But federalism is as much a question of deeds as words. It often takes the form of a concrete decision by this Court that respects the legitimacy of a State’s action in an individual case. Here, recognition of that federalist ideal, embodied in specific language in this particular statute, should lead us to uphold California’s law, not to strike it down. We do not honor federalist principles in their breach.
So wrote that noted champion of the 7th and 10th Amendments, Supreme Court Justice Stephen Breyer, on the last page of a dissent from a majority decision today that pre-empts and overrules California consumer protection law in favor of the Federal Arbitration Act (“FAA”). Yes, I’m joking – I don’t see Justice Breyer’s name on many lips of Constitutional conservatives or Tea Party websites. And in fact, Justice Breyer has sided with pro-pre-emption Justices in other cases, notably over medical device regulation, a subject I addressed last year. But in the decision announced today in AT&T Mobility LLC v Concepcion, Justice Breyer and the three other Democrat-nominated Justices supported states’ rights and dissented from the majority’s pre-emption hammer. In so doing, they supported states which want to allow their citizens to exercise their 7th Amendment right to a civil jury trial when trapped by forced arbitration clauses in a consumer contract (in this case, a cell phone contract).
In contrast, each of the Republican-nominated Justices, led by Justice Scalia (who apparently has never met a pro-pre-emption argument he didn’t like), struck down California state law and court decisions enabling class action lawsuits against forced arbitration clauses in consumer contracts. So even when a state acts to protect its citizens from such abusive contracts, the FAA trumps the state law. When faced with language in Section 2 of the FAA that should protect states’ ability to revoke any contract (“save upon such grounds as exist at law or in equity for the revocation of any contract”), the majority flattens it:
Although §2’s saving clause preserves generally applicable contract defenses, nothing in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives
So Constitutional principles like states’ rights and civil jury trials are “obstacles” to be removed or ignored.
Justice Thomas was the swing vote in this case, but still voted to abandon states’ rights. He hesitated before joining the assault by writing a concurring opinion in which he asserts that he adheres to views on pre-emption expressed in a previous opinion, Wyeth v. Levine on the regulation of drugs, but then he “reluctantly” joins the Court’s opinion.
The practical impacts of the decision could be enormous. As the dissent notes, it will force an end to many class actions, as few consumers and fewer attorneys will bring an individual case for small amounts of damages. Forced arbitration clauses are now buried in consumer contracts for everything from computers, credit cards and cell phones, to employee handbooks and nursing home admissions contracts. The decision also threatens the rights of employees as well. Employers are increasingly inserting arbitration clauses, with bans on class action suits, into employment contracts. It will be far more difficult for employees to fight discrimination, because they will be unable to file class action suits.
If the 7th and 10th Amendments are to be reinvigorated, Congress will have to take specific and strong action to enable Americans to opt out of forced arbitration clauses in consumer and employment contracts.