On April 11, 2013, the Ninth Circuit issued its long-anticipated en banc decision in Kilgore v. Keybank, National Association, No. 09-16703, declining to resolve whether the Federal Arbitration Act preempts California’s Broughton-Cruz rule prohibiting arbitration of injunctive relief claims. While the Broughton-Cruz rule likely did not survive the United States Supreme Court’s landmark decision in AT&T Mobility v. Concepcion, Kilgore ensures continued litigation over the issue as class action plaintiffs continue their attempts to challenge consumer arbitration provisions that prohibit class actions.
The en banc decision in Kilgore turned on the simple fact that defendant Keybank no longer was making the type of loan challenged in the case, so there was no basis for seeking injunctive relief. Because there was no continuing conduct, there was no need to determine whether public policy prohibits arbitration of a claim seeking to enjoin such conduct. By ducking the issue, the en banc panel avoided not only the central question in the case, but also the “vindication of statutory rights” argument the Second Circuit used to evade the holding of AT&T Mobility in In re American Express Merchants Litigation, 667 F.3d 204 (2d Cir. 2012). That issue is now pending before the Supreme Court, which granted certiorari and recently heard oral argument.
Kilgore illustrates that the battle over enforceability of consumer class action waivers is far from over. While AT&T Mobility certainly had a huge impact, the class action bar continues to pursue judicially created exceptions as well as regulatory and legislative measures that would limit or reverse the decision.