dogecoin prizes so they brought a class-action lawsuit in federal court. A federal district judge in California refused Coinbase's request to enforce arbitration, as the company argued its user agreements required. The Ninth Circuit Court of Appeals affirmed the trial judge's decision. In a related dispute last summer, the U.S. Supreme Court ruled 5-4 in favor of Coinbase. In that case, the justices supported Coinbase’s request to suspend customer lawsuits while seeking appeals to move disputes from courts to private arbitration. The review of the current case will likely impact the current status of arbitrability decisions by courts verus arbitrators and the utilization of arbitration clauses and enforcement of user agreements, especially in digital currency trading. When parties enter into successive contracts, and the first contains an arbitration agreement with a delegation clause but the second does not, who decides whether the first contract’s arbitration agreement governs any later disputes? This may finally resolve a regional circuit split. See more here-- https://tinyurl.com/ycy8xr67 and https://tinyurl.com/32s87z6t and https://tinyurl.com/2z57nbez

Class Arbitration Attacked Again

Recent rulings from the U.S. Supreme Court have supported the underlying concept codified in the Federal Arbitration Act (FAA), but have demanded clarity in the drafting of agreements seeking implementation of an arbitration process through which to dispose of disputes. Recently, in Lamps Plus, Inc. v. Varela, the Court found neither silence nor ambiguity in an arbitration agreement regarding the permissibility of class arbitration enables a court to find that the parties agreed to permit class arbitration. According to the Court, consent is fundamental to arbitration. Arbitration agreements must be express and unambiguous because it would so drastically alter the nature of the proceeding from the simple bilateral process that was envisioned in the FAA. Rules of ADR organizations such as JAMS or AAA incorporated by reference into the agreement that contain ancillary rules under which arbitrators could conduct class proceedings had no effect on the Court’s decision. This implies that mere incorporation of other procedural rules is not a sufficient basis to infer an agreement to permit class arbitration either. The Court emphasized that class arbitration proceedings are fundamentally different in nature from bilateral arbitrations envisioned by the FAA. Class arbitrations sacrifice the informality of the contemplated bilateral process, as well as its speed, simplicity, and relative inexpensiveness, and instead produce a slower, more costly, and more complex process that looks like “the litigation it was meant to displace." See full analysis here-- https://bit.ly/2HlFvdW and opinion here-- https://bit.ly/2GvzOZm

Half of Uber MDL to Arbitrate

A federal judge tossed half of the lawsuits concerning Uber's data breach after finding claimants were aware they signed arbitration agreements upon registering to use the app. Uber sought to compel arbitration in consumer class actions filed over the breach, which compromised the personal information of 57 million drivers and riders. This month, the presiding U.S. District Judge, Philip Gutierrez of California, granted such motions in separate orders in seven cases while seven other cases remain. The trial court relied on the U.S. Court of Appeal for the Second Circuit’s decision last year in Meyer v. Uber, finding a “reasonable user” of a smartphone would understand the process of agreeing to Uber’s terms of service. Of course, plaintiffs disagree with that holding and its reasoning. The judge wants further hearings to address whether there is going to be an MDL after this whole process of weeding out arbitrable cases is over with, or not. He noted, however, that all the cases are nationwide class actions that could go forward as a consolidated complaint, but that plaintiffs' lawyers are debating who should lead that action. Uber announced hackers breached its app in 2016 and also admitted paying them $100,000 to destroy the information in 2017. Last spring, the U.S. Judicial Panel on Multidistrict Litigation sent the class actions to this judge, whose first action was to decide Uber’s arbitration motions. Plaintiffs lawyers argued that data breaches fell outside the scope of Uber’s agreement. The current judge was not persuaded and instead found that an arbitrator must decide that issue. He cited the U.S. Court of Appeals for the Ninth Circuit’s 2016 decision in Mohammed v. Uber, which had a “nearly identical Uber delegation provision.” Plaintiffs also cited this summer's decision by the U.S. Court of Appeals for the First Circuit in Cullinane v. Uber and U.S. District Judge Richard Seeborg’s decision last year in Metter v. Uber, both finding Uber’s arbitration agreement unconscionable because a pop-up keyboard obscured text. But Judge Gutierrez found those cases, unlike the Second Circuit’s Meyer case, involved different devices or different versions of Uber’s app, stating he agreed with defendants "that the Cullinane decision departs dramatically both from what other courts have found regarding Uber’s registration process, and from the overall legal landscape regarding assent to online agreements." The court found rather that "Clickable buttons come in all shapes and sizes.” It is clear there is a split of authority in these cases likely to continue affecting arbitrability. See full story here-- https://bit.ly/2NqLmDK

