McGill v. Citibank, N.A.

A waiver of the right to seek injunctive relief in court to prevent violations of California’s Consumer Legal Remedies Act, Unfair Competition Law, or False Advertising Law is unenforceable under California law, and the Federal Arbitration Act does not preempt California law in that respect.  This decision reaffirms Broughton v. Cigna Healthplan of California (1999) 21 Cal.4th 1066 and Cruz v. Pacificare Health Systems, Inc. (2003) 30 Cal.4th 303, holding that a waiver of the right to seek injunctive relief in court to prevent violations of the CLRA, UCL or FAL is unenforceable under California law, and that the FAA does not preempt California law in that respect.  Although California courts have historically recognized a distinction between private injunctions and injunctions seeking relief on behalf of the public, this decision holds that provision in an arbitration agreement purporting to waive the right to seek public injunctive relief is contrary to public policy and is thus unenforceable under California law.  Proposition 64 enhanced the standing requirements under the Unfair Competition Law and False Advertising Law and required class certification for so-called “representative actions.” Nevertheless, the latter rule did not preclude private individuals from filing representative actions seeking public injunctive relief without class certification.  The Federal Arbitration Act does not preempt California law’s invalidation of a waiver of the right to seek public injunctive relief, or require enforcement of such a waiver in connection with an otherwise enforceable arbitration clause. The landmark decision in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, upholding such a waiver in the case of class actions, is distinguishable because the right to a class action is procedural while the right to seek public injunctive relief is substantive.

California Supreme Court (Chin, J.); April 6, 2017; 2017 WL 1279700

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