On October 8, 2013, an employer filed a cert petition with the U.S. Supreme Court asking the Court to find that the FAA preempts California’s Gentry rule. The case is called CarMax Auto Superstores California, LLC v. Fowler, No. 13-439.
In Gentry v. Superior Court, 165 P.3d 556 (Cal. 2007), the California Supreme Court held that class arbitration waivers are not enforceable if “class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration.”
If the Court agrees to hear this CarMax case, I expect the Court will easily find that the FAA preempts California’s Gentry rule. Under AT&T Mobility v. Concepcion, the Supreme Court interpreted the FAA has having a broad preemptive power. In Concepcion, Justice Scalia wrote that the FAA does not permit “state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives.” Justice Scalia found that “[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” The Gentry rule doesn’t stand a chance against this ruling from Concepcion. Furthermore, the Gentry rule is based in part on the effective vindication doctrine, and the Supreme Court in American Express Co. v. Italian Colors Restaurant eviscerated the effective vindication doctrine.
So far, the Supreme Court’s new term looks sparse in terms of FAA cases, with the exception of BG Group v. Republic of Argentina. If the Supreme Court grants cert in CarMax, CarMax would present an easy case for the Justices in light of their recent decisions.