Arguing that, in an Arbitration Agreement Falling Under the Federal Arbitration Act, a Reference to State Law with Respect to the Enforceability of a Class Arbitration Waiver Does Not Displace the Federal Arbitration Act’s Mandate to Enforce Such a Waiver. 
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At issue in this Supreme Court case was whether, in an arbitration agreement falling under the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (“FAA”), a reference to state law with respect to the enforceability of a class arbitration waiver displaced the FAA’s mandate to enforce such a waiver.The arbitration provision at issue was in satellite television provider DIRECTV’s customer agreement in 2007 with Amy Imburgia. The agreement required binding arbitration of any future disputes and also prohibited class-wide procedures. However, while the arbitration provision recited that it “shall be governed by the Federal Arbitration Act,” it also stated that enforcement of the class action waiver, and indeed of the entire arbitration provision, would depend on the law of each customer’s state: “If, however, the law of your state would find this agreement to dispense with class arbitration procedures unenforceable, then this entire [arbitration agreement] is unenforceable.” Id. (emphasis added).

The California Court of Appeals interpreted “the law of your state” as referring to the law of California without regard to the preemptive force of federal law and read the 2007 contractual language as intending to oust the FAA’s mandate to enforce the class arbitration waiver, as announced four years later in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). On that basis, the California court invalidated the class arbitration waiver under the California law that bars class action waivers in consumer actions and, giving effect to the arbitration agreement’s so-called “jettison” clause, voided the entire arbitration agreement, in essence forcing the parties to litigate in court.

From NELF’s point of view, the case raised one central issue: Did the parties to the disputed agreement intend to elevate state law over the FAA on the subject of class arbitration waivers? NELF argued that reference to “the law of your state” in the 2008 agreement was never intended to oust the FAA in favor of state law. Rather, it reflected the understanding, current in 2007, that, under the FAA, the enforceability of class action waivers in arbitration agreements was governed by state law. That is, the 2007 agreement was intended to comply with the FAA as then understood. This understanding, however, was dispelled by the Supreme Court in 2011 in Concepcion, which held that state law cannot impede the enforcement of class arbitration waivers under the FAA. NELF argued that, since “the law of your state” was not intended to oust the FAA, and since “the law of your state” cannot, after Concepcion, impede enforcement of the class arbitration waiver, DIRECTV’s motion to compel arbitration of Imburgia’s individual claims should have been allowed.

In its decision of December 14, 2015, a six-member majority of the Court agreed with NELF and enforced the class arbitration waiver, although for slightly different but nonetheless compelling reasons. In a skillful opinion written by Justice Breyer, the Court held that the FAA preempts the lower court’s opinion, which singles out arbitration agreements for unfavorable treatment and interprets “the law of your state” as referring presumptively to invalid state law. The Court explained that, since the FAA limits the states to applying general contract law principles to arbitration agreements, “the law of your state” must be interpreted under California general contract law. The Court observed that, as an empirical matter, California cases interpreting such contract language (along with cases from every other state) read “the law of your state” as referring presumptively to the valid law of a state. This means that “the law of your state” in this pre-Concepcion agreement evolves with the times and reflects any intervening changes made by a state Legislature, a state supreme court, or, as in this case, any pronouncements of controlling federal law by the Supreme Court under the Supremacy Clause, as announced in Concepcion.
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Therefore, once the Court in Concepcion held that the FAA preempted California’s Discover Bank rule (which had effectively invalidated all class arbitration waivers in California consumer form agreements and had required the availability of class arbitration), “the law of your state” no longer included the invalidated Discover Bank rule. Thus, the class arbitration waiver in the pre-Concepcion agreement at issue must be enforced under the FAA, and the jettison clause is never reached.

Notably, the Court explained that, while indeed the FAA allows parties to apply any body of law, even preempted state law, to their arbitration agreements, this is not what “the law of your state” means on its face. To override the presumptive meaning of “the law of your state,” then, parties would have to refer expressly to preempted state law in their arbitration agreements (an unlikely but nonetheless enforceable contract clause).

Arguing the Wartime Suspension of Limitations Act does not apply to civil qui tam claims brought under the False Claims Act

Note: In what we believe is a NELF first, during the hearing of this case on January 13, 2015, Supreme Court Associate Justice Sotomayor specifically referred to NELF’s amicus brief, when she asked the attorney for the Petitioner whether he was “adopting the argument of the New England [Legal] Foundation, the amic[us] brief?”  Counsel indicated that this was the case.
 
