The California Supreme Court is once again reviewing consumer credit card arbitration agreements.
In December 2014, the California Court of Appeal held in McGill v. Citibank, N.A. that California’s law against arbitrating claims for public injunctive relief under the Unfair Competition Law, the Consumer Legal Remedies Act and the False Advertising Law was preempted by the Federal Arbitration Act (FAA). The appellate court declared that “the FAApreempts all state-law rules that prohibit arbitration of a particular type of claim because an outright ban, no matter how laudable the purpose, interferes with the FAA’s objective of enforcing arbitration agreements according to their terms.” Thus, the appellate court found in Citibank’s favor that arbitration agreements are enforceable even when they strip California credit card holders of the right to public injunctive relief. Now the California Supreme Court is reviewing that lower court ruling.
The high court heard oral argument on the matter on December 7, 2016. Justice Goodwin H. Liu pointedly noted, in his questioning of counsel for Citibank, that the bank cannot take away the statutory rights of California credit card holders simply because the bank inserts such a relinquishment in an arbitration agreement, as opposed to some other agreement. Perhaps as a sign of things to come, Justice Liu said it doesn’t matter whether the bank takes away these rights in an arbitration agreement, some other provision, or even an independent agreement.
Come back for further posts on McGill v. Citibank, N.A.