Alex Reed

Alex Reed is an Assistant Professor of Legal Studies in the Terry College of Business at the University of Georgia.  His research interests include federal income taxation, employment discrimination, and securities regulation.  Before joining the UGA faculty, Alex was an associate at the law firm of Alston & Bird LLP in Atlanta, Georgia.

Lorinda Riley

Lorinda Maile Natsu Mall Riley, a Senior Program Analyst for the Department of Homeland Security, Office for Civil Rights and Civil Liberties, currently researches civil rights and civil liberties issues and develops training for state, local, tribal, and territorial law enforcement.  Lorinda has worked for the Office of Intelligence & Analysis as the National Tribal Liaison and the Departments of the Interior and Transportation as a Regulatory Project Manager.

Prior to joining the federal government, Lorinda practiced Federal Indian Law in Washington, DC.  In 2010 Lorinda completed an SJD in Indigenous Peoples Law and Policy from the University of Arizona.  She graduated in 2006 with a JD/MA (American Indian Studies) from the University of Arizona and obtained a BA in Anthropology from University of California, Los Angeles.

Slaying Class Actions: Italian Colors and the Triumph of Binding Arbitration Over Corporate Liability

The American Express gladiator logo. Credit: http://www.freevector.com/logo/american-express-vector-logo/

Pollice Verson, a painting by Jean-Leon Gerome depicting one gladiator slaying another. Public domain.

By Luke Herrine, Staff Editor

The decision in American Express Co. v. Italian Colors Restaurant,[1] announced on June 20, was quickly lost in the anticipatory hubbub around same-sex marriage and voting rights. Admittedly, it would not have gotten much media attention even if it had been announced on a slow news day; the issues of contract arbitration and the vindication of rights through class action proceedings don’t generate many page views.

Yet the decision in Italian Colors, written by Justice Scalia on behalf of a five-justice majority, deserves the attention of the progressive legal community and, indeed, all citizens. It is the latest installment in a long saga of cases that has allowed corporations to insulate themselves from suit through the strategic utilization of fine print.

The specific sort of fine print at issue in Italian Colors was an arbitration clause. These clauses require any suit brought against the party that writes them to be removed from court and diverted to proceedings presided over by a private judge from an organization such as the American Arbitration Association. In 1925, Congress passed the Federal Arbitration Act after extensive corporate lobbying to counteract the distrust that many courts had for such clauses. [2] This was in an era before the proliferation of consumer contracts, before strong labor and employment regulation, and before the modernization of civil procedure. Passed in such a context, the FAA was meant mainly to reduce the costs of dispute resolution for businesses that sued each other.

This changed in 1984 when the Court handed down Southland Corp. v. Keating. [3] In Southland, the Court ruled that the FAA was “a national policy favoring arbitration,”[4] putting into effect unsubstantiated dictum from a case it had decided a year before.[5] Southland was the first case to rule that the FAA preempted a state policy against certain types of arbitration. It was also the first case to hint, contrary to then-established jurisprudence,[6] that violations of rights created by statutes were just as arbitrable as arguments about the contract.[7] It was the first case to uphold an arbitration provision in a contract of adhesion (a contract in which a consumer has no bargaining power).

Although there were many chances to turn back, Southland turned out to be the first step of a unidirectional trail towards the pro-arbitration stance of the contemporary Court. Over the past thirty years, the Supreme Court has declared that arbitration provisions must be enforced regardless[8] of whether the claim to be argued is an antitrust claim,[9] an employment discrimination claim,[10] a wrongful death claim,[11] or even a claim that the contract itself is invalid.[12] Arbitration clauses must be enforced whether the claim is in state or federal court[13] and whether or not the claimant had any reason to suspect that she was agreeing to such a broadly exculpatory provision.[14] And with Italian Colors the court has finally declared that it doesn’t matter if arbitration is even an effective way of resolving the dispute as long as the parties have “chosen” to resolve their dispute that way.

Justice Scalia’s opinion—building on his prior ruling in AT&T Mobility LLC v. Concepcion[15]—declared that, even if the suit would be prohibitively expensive to litigate without the benefit of class action, if the contract provides for one-to-one arbitration then one-to-one arbitration it shall be. Plaintiffs in Italian Colors were a group of merchants that used American Express’s charge card machines. They were suing American Express for taking advantage of a monopoly position to charge exorbitant fees, in violation of Sherman Antitrust Act § 1.[16] The cost of an expert economic analysis required in any modern antitrust case would have run upwards of $1 million, while “maximum recovery for an individual plaintiff would be $12,850, or $38,549 when trebled.”[17] Although the Second Circuit ruled that class arbitration would be appropriate and the class waiver was unenforceable,[18] the Supreme Court was not swayed.

