On Monday, the Court handed down DirectTV v. Imburgia, which now succeeds AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011) as the latest substantive decision from the Court on Federal Arbitration Act (FAA) preemption. The case is interesting for a number of reasons, not least of which is that it makes it increasingly clear that the core logic of FAA preemption is one of antidiscrimination.
DirecTV held that the California Court of Appeal’s construction of a condition precedent in the parties’ arbitration agreement was preempted by the FAA. Writing for the majority, Justice Breyer clearly believed that the California appellate court had gotten its own state’s law of contract construction wrong. But he conceded—as he had to—that a federal court cannot sit in judgment of a state court decision on state law. So it was not enough simply to say that the decision was irrational and just plain wrong (which it was in my opinion as a contracts professor). There had to be a reason why the decision conflicted with the FAA.
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