The United States Supreme Court heard oral arguments Tuesday in AT&T Mobility LLC v. Concepcion, 09-893, a class-wide arbitration case from the 9th Circuit. AT&T concerns the applicability of state law unconscionability defenses to class arbitration exclusion clauses in consumer arbitration agreements. In the case, Vincent and Liza Concepcion sued AT&T in California over a charge of approximately $30 in connection with purchasing a cellular telephone. Because the amount was so small, the Concepcions also sued on behalf of other cellular phone purchasers despite that the service agreement the couple signed stated: YOU AND AT&T AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Although AT&T revised its arbitration provisions after the Concepcions filed suit, the case was allowed to proceed in federal court due to questions regarding whether California unconscionability law applied. AT&T maintains that the Federal Arbitration Act pre-empts state contract law. Oral argument before the Court lasted for approximately one hour. According to the Washington Post, The justices’ questions suggested a more limited ruling on the facts of the specific case rather than the broad decision on class-action suits that the 26 groups submitting friend-of-the-court briefs had addressed. The arguments also raised questions about states’ rights. State and federal courts in California agreed with a state law that said businesses’ attempts to ban arbitration class-action suits unfairly tilt the field against consumers. And some justices indicated that the decision should be up to the states. …[Justice] Roberts and Justice Samuel A. Alito Jr. seemed more sympathetic to AT&T. The company argued that lower courts had wrongly held that the ban on class-action arbitration suits was “unconscionable.” Alito said the “heart” of AT&T’s argument was that the traditional test of whether a contract is unconscionable “focuses on unfairness to the party who is before the tribunal. So here it would be unfairness to the Concepcions, rather than unfairness to other members of the class who are not before the court.” A review of the transcript reveals that the recent ruling in Stolt-Nielsen v. AnimalFeeds International, 130 S. Ct. 1758 (2010), weighed heavily on the minds of the Court. During oral argument, Justice Ginsburg asked AT&T’s attorney to focus on Stolt-Nielsen and explain why it was not dispositive in the case at hand. Justices Alito, Scalia and Roberts, who aligned with Justices Thomas and Kennedy to create the majority in Stolt-Nielsen, seemed likely to rule that the class arbitration exclusion clause in the case cannot be rendered unenforceable by the application of California unconscionability law. Meanwhile, Justices Breyer, Sotomayor and Kagan appeared to favor the application of state unconscionability principles, even in a class-wide arbitration context. It will be interesting to see if the Court in this case splits in a similar fashion to Stolt-Nielsen. Once available, audio from yesterday’s argument will be uploaded here. Disputing has discussed the AT&T Mobility case many times in recent months. Blogs about the case can be read here, here and here. Technorati Tags: law, ADR, arbitration

The U. S. Supreme Court will hear AT&T Mobility LLC v. Concepcion, 09-893, a class-wide arbitration case from the 9th Circuit, today. In the case, the Court is asked to consider whether the Federal Arbitration Act (FAA) preempts states from conditioning enforcement of an arbitration agreement on the availability of particular procedures when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims. A preview of the case is available here (from ScotusBlog). Case briefs and documents may be viewed here (from ScotusBlog). Disputing will provide a detailed account of the argument tomorrow. Our previous posts about the case can be read here, here, here, here and here. Technorati Tags: law, ADR, arbitration

by Philip J. Loree Jr. Part I: Introduction Virtually every year the United States Supreme Court’s docket features a number of politically-charged, controversial cases, plus some run-of-the-mill ones that do not inspire much in the way of intensive, ideological debate. Generally the Court’s arbitration-related cases fall into this latter category, though last term saw the Court decide 5-3 and 5-4 along ideological lines two politically controversial ones: Stolt-Nielsen, S.A. v. AnimalFeeds, Inc., 559 U.S. ___, 130 S. Ct. 1758 (2010); and Rent-A-Center West v. Jackson, 561 U.S. ___, 130 S. Ct. 2772 (2010). This Tuesday the Court will hear oral argument in the one Federal-Arbitration-Act-related case it has thus far agreed to hear this term: AT&T Mobility LLC v. Concepcion, No. 09-893. And while AT&T Mobility may be the only Federal Arbitration Act case before the Court this term, it is probably more controversial than Stolt-Nielsen and Rent-A-Center combined. The question before the Court is whether the Federal Arbitration Act preempts California’s Discover Bank rule, which renders a class-action or class-arbitration waiver unenforceable on unconscionability grounds if it: [1]. . . [Is] found in a consumer contract of adhesion [2] in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and [3] when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money. Discover Bank v. Superior Ct., 36 Cal.4th 148, 162-63 (2005). The preemption question before the