I attended the oral argument in Iskanian v. CLS this morning. Here are my notes and impressions.
To begin the morning, Chief Justice Cantil-Sakauye announced that Justice Kennard is retiring at the end of the week. Justice Baxter read a very nice statement extoling the accomplishments of Justice Kennard. The Chief Justice led the room in a standing ovation of the retiring Justice.
There are only three matters on the morning calendar, a duty to defend insurance case, the divorce of Frankie Valli and Iskanian. The room is packed. I assume everyone is there for Frankie Valli.
Counsel for Iskanian begins his argument and Justice Liu immediately peppers him with questions on how Concepcion does not outright overrule Gentry. Counsel pivots and concedes that Gentry may need to be modified, but can be done in a way that is consistent with Sonic II.
Justice Kennard jumps in and wonders whether the categorical rule in Discover Bank, overturned in Concepcion, is different from Gentry, since the Gentry rule at least anticipates that there may be circumstances where the class action waiver survives. However, it does not appear that Justice Kennard buys this reasoning.
Chief Justice Cantil-Sakauye pivots back to the modified Gentry rule plaintiff proposed and counsel suggests that it could be a two part test: 1) does the waiver create a de facto waiver of rights; and 2) are there any other ways to ameliorate this problem in the arbitration agreement (a reference to the very pro-consumer arbitration agreement in Concepcion).
Justice Liu is back at the questions and when counsel suggests it is not proper that unwaivable state claims are essentially waived, Justice Liu stops him and says is that not exactly what Concepcion and Italian Colors say is acceptable? Justice Liu suggests that the problem with Gentry and the proposed Gentry modification still suffer from the same defect; the rule seems to orbit around class action waivers themselves.
Justice Werdeger asks a question about PAGA, but plaintiff's time is up. Up next is amici counsel from the SEIU. SEIU counsel starts by saying there are two substantive rights at issue with the class action waiver, first the waiver of a full PAGA claim and the second is the waiver of right to bring a class action under the National Labor Relations Act. A brief discussion breaks out over the current procedural status of DR Horton in the Fifth Circuit.
Justice Liu, by far the most active inquisitor today, asked counsel to discuss the timing of the NLRA, the AAA and the various class action statutes. SEIU counsel points out the long history of concerted action in Section 7 being used for litigation and class actions. Justice Werdeger asks whether under this argument any class action waivers can survive in the employment context and SEIU counsel says they cannot. This seems somewhat at odds with plaintiff counsel's modified Gentry test.
Up next was counsel for CLS. Justice Kennard inquires again whether the difference between the Gentry rule and the Discover Bank rule creates a meaningful distinction in how to interpret Concepcion. Counsel is consistent in saying it does not, both interfere with the AAA and must fall.
Perhaps the most intense questioning of the day occurred next when Justice Liu asks if the FAA and the NLRA are in conflict. Counsel for CLS up to this point had done an outstanding job, but cannot seem to articulate a test for when two federal statutes are in conflict in the first place and if so, how to determine which statute governs. This seems to have the potential to be the major issue in this case; Justice Liu did not get a clear answer on this question, but seemed very interested in how to handle this issue. Whether the fact that the NLRA arguably creates a right to class action litigation, might this distinguish itself from the Sherman Act at issue in Italian Colors. Justice Liu does not say this outright, but the question seemed to hang out there.
Some minor procedural questions are asked by Chief Justice Cantil-Sakauye on the status of DR Horton.
Justice Liu is back at CLS counsel inquiring on how a class action is not almost explicitly included in the phrase "concerted action" in the NLRA.
The questioning pivots to PAGA for a few moments and Justice Liu asks whether PAGA is similar to a qui tam action.
Counsel for CLS is done and up next is amici counsel for the Chamber of Commerce. Counsel for the Chamber argues that even a modified Gentry rule has class arbitrations at the center of its test and that cannot survive Concepcion. Justice Corrigan and Chief Justice Cantil-Sakauye engage in a series of questions of whether if the State is the main party in a case what happens when it assigns the ability to bring a claim to an employee.
Counsel for the SEIU takes the last few minutes of rebuttal, but nothing of importance occurs. I do not believe in trying to read the tea leaves of oral argument, but there did not seem to be any enthusiasm for saving Gentry, in its current form or in a modified version. The impact between the AAA and NLRA was the most animated series of questions.
For what it is worth, the gallery was packed for Iskanian because as soon as the oral argument concluded, almost every single person got up and left.