In this case the Supreme Court considered whether the Wartime Suspension of Limitations Act, 18 U.S.C. § 3287 (“Suspension Act”), a criminal code provision of the federal False Claims Act (“FCA”), that suspends, during and for five years after times of armed conflict, the statute of limitations for “offenses involving [contractor] fraud . . . against the United States,” also applied to civil qui tam actions brought under the FCA. The FCA, first enacted during the Civil War, provides both criminal and civil remedies against federal government contractor fraud. On the civil side, the FCA encourages private whistleblowers (“relators”) to bring suit on behalf of the Government (“qui tam” actions); if successful, a civil qui tam plaintiff is awarded a share of the government’s damage award (between 15% and 30%). Such civil qui tam claims under the FCA are subject to a six-year limitations period. 31 U.S.C. § 3731(b)(1). The Fourth Circuit in this case concluded that the Suspension Act applies to both criminal and civil claims of contractor fraud against the Government. Consequently, the lower court allowed the plaintiff-relator’s otherwise untimely qui tam FCA claim to proceed on the merits against defendants Halliburton Company, KBR, Inc., Kellogg Brown & Root Services, Inc., and Service Employees International, Inc. (collectively “KBR”).
 
Since the vast majority of claims under the FCA are brought as civil claims initiated by qui tam plaintiffs, the Fourth Circuit’s extension of the Suspension Act to civil as well as criminal cases under the FCA would likely have had enormous consequences for companies doing business with the federal government if it had been upheld by the Supreme Court.
 
NELF submitted an amicus brief in support of KBR, arguing that the Fourth Circuit had erred and showing, based on an extensive analysis of the Suspension Act’s legislative history, the source of its mistake. The lower court had misunderstood a crucial part of the Suspension Act’s statutory history. Prior versions of the Suspension Act, enacted in 1921 and 1942, had applied to offenses that were “now indictable under existing statutes.” I.e.,i.e, their coverage was retrospective only, applying to crimes, still timely, that had already occurred when those 1921 and 1942 statutes took effect. In 1944, however, Congress, made the Suspension Act prospective as well, by deleting the phrase “now indictable under existing statutes.” However, the Fourth Circuit, along with virtually every other court and commentator, misinterpreted this 1944 amendment. In particular, the lower court concluded that Congress’ removal of the phrase “now indictable” in 1944 expanded the meaning of the word “offenses” to include non-indictable, civil claims. NELF demonstrated compellingly that, to the contrary, when Congress removed the phrase “now indictable” in 1944, it simply extended the Suspension Act to future offenses of contractor fraud. (Congress also preserved other language in the 1944 Suspension Act to make it clear that the 1944 statute applied to past timely offenses as well.) By no means did the 1944 amendment affect in any way the exclusively criminal meaning of the word “offense.”
 
In its unanimous decision issued on May 26, 2015, the Supreme Court agreed with NELF’s arguments in the case. In an opinion that largely parallels NELF’s brief, the Court held that the Act only applies to criminal offenses under the FCA.

Arguing That the First Amendment Should Prohibit Massachusetts from Criminalizing Knowingly False Political Campaign Speech
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At issue was whether Mass. G. L. c. 56, § 42, a 1946 statute that criminalizes any knowingly false statement in relation to any candidate for nomination or election to public office, violated the First Amendment to the United States Constitution. The statute punishes the convicted speaker with either a fine of up to $1,000 or imprisonment for up to six months. This case was initiated during the 2014 state elections by an incumbent (and subsequently reelected) candidate, State Representative Brian Mannal, who successfully applied for the issuance of a criminal complaint against Melissa Lucas, the chairperson and treasurer of Jobs First, an independent-expenditure Political Action Committee. Mannal alleged that Lucas was responsible for the PAC’s publication and circulation of a brochure falsely stating that Mannal, a criminal defense attorney, would benefit personally from the passage of bill that he was sponsoring. Mannal’s proposed legislation would earmark state funds for court-appointed criminal attorneys representing indigent convicted sex offenders in post-conviction proceedings. The SJC stayed Lucas’ arraignment in Falmouth District Court until it decided the constitutionality of the statute, in the exercise of its general superintendence powers. The Court issued an amicus announcement and heard oral argument on May 7, 2015.
 
In its amicus brief in support of the defendant, NELF argued that this case was not about protecting the right to lie in political campaigns. Instead, it was about protecting the First Amendment right of everyone, including State Representative Brian Mannal himself, to engage freely in political debate about the qualifications of candidates for public office, without fear of criminal reprisal from the government. Such speech is “integral to the operation of the system of government established by our Constitution. The First Amendment affords the broadest protection to such political expression . . . .” McIntyre v. Ohio Elections Comm'n, 514 U.S. 334, 346 (1995) (citations and internal quotation marks omitted). 
 
As NELF argued, political speech does not lose its First Amendment protection even if it is false (to the extent that political speech can be reduced to truth or falsity). This means that the disputed statute is a content-based prohibition on protected speech. Therefore, the statute violates the First Amendment unless the Commonwealth can show that it survives “exacting scrutiny.” It must be narrowly tailored to serve an overriding state interest.
 
This the Commonwealth cannot show. Indeed, “it might be maintained that political speech simply cannot be banned or restricted as a categorical matter . . . .” Citizens United v. Fed. Election Comm’n, 558 U.S. 310, 340 (2010). This is because political campaign speech is the essence of self-government and thus occupies the highest rung of First Amendment values. To ensure the proper functioning of a representative democracy, core political speech must be afforded ample breathing space to flourish.   The First Amendment thus requires that the electorate shall engage freely in political debate and shall decide whom and what to believe during an election campaign, without any governmental interference. 
 