Supreme Court raises two subissues: (1) whether Section 2 of the Federal Arbitration Act expressly preempts the Discover Bank rule; and (2) whether the Federal Arbitration Act impliedly preempts the rule. The express preemption question turns on the language of Section 2, which declares all arbitration agreements within its scope to be “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Section 2 establishes substantive federal law that expressly preempts all conflicting state law, except for state law that permits “the revocation of any contract” or governs the formation, interpretation, or construction of contracts generally. State laws that discriminate against arbitration agreements are preempted by Section 2. If the Supreme Court finds that the Discover Bank rule is simply an application of California law on unconscionability and exculpatory contracts, then it will hold that the Discover Bank rule is not expressly preempted by Section 2. But if it finds that the Discover Bank rule is not really a rule that applies to all contracts generally, but principally to arbitration agreements, then it will find that the rule discriminates against arbitration agreements in violation of Section 2. But if the Supreme Court finds that the Federal Arbitration Act does not expressly preempt the Discover Bank rule, it must also consider whether the Federal Arbitration Act impliedly preempts the rule. One type of implied preemption is known as “conflict preemption,” which “exists if compliance with both state and federal law is impossible or where state law stands as an obstacle to the accomplishment and execution of the full purposes of Congress.” Shroyer v. New Cingular Wireless Serv., Inc., 498 F.3d 976, 988 (9th Cir. 2007) (citations and quotations omitted). State laws or policies that undermine “the goals and policies of the FAA” are thus preempted by the Act. Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Univ., 489 U.S. 468, 477-78 (1990). If the Court finds that the compliance with both the Federal Arbitration Act and the Discover Bank rule is impossible, or application of the rule would frustrate the purposes and intent of the Federal Arbitration Act, then it will find that the Act impliedly preempts Discover Bank. Our focus in this multi-part guest post will be on the extent to which Stolt-Nielsen bears on the preemption questions before the Court, and in particular, what (if anything) we can glean from the upcoming oral argument about those questions. If you are an arbitration fanatic (thankfully, a rare breed), then you are surely planning to download and read the oral argument transcript as soon as it becomes available (usually about 4:00 p.m. on the day of argument, here). But whether or not you’re planning to do that, reflect on this: Stolt-Nielsen was the product of a sharply divided Court. Associate Justice Samuel J. Alito, Jr. wrote the majority opinion, which was joined in by Chief Justice John G. Roberts, Jr. and Associate Justices Antonin G. Scalia, Anthony M. Kennedy and Clarence Thomas. Associate Justice Ruth Bader Ginsburg, joined by Associate Justices John Paul Stevens and Steven G. Breyer, dissented. Associate Justice Sonia M. Sotomayor did not participate in the decision, and Associate Justice Elena Kagan has, of course, replaced the now-retired Justice Stevens. The five Justices that formed the majority in Stolt-Nielsen are presumably the ones most likely to vote for reversal of the Ninth Circuit in AT&T Mobility. Stolt-Nielsen dissenters Justices Ginsburg and Breyer are unlikely to accord that decision much, if any, weight. And even though we cannot predict with any reasonable certainty whether Associate Justices Sotomayor and Kagan are likely to consider Stolt-Nielsen as controlling the outcome in AT&T Mobility, we suspect that they are probably more likely to favor allowing California apply its Discover Bank rule in Federal Arbitration Act cases. The Stolt-Nielsen majority, however, does not speak with one voice when it comes to implied preemption. Justice Thomas does not believe that the judicial doctrine of implied preemption is constitutional. According to his concurring opinion in Wyeth v. Levine, 555 U.S. ___, 129 S. Ct. 1187 (2009), “implied pre-emption doctrines that wander far from the statutory text are inconsistent with the Constitution. . . .” 129 S. Ct. at 1205 (Thomas, J., concurring). Moreover, he believes that the Federal Arbitration Act does not apply in state court, and, while AT&T Mobility was brought in federal court, that suggests he favors a more deferential approach […]

by Holly Hayes Physician News Digest posted a beginner’s guide to negotiating an Electronic Health Record (EHR) software license agreement. EHR contracts are similar to other software license agreements, but issues specific to health care, including provisions related to HIPAA and “meaningful use” provisions, need to be addressed. The guide focuses on five key areas of a software license agreement (SLA): User license Implementation Service obligation Hardware and interfaces HITECH Act clauses User License — We begin our tutorial with the user license for one main reason: you will almost always be able to negotiate licensing costs. In enterprise software negotiations, some vendors offer as much as a 20% baseline discount (source). Small practices likely won’t come close to this level of discount, but it