Supreme Court Update: DIRECTV, Inc. v. Imburgia (14-462), White v. Wheeler 14-1372) and Order List

December 18, 2015 Supreme Court Update

Greetings, Court Fans!

We're back with the first contested decision of the term (as well as a very-much uncontested one).

First, in DIRECTV, Inc. v. Imburgia (14-462), the Court addressed for the third time in five years the latest fad in Federal Arbitration Act jurisprudence: whether to enforce a waiver of class arbitration in a consumer contract. In a 6-3 decision, the Court reversed a California court's refusal to enforce the waiver. In so doing, the Court disrupted the putative state-court class action and required the two plaintiffs to individually arbitrate their claims that DIRECTV unlawfully imposed early-termination fees.

Imburgia is a sequel to AT&T Mobility v. Concepcion (2011), a 5-4 decision in 2011 that applied FAA preemption to strike down a California law prohibiting consumer class-arbitration waivers as unconscionable. While that holding would seem to supply the answer to this case, which was pending when Concepcion was decided, the California trial and appellate courts found a unique way around the FAA. The consumer contract used by DIRECTV required binding arbitration to resolve disputes but then voided that requirement if the "law of your state" would not enforce a waiver of class arbitration. When the California plaintiffs signed up for their satellite TV service, the "law of [their] state" prohibited the class-arbitration waiver, so they were free to bring their class action in court. After Concepcion, DIRECTV sought to compel arbitration because it could now avoid class arbitration. But the state courts interpreted the "law of your state" as evidencing the parties' contractual intent to apply state law without regard to FAA preemption—meaning that DIRECTV ostensibly had a meeting of the minds with California customers to apply that state's dislike of class arbitration waivers, making the entire arbitration clause void under the contract's own terms.

Justice Breyer, writing for the Court, could not stomach that end run around Concepcion (even though he had written Concepcion's dissent). He was joined by the Chief and by Justices Scalia, Kennedy, Alito, and Kagan (another Concepcion dissenter). He held his nose and conceded that the state courts have the last word on the meaning of the contract, but he then questioned whether the steps that the state courts took to construe the contract were themselves preempted by the FAA as evidencing hostility toward arbitration. By construing the contractual phrase "law of your state" as including even invalid state law, the state courts applied an arbitration-specific means of analyzing the parties' contractual intent that could not be found in any other area of the law. Breyer could find no precedent construing the term "state law" in a contract as incorporating, for example, state laws preempted by "federal labor law, federal pension law, or federal civil rights law." The FAA preempts state laws that target arbitration agreements on grounds that don't apply to contracts generally, and Breyer found the state courts to have tilted their application of canons of contract construction because the contract term related to arbitration. So, as a matter of federal law, the contract cannot be construed as intending to abide by state laws preempted by the FAA, and Concepcion allows arbitration to proceed without class procedures.

Justice Thomas dissented, although not because of any disagreement about Concepcion (where he was in the majority). Unlike Concepcion, which addressed a claim originally brought in federal court, this case was brought in state court—and Thomas held to his longstanding, unwavering view that the FAA applies only to federal courts and never requires state courts to enforce agreements to arbitrate.

Two of Concepcion's four dissenters also dissented here, with Justice Ginsburg penning the opinion joined by Justice Sotomayor. Justice Ginsburg acknowledged the Court's precedent, but drew a line in the sand, refusing to take any "further step to disarm consumers, leaving them without effective access to justice." She noted how "routine" it now is "for powerful economic enterprises to write into their form contracts with consumers and employees no-class-action arbitration clauses." Because she would construe the contract against the drafter, and because she thought the phrase "law of your state" is ambiguous, she supported the California courts' construction of the contract as incorporating the law as it stood in that state before Concepcion, invalidating waivers of class procedures in arbitration.

Concepcion and no-class clauses may still have the Court divided, but if there's one thing that can bring the Nine together, it's is smacking down the Sixth Circuit in habeas cases. This time, in White v. Wheeler (14-1372), the Court unanimously called out the Sixth for overturning a death sentence affirmed by the Kentucky Supreme Court on the ground that the trial court had improperly excluded a prospective juror who could not give adequate assurance of impartiality with respect to the death penalty.

During voir dire at Roger Wheeler's murder trial, a juror gave somewhat inconsistent answers to lawyers' questions on whether he could consider all penalty options in the murder trial, and the court granted the prosecution's contested motion to strike him for cause. Wheeler was convicted and sentenced to death, and the Kentucky Supreme Court affirmed the conviction and sentence, holding with respect to the juror strike that the trial judge appropriately struck for cause all jurors who categorically could not support the death penalty. The District Court for the Western District of Kentucky dismissed Wheeler's habeas petition, but a divided Sixth Circuit panel reversed and granted habeas relief, holding that excluding the juror was an unreasonable application of Witherspoon v. Illinois (1968) and its progeny.

But, in fact, it wasn't, held the Supreme Court in a per curiam summary reversal. The Sixth Circuit failed to apply the deference due to state court decisions under the Antiterrorism and Effective Death Penalty Act (AEDPA), which allows a federal court to grant habeas relief to a state prisoner only where the state court's decision "was contrary to, or involved an unreasonable application of, clearly established federal law, as determined by the Supreme Court of the United States." Here, the Sixth Circuit held that the Kentucky Supreme Court misapplied Witherspoon and its progeny by striking the juror based on ambiguous responses, rather than clear statements of partiality with respect to the death penalty. In so doing, the Sixth circuit "failed to ask the critical question: Was the Kentucky Supreme Court's decision to affirm the excusal of [the juror] for cause ‘so lacking in justification that there was an error well understood and comprehended in existing law beyond any possibility for fair-minded disagreement?" Because the juror at one point stated that he was "not absolutely certain whether [he] could realistically consider" the death penalty, there was a reasonable basis for the trial judge to conclude that the juror was unable to give the death penalty fair consideration. The trial judge's decision to strike him therefore did not violate clearly established law, nor did the Kentucky Supreme Court's decision affirming it.

Though the Supreme Court is not a court of error correction, it seems to find it "necessary to reverse the Court of Appeals by . . . summary disposition" rather often in the habeas context. In this instance, aside from knocking the Sixth Circuit around, it appears that the Justices are trying to establish, through repetition, that a State court decision is only contrary to clearly established law if it is "so lacking in justification that there was an error well understood and comprehended in existing law beyond any possibility for fair-minded disagreement." That formulation—which may sounds a bit more stringent than the typical "clearly established law" standard—was first iterated in Harrington v. Richter in 2011, repeated in White v. Woodall last year, and reiterated three more times in Monday's per curiam decision. We expect to see it again the next time the Sixth Circuit is summarily reversed.

There was also one new cert grant in yesterday's order list: United States v. Bryant (15-420), an Indian law case, which asks whether it violates the Constitution to rely on an otherwise valid, uncounseled tribal-court conviction to prove that a defendant has at least two prior domestic-violence convictions in "Federal, State, or Indian tribal court proceedings."

That should just about round out Calendar Year 2015, but we will be back in 2016 with the latest from October Term 2015. Happy Holidays (those past and still to come) to all!