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California Supreme Court Agrees To Review Case Holding FAA Preempts California’s “Broughton-Cruz Rule” Barring PDAAs Of Consumer Claims
Posted on Categories Arbitration Agreements, Court Decisions, News, Non-Securities ArbitrationTags , , , ,

We covered previously McGill v. Citibank, NA, 232 Ca4th 753 (Dec. 18, 2014), where the California Court of Appeal ruled that the Federal Arbitration Act preempts application of the state’s “Broughton-Cruz Rule,” holding that arbitration provisions are unenforceable as against public policy if they require arbitration of injunctive relief claims brought for the public’s benefit under certain state consumer protection laws (see SAA 2015-01). The McGill Court ruled that the FAA “preempts all state-law rules that prohibit arbitration of a particular type of claim because an outright ban, no matter how laudable the purpose, interferes with the FAA’s objective of enforcing arbitration agreements according to their terms.” Now comes word that the California Supreme Court will take a look at McGill. A Summary of Cases Accepted and Related Actions for Week of March 30, 2015 released April 3rd lists #15-38 McGill v. Citibank, N.A., S224086 as the lead case. The Summary describes the issue under review this way: “Does the Federal Arbitration Act (9 U.S.C. § 1 et seq.), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 321, preempt the California rule (Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066; Cruz v .PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303) that statutory claims for public injunctive relief are not subject to compulsory private arbitration?”

(ed: We make no predictions how this one will end up. The California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (Calif. 2014) (see SAA 2014-24), preserved from preemption California private attorney general act claims. The difference for the McGill Court was that PAGA claims are brought on behalf of the state, while the statutes involved in McGill are not.

(SAC Ref. No. 2015-13-08)

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