The Court rationalizes its expansive pro-arbitration position in this case and those that preceded it through a trio of flimsy fictions. First, it repeatedly relies on the purported (and aforementioned) “liberal policy favoring arbitration” despite the fact that scholars and multiple subsequent Justices have rejected this interpretation of legislative intent.[19] Second, it recites the platitudes of “freedom of contract” even when faced with situations in which one party obviously had no say whatsoever in the contract’s terms.[20] Third, it argues that arbitration agreements reduce costs for businesses, which then pass the savings on to the consumer or employee. Setting aside the fact that this is an unsubstantiated empirical claim, it assumes a falsity: that consumers are actively choosing between lower price and the ability to sue if injured.[21]

As the Court’s willingness to enforce exculpatory provisions through flights of fancy has increased, the role of these provisions has proliferated and metamorphosed. The FAA has become an instrument for reducing or eliminating the liability of big corporations, yet it has nearly ceased to be a means for businesses to work out disputes amongst themselves. In a 2007 survey of the telecommunications and financial services industries, a study found arbitration clauses in over 90% of employment contracts and in over 75% of consumer contracts, but in only 10% of contracts negotiated between businesses.[22]

If there is to be any hope of escape, it will not be through the Court. Enough precedent now exists proclaiming the comprehensive power of the FAA that legislative intervention is needed.[23] A bill called the Arbitration Fairness Act has already been introduced several times over the past few years, but has gotten nowhere.[24] As Professor Amalia Kessler of Stanford Law explained, this proposed bill “is no panacea, but it’s a start.”[25] Those of us who care about the judicial vindication of rights and about checking the power of corporations should get behind it as a first step out of the rabbit hole.[26]

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[1] 133 S. Ct. 2304 (2013).

[2] See Hal Neth, The Federal Arbitration Act and How it Grew, 13 (May 2011) (unpublished Master’s thesis, University of Oregon), available at http://adr.uoregon.edu/files/2012/01/federalarbitrationact.pdf. Note that the FAA was passed before the 1938 Federal Rules of Civil Procedure.

[3] 465 U.S. 1 (1984).

[4] Southland, 465 U.S at 10.

[5] Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).

[6] See Wilko v. Swan, 346 U.S. 427, 435 (1953).

[7] The statute involved in this case was the California Franchise Investment Law. The Court was not ruling on whether the rights created by the statute could be resolved in arbitration (the question was whether the fact that the statute seemed to preclude arbitration was preempted by the FAA); nevertheless its ruling suggested that the preference for arbitration stated in the FAA was more important than the potential for the arbitrator to not properly vindicate statutory rights (which was the Court’s concern in Wilko). Southland, 465 U.S. at 16.

[8] Unless the statute is a federal statute creating the cause of action that explicitly precludes arbitration, see CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012), and almost no statutes do. After all, Congress didn’t know it had to put this exception into statutes until the Supreme Court told it so.

[9] See, e.g., Italian Colors, 133 S. Ct. 2304 (2013); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).

[10] E.g. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).

[11] E.g. Marmet Health Care Ctr., Inc. v. Brown, 132 S.Ct. 1201 (2012).

[12] E.g. Buckeye Check Cashing v. Cardegna, 546 U.S. 440 (2006).

[13] Cf. Southland v. Keating, 465 U.S. 1 (1984); Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265 (1995).

[14] Most people don’t. Even Richard Posner has admitted to not reading most contracts of adhesion he enters into, and he is on notice (if anybody is) that such contracts might contain arbitration. David Lat, Do Lawyers Actually Read Boilerplate Contracts? Above the Law (June 22, 2010) http://abovethelaw.com/2010/06/do-lawyers-actaully-read-boilerplate-contracts-judge-richard-posner-doesnt-do-you/. The preclusion of unconscionability claims was the upshot of AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), which built on a string of cases represented most recently by Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (2010).

[15] 131 S. Ct. 1740 (2011) (ruling that a California rule compelling class arbitration was preempted by the FAA).

[16] Italian Colors, supra note 1 at 423.

[17] Id.

[18] In re Am. Express Merchs.’ Litig., 554 F.3d 300 (2d Cir. 2009).

