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Ninth Circuit Avoids Broad Ruling in Kilgore v. KeyBank

In Arbitration, Class Waiver, Concepcion, Public Claims, Unfair Competition Law on April 11, 2013 at 5:49 pm
Wright brothers flying over the Kohn plantatio...

Wright brothers flying over the Kohn plantation in Montgomery, Alabama, where they set up a flying school. Maxwell Air Force Base was later built on the site. (Photo credit: Wikipedia)

The Ninth Circuit took a narrow approach in a ruling which had been expected to  have implications for wage & hour class actions.  The en banc court today compelled arbitration in Kilgore v. Keybank, National Association, but declined to issue a broad holding vitiating the Broughton-Cruz rule.  Kilgore v. Keybank, National Association, No. 09-16703, __ F.3d __ (9th Cir. Apr. 11, 2013) (en banc).  The appeal involved a putative class action by former students of a failed flight-training school who seek broad injunctive relief against the bank that originated their student loans among others.  The en banc court held that the arbitration agreement was not unconscionable under California law and reversed and remanded with instructions to compel arbitration.

The court concluded that the injunctive relief claim at issue fell outside Broughton-Cruz’s “narrow exception to the rule that the FAA requires state courts to honor arbitration agreements.”

The central premise of Broughton-Cruz is that “the judicial forum has significant institutional advantages over arbitration in administering a public injunctive remedy, which as a consequence will likely lead to the diminution or frustration of the public benefit if the remedy is entrusted to arbitrators.” Broughton, 988 P.2d at 78. That concern is absent here, where Defendants’ alleged statutory violations have, by Plaintiffs’ own admission, already ceased, where the class affected by the alleged practices is small, and where there is no real prospective benefit to the public at large from the relief sought.

You can read more about today’s ruling here.

Attorneys

Andrew A. August and Kevin F. Rooney, Pinnacle Law Group, LLP; James C. Sturdevant (argued) and Whitney Huston, The Sturdevant Law Firm, San Francisco, California, for Plaintiffs-Appellees/Appellants.

W. Scott O’Connell (argued), Courtney Q. Brooks, and Kristen M. Yasenka, Nixon Peabody LLP, Manchester, New Hampshire; Matthew A. Richard, Todd C. Toral, and Stephanie Karnavas, Nixon Peabody LLP, San Francisco, California, for Defendants-Appellants/Appellees.

David Horton, Davis, California; Hiro N. Aragaki, Los Angeles, California, for Amici Curiae Law Professors. Hiro N. Aragaki and David Doeling, Los Angeles, California, for Amici Curiae Arbitration Professors.

Donald M. Falk, Mayer Brown LLP, Palo Alto, California; Andrew J. Pincus (argued), Evan M. Tager, Archis A. Parasharami, and Scott M. Noveck, Mayer Brown LLP; Robin S. Conrad and Kate Comerford Todd, National Chamber Litigation Center, Inc., Washington, D.C., for Amicus Curiae The Chamber of Commerce of the United States of America.

Steve Bullock and Kelley L. Hubbard, Office of the Montana Attorney General, Helena, Montana, for Amicus Curiae State of Montana.

Arthur D. Levy; Nancy Barron, Kemnitzer, Barron & Krieg LLP, San Francisco, California, for Amicus Curiae The National Association of Consumer Advocates and The National Consumer Law Center.

Ellen Lake, Oakland, California; Terisa E. Chaw, The Employee Rights Advocacy Institute for Law & Policy; Rebecca M. Hamburg, National Employment Lawyers Association; Cliff Palefsky, McGuinn, Hillsman & Palefsky, San Francisco, California, for Amici Curiae National Employment Lawyers Association, The Employee Rights Advocacy Institute for Law & Policy, and California Employment Lawyers Association.

Mark A. Chavez, Chavez & Gertler LLP, Mill Valley, California, for Amicus Curiae The National Consumer Law Center, National Association ofConsumer Advocates, Public Citizen and National Consumers League.

C. Dawn Causey and Gregory F. Taylor, American Bankers Association, Washington, D.C., for Amici Curiae American Bankers Association, Consumer Bankers Association, and the Clearing House Association, L.L.C.

By CHARLES H. JUNG

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