On January 17, 2020, the Ninth Circuit denied the defendants’ petitions for panel and en banc rehearing in the Blair v. Rent a Center appeals, setting the stage for possible U.S. Supreme Court review of the California Supreme Court’s McGill Rule.  Under the McGill Rule, an arbitration agreement that precludes a consumer from pursuing claims for “public” injunctive relief in court or in arbitration is unenforceable under California law.

The defendants in Blair asked the Ninth Circuit to overturn panel decisions holding that the Federal Arbitration Act (FAA) does not preempt the McGill Rule.  They contended that the McGill Rule is preempted because the FAA protects the right of parties to choose individualized resolution of their claims, notwithstanding contrary state law, and because the McGill Rule is not a ground “at law or in equity for the revocation of any contract” (the FAA’s savings clause), but instead impermissibly singles out arbitration for special treatment.

The defendants will have 90 days to file petitions for certiorari with the U.S. Supreme Court and, in the interim, can ask the Ninth Circuit to stay its mandates pending the filing of such petitions.  The McGill Rule, and its interpretation by the Ninth Circuit in the Blair cases, poses a direct challenge to the U.S. Supreme Court’s 2011 landmark opinion in ATT Mobility, LLC v. Concepcion.  In Concepcion, the Court held that class action waivers in consumer arbitration agreements are valid under the FAA, notwithstanding California law holding such waivers to be invalid and against public policy.

We have been reporting on the Blair appeals since the original panel decisions and will update you again in the near future.