[19] E.g. Christopher Drahozal, In Defense of Southland: Reexamining the Legislative History of the Federal Arbitration Act, 78 Notre Dame L. Rev. 101, 103 (2002) (“the majority opinion in Southland, written by Chief Justice Burger, is widely held to be an illegitimate exercise in judicial lawmaking, flatly inconsistent with congressional intent in enacting the FAA.”); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 284 (1995) (Scalia, J., dissenting (“Southland clearly misconstrued the Federal Arbitration Act.”). But note that scholarly opinion is not unanimous: Drahozal himself rejects this majority and the majority of Justices in Allied-Bruce upheld Southland (although not without reluctance). See also Hal Neth, The Federal Arbitration Act and How it Grew, 46-47 (2011) (Master’s thesis, University of Oregon).

[20] Margaret Jane Radin, in Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law (2013), calls this the “gerrymandering of the word ‘agreement’ . . . In this process, consent is degraded to assent, then to fictional or constructive or hypothetical assent, and then further to mere notice . . . until finally we are left with only a fictional or constructive notice of terms.” Id. at 30. The traditional law and economics response to this charge is that consumers can still choose another company’s contract. But this is at best partially true in a world where well over three-quarters of the contracts on offer contain arbitration agreements. See infra note 22 and accompanying text.

[21] Professor Stephen Ware of the University of Kansas School of Law argues that the lack of empirical evidence should, on balance, lead one to believe that savings are passed on to the consumer, since one should default to the predictions of economic theory when faced with a lack of evidence. Stephen J. Ware, The Case for Enforcing Adhesive Arbitration Agreements—with Particular Consideration of Class Actions and Arbitration Fees, 5 J. Am. Arb. L. 251, 256 (2006), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=791807 (“[I]t is inconsistent with basic economics to question the existence of the price reduction.”). This is the sort of reasoning only permissible in law and economics circles.

[22] Theodore Eisenberg, Geoffrey P. Miller, and Emily Sherwin, Arbitration’s Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts, 41 U. Mich. J. L. Reform, 871, 883 (2008). Given that, since 2007, Rent-a-Center, Concepcion, and Italian Colors were decided, it seems likely that these results likely understate the prevalence of arbitration clauses in the contemporary world.

[23] Myriam Gilles and Gary B. Friedman argue that Attorneys General should fill the void that will inevitably be left by the ability of corporations to escape class litigation or arbitration. After Class: Aggregate Litigation in the Wake of AT&T Mobility v. Concepcion, 79 U. Chi. L. Rev. 623 (2012). I set aside this possibility as outside the scope of this short blog post.

[24] Arbitration Fairness Act of 2013, H.R. 1844, 113^th Cong. (2013); see H.R. 1844, GovTrack.us (last visited Sept. 14, 2013), http://www.govtrack.us/congress/bills/113/hr1844.

[25] Amalia D. Kessler, Stuck in Arbitration, N.Y. Times (Mar. 6 2012), http://www.nytimes.com/2012/03/07/opinion/stuck-in-arbitration.html.

[26] One reason the AFA is no panacea is that arbitration is not the only sort of clause that businesses sneak into contracts to get out of liability. These other clauses are beyond the scope of this article, but Radin, supra note 20, provides a useful overview of the most egregious.

Deportation, Moncrieffe and the Rights of Immigrants

By Jesse Rockoff & Leila Kang

Credit: Torben Bjørn Hansen
Creative Commons License

On the morning of October 10, 2012, we arrived at the front steps of the Supreme Court. Waiting for the doors to open, we formed a small circle with our colleagues in the Immigrant Rights Clinic and our professor Alina Das. Surrounding us were crowds of journalists and activists—but hardly any of them were interested in the argument that we were scheduled to attend. Most of them were there to show their support, in one way or another, for the argument in Fisher v. University of Texas at Austin.[1] The great majority were unaware that Fisher was being preceded by oral argument for Moncrieffe v. Holder,[2] a case that would affect thousands of immigrants facing deportation from the U.S. due to past criminal convictions. After many months of anxious waiting, immigrants’ rights advocates around the country breathed a sigh of relief after reading the Moncrieffe opinion on April 23rd.

At base, Moncrieffe is about a superficially dry question of statutory construction: namely, whether Congress intended the social sharing of a small amount of marijuana to presumptively qualify as an “aggravated felony” for immigration purposes. The result in Moncrieffe, however, signals a welcome recognition that the immigration system treats immigrants with criminal convictions out of all proportion with the acts for which they were originally punished.