SCOTUS Upholds Employer Arbitration Requirement

This month, in a 5-4 decision, the U.S. Supreme Court ruled that an employer can lawfully require employees to arbitrate as a condition of employment any related disputes on an individual basis and to waive their right to participate in a class action suit or class arbitration. The case involved an effort by workers to file a class action suit against an employer for violating the federal minimum wage law. The employer sought to dismiss the case because it insisted as a condition of employment that the employees waive their ability to go to court or be part of any class action. Rather, any dispute had to be resolved out of court in a private arbitration. The case, Epic Systems v. Lewis, arose from the U.S. Court of Appeals for the Seventh Circuit. Companion cases, Ernst & Young v. Morris, from the Ninth Circuit and National Labor Relations Board v. Murphy Oil, from the Fifth Circuit were argued as a trio before the Supreme Court which decided they differed only in detail, not substance. The Federal Arbitration Act (FAA) requires courts to enforce arbitration agreements between employers and employees according to their terms, even when the agreements provide only for arbitration through “individualized proceedings” rather than a class. In this holding, the Court refused to read the National Labor Relations Act (NLRA) to prohibit arbitration agreements requiring individualized arbitration as an impermissible restriction on employee rights under the NLRA to “engage in … concerted activities for the purpose of … mutual aid or protection,” 29 U.S.C. § 157, holding that Section 7 of the act “focuses on the right to organize unions and bargain collectively” and “does not even hint at a wish to displace" the FAA. The Court stated the FAA and the NLRA have long coexisted (since 1925 and 1935 respectively) and found the suggestion they might conflict something quite new. The Court reasoned that the employees’ theory ran “afoul of the usual rule that Congress does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions..." See more in article here-- https://bit.ly/2Jk3e04 and read full opinion here-- https://bit.ly/2rWzAE8

Can Trump U. Settlement Objector Opt Out?

This week, a Florida lawyer and former Trump University student who paid $19,000 in tuition after being upsold to a "Gold Elite" program objected to a proposed $25 million settlement that would end lawsuits against President Trump’s real estate investing education seminars. The proposed settlement is expected to pay around fifty cents on the dollar for what students initially paid to attend the now-defunct program. The class action deal resolved claims that Trump University falsely promised that Donald Trump himself had hand-picked the instructors and that the program was an “accredited university.” Most class action settlements allow individual class members to opt out of the deal just prior to final approval. The facts of this case, in which class members had an opportunity to opt out before the two sides reached a settlement, are particularly unusual. Typically classes are certified at the time of settlement, so class members receive notice of their opt-out rights at the same time they are informed of settlement terms. There’s surprisingly little precedent to guide the court on this issue. Because of the objection filed, San Diego U.S. District Judge Gonzalo Curiel could delay the settlement or even call the entire deal into question. The plaintiff seeking to opt out maintains that by not offering a formal opportunity to opt out, the settlement violates her due process rights and the Federal Rules of Civil Procedure. Plaintiff's counsel even agreed to waive its litigation fees and costs in order to assure the judge overseeing the case that the firm’s only interest was getting the best possible deal for Trump University students. See more here-- http://bit.ly/2nkEt5j and http://bit.ly/2nkNqvb and http://bit.ly/2mGHzU4 and http://bit.ly/2mGHzU4