June 24, 2013 Articles

Ninth Circuit Retreats from Complete Destruction of Broughton-Cruz Rule

By Sheila J. Carpenter

In AT&T Mobility LLC v. Concepcion, 563 U.S. ___, 131 S.Ct. 1740, 1745 (2011) (Concepcion), the Supreme Court struck down the "Discover Bank rule," California's judicially crafted prohibition of class action waivers in arbitration agreements. See Discover Bank v. Superior Court, 36 Cal.4th 148, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005). Concepcion also brought into question the validity of California's "Broughton-Cruz rule," another judicially crafted doctrine allowing plaintiffs to avoid arbitration in cases involving claims for relief in the form of a "public injunction." See Broughton v. Cigna Healthplans of California., 21 Cal. 4th 1066, 90 Cal.Rptr.2d 334, 988 P.2d 67 (Cal. 1998 and Cruz v. PacifiCare Health Systems, Inc., 30 Cal.4th 303, 133 Cal.Rptr.2d 58, 66 P.3d 1157 (Cal. 2003).

In a decision issued April 11, 2013, the Ninth Circuit, sitting en banc, declined the opportunity to settle the question of whether seeking a "public injunction" can allow a party to avoid an arbitration agreement, opining that it need not reach the validity of Broughton-Cruz because it was able to compel arbitration on other grounds. Kilgore v. KeyBank, ___ F.3d ___, 2013 WL 1458876 (9th Cir. 2013) (Kilgore II). Kilgore II grew out of the panel decision in Kilgore v KeyBank, N.A., 673 F.3d947 (9th Cir. 2012) (Kilgore I), which had declared the Broughton-Cruz rule voided by the Supreme Court's decision in Concepcion. (None of the panel judges sat en banc.) (I addressed Kilgore I at length in "The FAA Dictates the Supremacy of Arbitration Agreements . . . Right?"

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