To understand the import of Moncrieffe, one must be acquainted with the “categorical approach,” the main interpretive tool for assessing the criminal convictions of noncitizens. For nearly a hundred years,[3] the categorical approach has served to focus immigration adjudications solely on the type of convictions on a noncitizen’s record, rather than the actual conduct that led to these convictions. The primary purpose of the categorical approach is to promote administrability and fairness in civil immigration proceedings, which lack the procedural safeguards of the criminal process.[4] The categorical approach also helps to promote predictability for criminal attorneys seeking to properly advise noncitizens of the consequences of potential criminal dispositions and pleas, as required by the Supreme Court under Padilla v. Kentucky.[5] While the bright-line rules of the categorical approach may sometimes cut against noncitizens, immigration advocates generally seem to be of the opinion that the categorical approach does more good than harm.

 The last several years have seen a series of efforts by the Department of Homeland Security (DHS), with varying degrees of success, to erode the categorical approach.[6] Despite the additional work created for massively backlogged immigration courts in delving into the circumstances of noncitizens’ sometimes ancient criminal convictions, the government has attempted to undermine the categorical approach not only as a way to gather more information on the noncitizens it seeks to deport, but also as a way of imposing an insurmountable burden on respondents. The government’s position, at least until Moncrieffe, was that it could charge respondents with “evidence indicat[ing]” an aggravated felony and then force noncitizens to produce evidence rebutting this presumptive conduct on pain of deportation.[7] This position became the law in three circuits.[8] Essentially, the government’s solution to administrative difficulties caused by its rejection of the categorical approach was to shift the necessary record-building to respondents,[9] many of whom were detained, many of whom were without legal representation, and many of whose convictions occurred decades ago, with the necessary records long since lost or destroyed. The result was a government end run around any reasonable conception of basic fairness for immigrants with criminal convictions.

The detrimental impact of this erosion of the categorical approach became particularly acute for immigrants who were convicted of minor misdemeanor marijuana offenses, like Adrian Moncrieffe. Moncrieffe is a Jamaican national who had been a lawful permanent of the resident (“LPR” or “green card” holder) of the United States since 1984, when he was three years old.[10] During a traffic stop in 2007, police found 1.3 grams of marijuana in his car and he pleaded guilty to possession with intent to distribute, in violation of a Georgia statute.[11] As a first-time offender, Moncrieffe received no jail sentence, but instead was required to complete five years of probation, at the end of which his charge would be expunged.[12] While this plea proceeding may have seemed relatively innocuous to Moncrieffe and his criminal defense attorney at the time, it became the reason for his deportation proceeding: the Department of Homeland Security argued that his conviction was for a drug trafficking aggravated felony, and that Moncrieffe was removable from the United States and ineligible to seek any form of relief from deportation.[13]

Many others before Moncrieffe were unjustly treated as “drug trafficking aggravated felons,” as discussed at length in an amicus brief filed on behalf of immigration law professors[14]:

• Tam Duy Pham was a Vietnamese refugee who became an LPR in 2001. He pleaded guilty to conspiracy to commit a misdemeanor in violation of a Virginia statute that included the giving of marijuana, received a 12-month suspended sentence, and was placed on probation. Seven years after his guilty plea, he was removed from the United States for being a drug trafficking aggravated felon.[15]

• Belito Garcia arrived as an LPR in 1982, fleeing persecution and civil war in Angola. His parents, wife, and son were all U.S. citizens. Fourteen years after obtaining his green card, Mr. Garcia pled guilty to two counts of possession with intent to distribute marijuana in violation of Pennsylvania law. He also did not serve a jail sentence but received one year of probation. Even though he faced persecution if returned to Angola, he was prevented from seeking asylum.[16]

In Moncrieffe, the Supreme Court unequivocally held that such convictions do not necessarily constitute aggravated felonies.[17] This is because these convictions, without more, now definitively cannot establish a presumption that the underlying conduct corresponds to ‘drug trafficking’ as defined by the federal Controlled Substances Act.[18] The Court thereby reaffirmed the correct application of the categorical approach: when determining whether a particular criminal conviction renders a noncitizen deportable, immigration courts are to presume that it “rested upon [nothing] more than the least of th[e] acts criminalized.”[19] The Court also admonished the government for its continuous attempts to classify low-level drug offenses as “illicit trafficking aggravated felonies,” noting that such an approach “defies the commonsense conception of these terms.”[20] Moreover, the Court stated that “ambiguity in criminal statutes referenced by the INA [Immigration and Nationality Act] must be construed in the noncitizen’s favor”[21]—a rare affirmation of the rule of lenity in the immigration context.

