Outsourcing Justice

District Court Certifies for Appeal Whether FAA is Constitutional

In Youssofi v. Credit One Financial, No. 15-CV-1764-AJB-RBB (S.D. Cal. Oct. 28, 2016), a federal district court granted the plaintiff’s motion to certify for immediate, interlocutory appeal whether application of the FAA, without a heightened, knowing, voluntary waiver standard, violates the plaintiff’s First Amendment right to petition a court and Seventh Amendment right to a jury trial.  (Click here for a copy of the decision.)

The momentum in favor of limiting the FAA has been picking up steam in recent months, especially in administrative agencies like the CFPB, FCC, and Centers for Medicare & Medicaid Services, and because of high-profile cases like the Wells Fargo fraud involving churning of bank accounts and the Gretchen Carlson sexual harassment case.  As a result of Supreme Court decisions spanning back to the 1980s, the FAA has an extremely broad, expansive scope and trumps (pun intended – I’ll never view the word trump in a positive light again) state law on an unconstitutional level that rivals the nefarious Swift case from the 1800s.  But the pendulum finally appears to be swinging in the opposite direction to limit this broad scope.  Maybe this case will become a part of that limiting of the FAA.  In the legislative history of the statute, it is clear that the drafters never intended the FAA to apply to take-it-or-leave it consumer or employment contracts, and so arguably, consumers and employees cannot be forced to arbitrate and give up their constitutional right to a jury unless the waiver was knowing and voluntary.

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