Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES NEWS: High Court asked to review constitutionality of Federal Arbitration Act, (Oct 29, 2015)

By Greg Hammond, J.D.

A Verizon Wireless customer is asking the Supreme Court to review a decision by U.S. Court of Appeals in New York City, finding that his various constitutional challenges to the Federal Arbitration Act (FAA) were meritless and staying the consumer fraud action after arbitration was compelled by the trial court (Katz v. Cellco Partnership, Dkt. 15-542).

The customer sued Cellco Partnership, doing business as Verizon Wireless, on behalf of New York-area Verizon wireless telephone subscribers, asserting contract and consumer fraud claims under New York state law. The consumer fraud claims were based on administrative charges that were allegedly misrepresented as “government related” costs. The customer’s contract with Verizon contained an arbitration clause that invoked the FAA and required the arbitration of disputes. The appellate court affirmed the district court’s decision to deny Katz’s motion for partial summary judgment and grant Verizon’s motion to compel arbitration. However, the court determined that the FAA requires a stay of proceedings when all claims are referred to arbitration and a stay is requested. The consumer’s principal argument—that application of the FAA to compel arbitration of his state law claims violates Article III separation of powers principles and constitutes an impermissible rule of decision—was rejected as meritless.

The petition for review asks: (1) whether the application of the Federal Arbitration Act (“FAA”) to state-law private rights brought within the jurisdiction of the federal courts violates Article III of the United States Constitution; and (2) whether Congress’ adoption of the alternative scheme of adjudication under the FAA combined with the federal courts’ enforcement of the statute as mandated by Congress constitutes “state action.”

Attorneys: William R. Weinstein for Cellco Partnership.

Companies: Cellco Partnership

News: StateUnfairTradePractices