Mortensen v. Bresnan Communications, LLC

AT&T Mobility LLC v. Concepcion further limits the Federal Arbitration Act savings clause and therefore preempts Montana reasonable expectations/fundamental rights rules.

The panel considered a class action lawsuit alleging that Bresnan Communications violated the Electronic Communications Privacy Act, 18 U.S.C. §§2520-21; the Computer Fraud and Abuse Act, 18 U.S.C. § 1030; and Montana state law for “invasion of privacy and trespass to chattels in connection with targeted advertising.” At issue was a Bresnan customer service provider agreement that was provided to all Bresnan customers, including the customers in Montana who filed this lawsuit. The service agreement contained a New York choice-of-law clause and an arbitration clause. The customers argued that they had never given consent to the contents of the agreement because the arbitration and choice-of-law notices were misleading. The district court refused to enforce either the choice-of-law or the arbitration clauses because “the Montana reasonable expectations/fundamental rights rule survived [AT&T Mobility LLC v.Concepcion], served as the fundamental public policy supporting the Montana law…under Montana choice-of-law rules, and required the court to deny arbitration.” The Ninth Circuit disagreed. The panel held that Concepcion instead limits the savings clause of the Federal Arbitration Act (“FAA”) so that the FAA displaces “[a]ny general state-law contract defense, based in unconscionability or otherwise, that has a disproportionate effect on arbitration….” The panel explained that the Supreme Court has held in the past that “the FAA’s purpose is to give preference (instead of mere equality) to arbitration provisions.” Concepcion reinforces this precedent and forbids states from discriminating against arbitration by limiting the savings clause. Furthermore, the panel held that the district court should have applied New York law instead of Montana law because “a state’s preempted public policy is an impermissible basis on which to reject the parties’ choice-of-law selection.” VACATED and REMANDED.