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Consumer Arbitration Agreements: 3.4.1 General

The Federal Arbitration Act (FAA) sets out a number of procedural requirements relating to federal court decisions as to the enforceability of arbitration requirements. For example, sections 16(b)(1) and 16(b)(2) of the Act prohibit appeals of most interlocutory orders directing arbitration to proceed or staying litigation.118 FAA section 16(a)(1)(B) permits immediate appeals of orders denying motions to compel arbitration.

Consumer Arbitration Agreements: 3.5.1 The “Market Participant” Exception

Notwithstanding the Federal Arbitration Act (FAA), states may act pursuant to their “market participant” powers to require state contracting entities, as a condition of their state contracts, to agree not to enforce arbitration clauses, including in contracts of adhesion with consumers, employees, and investors.139 The FAA certainly does not prevent a state from restricting its own ability to enter into an arbitration agreement as a participant in a transaction with a private commercial actor.140

Consumer Arbitration Agreements: 3.5.2 When State Law Allows a Private Party to Sue on Behalf of the State

Even though victimized consumers or employees have signed arbitration agreements, the state is not bound by those agreements and can seek relief for those individuals in court.145 Similarly, an arbitration requirement does not apply when a private individual bound by an arbitration clause brings an action, pursuant to state law, on behalf of the state and not on their own behalf. Even when an individual has been injured, as long as the relief goes to the state, the arbitration clause does not apply.

Consumer Arbitration Agreements: 3.5.3.1 General

The FAA does not preempt state statutes limiting the enforceability of arbitration agreements found in insurance contracts. The federal McCarran-Ferguson Act prohibits federal regulation of insurance practices to the extent that such regulations would invalidate, impair, or supersede state law enacted for the purpose of regulating the business of insurance, unless the federal law explicitly relates to the business of insurance.153

Consumer Arbitration Agreements: 3.5.3.2 Was the State Law Intended to Regulate Insurance?

McCarran-Ferguson Act reverse preemption does not apply when a state statute does not apply to insurance.158 But a number of state statutes of general application limit the enforceability of arbitration agreements, and apply to insurance, but do not specifically mention insurance.159 Are such statutes enacted for the purpose of regulating insurance, thereby triggering application of the McCarran-Ferguson Act?160

Consumer Arbitration Agreements: 3.5.4.0 FAA Section 2 Exemption When Dispute Does Not Arise Out of Contract or Transaction

FAA section 2 applies to a “written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction.”194 The United States Supreme Court opined on this “arising out of” language in a footnote to its 2022 opinion in Viking River Cruises, Inc. v.

Consumer Arbitration Agreements: 3.5.4.1a.2 Court determines whether exemption applies

The Supreme Court has clearly held that the applicability of the section 1 exemption must be determined as a threshold matter by a court, not an arbitrator, before any arbitration is ordered—regardless of any delegation clause that purports to delegate such issues to the arbitrator.216 Because if the FAA does not apply to a contract of employment, the court has no authority or power to order arbitration under the FAA.

Consumer Arbitration Agreements: 3.5.4.1a.6 Discovery in FAA section 1 exemption cases

Some courts have held that when the section 1 exemption cannot be decided purely based on the facts alleged in the complaint, discovery is necessary to help determine if a class of workers is, in fact, engaged in interstate commerce.234 When such discovery is permitted, courts have recognized that motions to compel arbitration should be held in abeyance until that discovery is complete.235

Consumer Arbitration Agreements: 3.5.5 When Parties Contract to Have State Law Displace the FAA

The FAA’s application, particularly to rules of procedure, can also be limited by the terms of a contract that provides that state law displaces the FAA.249 As described below, the question often will be whether language in a contract selecting state law should be interpreted as displacing the FAA, and whether that displacement applies to the arbitration agreement’s enforceability or only to arbitration procedure.

Repossessions: 2.2.3a The 2022 UCC Amendments

The 2022 UCC amendments focus on providing rules for commercial transactions involving virtual currencies, distributed ledger technologies (including blockchain), artificial intelligence, and other technological developments. The amendments add a new Article 12 addressing certain types of digital assets defined as “Controllable Electronic Records” (CERs). Extensive changes are made throughout the rest of the UCC Articles to conform to the new Article 12 rules.

Repossessions: A.1 Introduction

This appendix reprints the parts of the Uniform Commercial Code (UCC) text and official comments most often consulted in consumer repossession cases. The UCC is prepared by the American Law Institute (ALI) and the Uniform Law Commission (formerly the National Conference of Commissioners on Uniform State Laws (NCCUSL)). These selected provisions are reprinted with permission.1 Where text or comments have been omitted in this appendix, that omission is marked by three asterisks.

Fair Debt Collection: 9.2.3 Validation Notice Where Consumer Is Deceased

The Official Interpretations to Regulation F (effective November 30, 2021) provide that if the debt collector knows or should know that the consumer is deceased, and if the debt collector has not previously provided the validation information to the deceased consumer, then a person who is authorized to act on behalf of the deceased consumer’s estate operates as the consumer for purposes of the validation information requirements.49 In the initial communication, or within five days, the validation information