“This Constitution, and the Laws of the United States which shall be made in pursuance thereof … shall be the supreme law of the land,” the U.S. Constitution reads. It goes on to add that “the judges in every state shall be bound thereby, anything in the constitution or laws of any state to the contrary notwithstanding.”
This is known as the Supremacy Clause. It clearly states that where a valid federal law conflicts with a state law or the provision of a state constitution, federal law takes precedence.
This longstanding principle will be put to the test once again in a Supreme Court case to be argued Tuesday. The plaintiff in DirecTV v. Imburgia is a satellite TV customer who, under her contract with DirecTV, must submit to individual arbitration in her dispute with the company over cancellation fees. At issue is whether that arbitration provision in the contract is binding, or whether Imburgia and others can instead force a class arbitration against the company. California’s supreme court said she could do so, and DirecTV appealed.
As it happens, there is a 90-year-old federal law that governs arbitration questions precisely like this one, and it pre-empts California law. The Supreme Court made that quite clear in a 2011 ruling when it overturned another effort by California to nullify the same law (the Federal Arbitration Act) on more or less the same grounds.
As Ronald Mann put it on SCOTUSBlog, “Most of the justices are likely to see the case as yet another decision by a recalcitrant state court unwilling to accept the Supreme Court’s preference for arbitration.”
You might wonder how it is that a case like this reaches the Supreme Court at all — and as Mann hints, at least five justices will probably be asking themselves the same question. It all boils down to efforts by trial lawyers to expand the universe of cases that can become class actions and sluice money out of the productive sector of the economy into their bank accounts.
Lawyers who work on contingency fees understand that there are only so many opportunities to represent someone who can plausibly claim to have been wronged to the tune of millions of dollars. But if tens of thousands of plaintiffs have been wronged to the tune of $100 apiece, there’s potentially a jackpot for an enterprising trial lawyer. In recent years, the Supreme Court has raised the bar for bringing class action lawsuits, hence the scramble to find new gold mines.
If states can effectively nullify the Federal Arbitration Act, then trial lawyers can put their money behind politicians in those states and pass laws that make it easier for them to get rich quick. This law is important because contractual arbitration provisions not only keep small cases separate, but also rob them of lucrative opportunities for litigation.
Those lawyers’ boats, vacation homes and state legislatures don’t buy themselves.
