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Amici File Briefs to Support Blair Rehearing Petitions

Last week, we published a Legal Alert discussing the petitions for rehearing filed in the Blair v. Rent-A-Center appeals which ask the Ninth Circuit en banc to overturn a panel decision holding that the Federal Arbitration Act (FAA) does not preempt California’s “McGill Rule.” The McGill Rule derives from the California Supreme Court’s ruling in McGill v. Citibank, N.A. that an arbitration agreement requiring individual arbitration and precluding a consumer from pursuing claims for “public” injunctive relief in court or in arbitration is unenforceable under California law.

To update, on August 19, amicus briefs in support of the rehearing petitions were filed by a number of industry groups, including the U.S. Chamber of Commerce, the National Association of Manufacturers, the Washington Legal Foundation, CTIA-The Wireless Association and the California Employment Law Council. The amicus briefs argue that the FAA preempts the McGill Rule because it interferes with the fundamental attributes of individualized arbitration in that it greatly magnifies the risks to the defendants while depriving them of meaningful appellate review. Moreover, the amicus briefs assert that Section 2 of the FAA independently preempts the McGill Rule and is outside the scope of the FAA’s savings clause because it is does not constitute a contract “revocation” defense, but rather is a defense related to validity or enforceability.

We will continue to keep you advised of developments in these appeals since Blair may become the next “blockbuster” arbitration decision by the U.S. Supreme Court.

Copyright © by Ballard Spahr LLP

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About this Author

Kaplinksy, partner, New York, finance
Partner

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

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215-864-8544
Mark Levin, Ballard Spahr Law Firm, Litigation Attorney
Partner

Mark J. Levin is known for his work in complex commercial, insurance, and class-action litigation, with particular experience in consumer finance litigation, the structuring and enforcement of consumer arbitration clauses, and the defense of insurance companies in class actions. He testified in 2007 for the lending industry before a subcommittee of the U.S. House Judiciary Committee at an oversight hearing on whether mandatory arbitration in consumer contracts is fair to consumers.

Mr. Levin has represented banks in defending against the first private class-action lawsuits under the Federal Trust Indenture Act, nuclear power plant owners in a year-long arbitration against an international insurance consortium, and school districts in a major funding lawsuit to recover state funds. He is currently involved in defending banks, other lending companies, and insurance companies in a wide variety of consumer class actions, including numerous class actions brought under the Pennsylvania Unfair Trade Practices and Consumer Protection Law.

215-864-8235