Before Moncrieffe, lawfully residing immigrants could be deported for sharing a small quantity of marijuana without any opportunity to seek relief.[22] Now, thanks to seven members of the Supreme Court, the government may no longer rely exclusively on such conduct as grounds for separating noncitizens from their families and the only country they may have ever really known. However, while the immigrant rights community is savoring the Moncrieffe victory, the immigration system continues to treat noncitizens with criminal convictions in almost unimaginably harsh ways.[23] Litigation is only one of many tools to finally restore some measure of justice and proportionality to individuals who have long since paid their debts to society—our shared society.

Leila and Jesse are currently  2L Staff Editors on the Review of Law and Social Change. Both are representing noncitizens with criminal convictions in the Immigrants Rights Clinic.

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[1] 132 S. Ct. 1536 (2012) (granting certiorari).

[2] No. 11-702, 569 U.S. ___ (Apr. 23, 2013), available at http://www.supremecourt.gov/opinions/12pdf/11-702_9p6b.pdf.

[3] Alina Das, The Immigration Penalties of Criminal Convictions: Resurrecting Categorical Analysis in Immigration Law, 86 N.Y.U. L. Rev. 1669, 1688–1702, 1749–52 (2011). See also Moncrieffe at 6 (citing Das, supra).

[4] Moncrieffe at 15–16 (collecting cases and noting that the categorical approach “promotes judicial and administrative efficiency by precluding the relitigation of past convictions in minitrials conducted long after the fact”).

[5] 559 U.S. 356 (2010).

[6] See, e.g., Nijhawan v. Holder, 557 U.S. 29 (2009); Lanferman, 25 I. & N. Dec. 721 (B.I.A. 2012); Silva-Trevino, 24 I. & N. Dec. 687 (A.G. 2008).

[7] See 8 C.F.R. § 1240.8(d).

[8] See Young v. Holder, 697 F.3d 976 (9th Cir. 2012) (en banc); Salem v. Holder, 647 F.3d 111 (4th Cir. 2011); Garcia v. Holder, 584 F.3d 1288 (10th Cir. 2009). But see Martinez v. Mukasey, 551 F.3d 113 (2d Cir. 2008).

[9] See, e.g., Castro-Rodriguez, 25 I. & N. Dec. 698 (B.I.A. 2012), overruled by Moncrieffe v. Holder, No. 11-702, 569 U.S. ___ (Apr. 23, 2013). Cf. I.N.A. § 240(c)(3)(A) (requiring that the government bear the burden of proving a noncitizen’s removability by clear and convincing evidence).

[10] Moncrieffe at 3.

[11] Id.; Ga. Code Ann. §16-13-30(j)(1) (2007) (“It is unlawful for any person to possess, have under his control, manufacture, deliver, distribute, dispense, administer, purchase, sell, or possess with intent to distribute marijuana.”).

[12] Moncrieffe at 3.

[13] Id. at 3–4.

[14] Brief of Immigration Law Professors as Amici Curiae in Support of Petitioner, Moncrieffe v. Holder, 569 U.S. ___ (2013) (No. 11-702), 2012 WL 2561163 [hereinafter Law Professors]. See also In Upcoming Supreme Court Case, the Immigrant Rights Clinic and the Center for the Administration of Criminal Law Weigh in with Amicus Briefs, N.Y.U. Sch. of L., News, http://ecmappdlv02.law.nyu.edu/nyu_law_website//news/UPCOMING_SUPREME_COURT_CASE_TWO_NYULAW_ENTITIES_WEIGH_IN (last visited May 5, 2013).

[15] Law Professors, supra note 14, at 24–25. See Pham v. Holder, 442 Fed. App’x 62 (4th Cir. 2011).

[16] Law Professors, supra note 14, at 34–35. See Garcia v. Att’y Gen., 462 F.3d 287 (3d Cir. 2006).

[17] Moncrieffe v. Holder, No. 11-702, 569 U.S. ___, slip op. at 1–2, 22 (Apr. 23, 2013).

[18] Id. at 6–9.

[19] Id. at 5 (citing Johnson v. United States, 559 U.S. 133, 137 (2010)) (internal quotation marks omitted).

[20] Id. at 21 (citing Carachuri-Rosendo v. Holder, 130 S. Ct. 2577 (2010)) (internal quotation marks omitted).

[21] Id. at 20–21. See also Fong Haw Tan v. Phelan, 333 U.S. 6 (1948).

[22] As the Court acknowledged in Moncrieffe, the result of the decision is not that Moncrieffe necessarily avoids deportation. His conviction still constitutes a controlled substance violation. At the very least, however, he may apply for cancellation of removal, which allows lawful permanent residents to demonstrate the reasons for why they should not be removed.

[23] See Peter Markowitz, Deportation is Different, 13 U. Penn. J. Const. L. 1299, 1301–03 (2011).