gives you an idea of how much room you may have to bargain. Before talking about price, you’ll need to define “user.” An EHR license agreement is unique in that a single user license may include multiple employees. For example, a user license for one MD may include mid-level providers (nurses and physician’s assistants), as well as administrative staff. Alternatively, you might use a tiered pricing structure with one high cost for MDs, a lower cost for mid-level providers and an even lower cost for administrative staff. Finally, “site” and enterprise licenses exist for large medical facilities and hospitals. After defining “user,” several questions still need to be addressed. Is there a limitation on how many computers the software can be installed on? Can it be used at multiple offices? Can the license be sold or transferred if the practice is sold or merges with another company? It is important to anticipate possible scenarios of how, where and who will access the software, then address these in the contract. Implementation — Not all software vendors offer implementation services – some rely on a network of value added resellers (VARs) to provide implementation services – but it is still worth discussing here because of the high costs. For every dollar the EHR costs, you can expect to pay at least one dollar for implementation services. In larger offices or more complex environments, this ratio can be even higher; a two-to-one or even five-to-one ratio is not uncommon. Implementation costs are based off hourly rates and an estimate of hours to complete the setup. It can also be based on monthly rates, which is sometimes cheaper. In some cases, the vendor will provide a fixed cost, but that is less common. Regardless, it is important to settle on implementation expenses in the initial agreement. You’ll have the most leverage during the negotiation process and prices will likely go up after you are in a contract. After negotiating costs, you’ll need to agree on the details of the implementation process. For example, who will be responsible for transferring data into the new EHR? Will you be transferring data from another system or from paper records? What are the costs? You should also develop an implementation timeline, determine what kind of strategy you’ll pursue (e.g. “phased rollout”) and decide which implementation activities the vendor will be responsible for. Poor planning is a leading cause of failed software implementations, so be prepared. Ongoing Service Obligations — Next, we address the service obligations, or support, updates and maintenance. Depending on the length of your contract, the service agreement will be the second or largest expense of your EHR software purchase. It is not uncommon for maintenance and support to be as much as 20% to 30% of the original software purchase price. Each part of the service section deserves attention. Here are a few key considerations to begin with: Support – What hours of support will be available? Does it include telephone support, in-person technical support, or both? What happens if the EHR vendor doesn’t meet the support requirements? Will the contract include a clause for negligence of support and require vendors to face a penalty – either monetary or other? Updates – How often will updates be rolled out? Are you required to install all updates? Keep in mind, changes to the functionality of the EHR could affect your workflow and office efficiency. Maintenance – What new software releases are included in the maintenance agreement; for example, does the agreement just include patches for bugs, are are new functional capabilities included? How are the maintenance fees calculated? Training – How many hours are included? What does it cost if you exceed the specified hours? Who will be trained and where will they be trained? Will you be charged for travel-related expenses for on-location training? Hardware and Interfaces — Next, on to hardware. In addition to discussing hardware with your EHR vendor, be sure to compare prices from third party vendors. You should be able to get hardware specifications from your vendor’s website or just by request. You can then use this information to get price quotes from other hardware vendors. You might find a better price elsewhere or just have extra leverage when it comes time to negotiate with the EHR vendor. Conversely, the integration or interfacing of devices is better left to the EHR vendor. This can include everything from scanners and faxes to more complex devices like laboratory information systems and electrocardiogram (ECC/EKG) equipment. Make sure your agreement clearly identifies who will provide ongoing support for interfaces. You don’t want to get stranded if both the EHR vendor and device manufacturer claim the other should provide support. HITECH Act Clauses — Several EHR software vendors have started adding provisions for the HITECH Act into their license agreements. As details about “meaningful use” and “certified technology” are revealed every few months, it’s important to make sure this section is up to date. Additionally, with thousands of dollars at stake, it’s important to identify any ambiguities. What happens if you fail to achieve meaningful use? Do you receive a reimbursement covering the full amount of Stimulus Bill incentives? Or are you only reimbursed for the cost of the software? Ultimately […]