By contrast, the fact or threat of criminal prosecution is antithetical to this First Amendment value because it stifles political discourse, especially when that discourse is needed most, on the eve of an election. The statute thus impinges the rights of the electorate, both as speaker and listener. As a result, the political process suffers.
 
The First Amendment ensures a wide-open marketplace of ideas in which the appropriate remedy for allegedly false speech is simply more speech, and not enforced silence through actual or threatened criminal prosecution. As the Supreme Court has long recognized, counter speech is a particularly effective remedy during a political campaign, because a candidate is likely to respond immediately and forcefully to false accusations, as this case illustrates.
 
Not only does the statute fail exacting scrutiny. It is also void for vagueness. Political speech is often an unruly mixture of fact and opinion that cannot be reduced to neat categories of truth and falsity. This means that the statute cannot provide adequate notice of what speech is permitted or proscribed. This can only result in widespread self-censorship among the electorate. The statute’s vagueness could also invite prosecutorial abuse, such as the silencing of views that are critical of incumbents or government generally. 
 
In its decision issued on August 6, 2015, the Supreme Judicial Court agreed with NELF that Mass. G. L. c. 56, § 42 was unconstitutional. The Court, however, based its decision entirely on the Massachusetts constitution holding that “§ 42 is antagonistic to the fundamental right of free speech enshrined in art. 16 of our Declaration of Rights and, therefore, is invalid.” On this basis, the Court dismissed the criminal complaint charging the defendant with criminal charges under § 42.

Whether an Agreement to Submit Valuation of Stock to the Binding Decision of Arbitrators is an Arbitration Agreement Enforceable Under the Massachusetts Arbitration Act
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At issue in this case, pending before the Massachusetts Supreme Judicial Court (“SJC”), is whether a stock valuation provision in the articles of organization of a closely held Massachusetts corporation is enforceable under the Massachusetts Arbitration Act, G. L. c. 251, §§ 1-18 (“MAA”). The SJC requested amicus briefing on this issue. Under this familiar contract provision, the shareholders have agreed in advance to submit any future dispute about the value of a departing shareholder’s stock to a binding and final determination by an arbitral panel. Unlike the common law, the MAA provides for expedited specific performance of an arbitration agreement, via a motion to compel arbitration, along with other streamlined statutory mechanisms designed to enforce the parties’ bargained-for expectations.
 
The departing shareholder in this case has refused to complete the parties’ agreed-upon process for arbitrating the value of his shares. Instead, he has sought an accounting in court, as part of his claim for breach of fiduciary duty against the defendant, New England Cleaning Services, Inc. (“NECS”). The Superior Court denied NECS’ motion to compel arbitration, concluding that the parties’ valuation agreement was not an arbitration agreement. The lower court based its decision on Palmer v. Clark, 106 Mass. 373 (1871), and its progeny. In Palmer, decided nearly a century before the MAA’s enactment in 1960, this Court drew a distinction between an appraisal and an arbitration agreement. The SJC has also requested amicus briefing on whether Palmer and its progeny survive the MAA.

In its amicus brief supporting NECS, NELF has argued that the parties’ valuation agreement is indeed an arbitration agreement enforceable under the MAA, which applies broadly to any “controversy” that the parties have designated in their agreement for resolution in binding arbitration. In fact, this Court has already enforced a property valuation agreement under the MAA. See Trustees of Boston & Maine Corp. v. Massachusetts Bay Transp. Auth., 363 Mass. 386 (1973) (enforcing railroad right-of-way valuation agreement under MAA). As the Court recognized implicitly in Trustees of Boston & Maine, the MAA allows the parties to decide in advance both what is to be arbitrated--however specific and factual the issue--and how it is to be arbitrated--however informal the procedures. See G. L. c. 251, § 1 (MAA applies to “any controversy thereafter arising . . . .“), § 5 (MAA requires certain arbitral procedures “[u]nless otherwise provided by the agreement . . . .”) (emphasis added). In short, the MAA embodies the modern notion of party autonomy in the crafting of arbitration agreements tailored to each particular dispute. Therefore, the parties’ valuation agreement should be specifically enforced under the MAA. As a result, the old distinction between an appraisal and an arbitration agreement under Palmer should not survive the MAA. That distinction was drawn under a predecessor arbitration statute that did not apply to valuation agreements. Moreover, Palmer was decided when predispute arbitration agreements were voidable. Thus, in its day, Palmer actually protected the rights of shareholders to an appraisal agreement. Such protection is no longer necessary now that such an agreement can be enforced under the MAA.

On May 22, 2015, the Supreme Judicial Court issued its opinion in this case. Agreeing with NELF, the Court concluded that Article 5 of NECS's articles of incorporation contained a valid agreement to arbitrate future controversies regarding the value of NECS's stock. However, the Court also concluded that no such controversy existed at the time of NECS's motion to compel arbitration and, therefore, affirmed the order denying the NECS's motion to compel arbitration.