Issue link: https://read.dmtmag.com/i/609009
DECEMBER 2015 26 THE JOURNAL COMMUNITY LAW BY ROBERT G. WILLIAMSON JR. Brief Update On Enforcement of Arbitration Agreements We have previously presented a few articles outlining the importance of the Federal Arbi- tration Act (FAA) governing arbitration agree- ments. As we have previously noted, FAA can present a saving lifeline for arbitration agreements generally. This article looks at a recent Fed- eral Ninth Circuit Court of Appeals (Ninth Circuit) decision impacting arbitra- tion agreements in California. In 2011, in AT&T Mobility LLC v. Concepcion ("AT&T"), the U.S. Supreme Court reversed the California Supreme Court and held that the FAA operated to trump conflicting state law public policies that would purport to preclude arbitration of certain claims. Specifi- cally, the High Court said that the FAA pre-empted state policies requir- ing litigation, rather than arbitration, of consumer class action suits. The holding of AT&T on arbitration became the law of the land. But, on September 28, 2015, the Ninth Circuit issued its contrary decision in Sakkab v. Luxottica Retail North America, Inc. (Sakkab) holding that the FAA does not operate to pre- empt a bar to waiver of California's Private At- torney General Act (PAGA) under California law. The move by the Ninth Circuit surprised many legal experts who anticipated that the Ninth Circuit would fol- low a growing fed- eral precedent under AT&T, that such policies should be pre- empted by the FAA because they impugn on the stated purpose of FAA: to permit parties to select by contract arbitra- tion as the means to resolve a po- tential future dis- putes. Many propo- nents of FAA pre-emption view Sakkab as a major setback. However, there is a good potential that the US Supreme Court will ultimately take this case up on review to once again confirm its policy that the FAA pre-empts any state policy that impugns upon the clear purpose the FAA. We see the Sakkab case as having minimal impact on the AT&T's well-reasoned holding given the current makeup of the High Court. Stay tuned! Notwithstanding the Sakkab case, FAA based Arbitration Agreements are preferable for use at your MHC because they increase the odds of being enforced and avoiding court actions. Hart King has drafted numerous FAA Arbitra- tion Agreements for its clients. Naturally, re- view of your arbitration agreement should be done in consultation with your legal advisor. The above commentary is not intended as legal advice. Our observations of the cur- rent trend of FAA's effectiveness in compelling arbitration are interpretive and may differ from that of other counsel's interpretations and the appropriate provisions to include in, or exclude from an arbitration agreement. John H. Pentecost and Robert G. Williamson, Jr. are partners with Hart King Law. They represent manufactured home community owners and man- agers with on various legal issues including prepa- ration and enforcement of arbitration agreements under FAA. They may be reached at jpente- cost@hartkinglaw.com and rwilliamson@hartk- inglaw.com; or at 714.432.8700. T J The move by the Ninth Cir- cuit surprised many legal ex- perts who anticipated that the Ninth Circuit would follow a growing federal precedent under AT&T, that such policies should be pre-empted by the FAA because they impugn on the stated purpose of FAA: to permit parties to select by contract arbitration as the means to resolve a potential future disputes.