Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES NEWS: Supreme Court denies review of constitutional challenges to FAA, (Dec 7, 2015)

By Greg Hammond, J.D.

A Verizon Wireless customer was denied U.S. Supreme Court review today of a decision by the U.S. Court of Appeals in New York City, determining that the customer’s various constitutional challenges to the Federal Arbitration Act (FAA) were meritless (Katz v. Cellco Partnership, Dkt. 15-542).

The customer sued Cellco Partnership, doing business as Verizon Wireless, on behalf of New York-area wireless telephone subscribers, asserting breach of 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. However, 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 lower court’s decision to deny the customer’s motion for partial summary judgment and to grant Verizon’s motion to compel arbitration. However, the appellate 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 asked: (1) whether the application of the 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 Petitioner. Andrew G. McBride (Wiley, Rein LLP) for Cellco Partnership.

Companies: Cellco Partnership

News: StateUnfairTradePractices NewYorkNews