California’s McGill rule is often invoked by plaintiffs to invalidate arbitration agreements that purport to waive the right to seek public injunctive relief in any forum. But the Ninth Circuit’s decision in Hodges v. Comcast Cable Communications, LLC, 2021 WL 4127711 (9th Cir. 2021), limits the impact of the McGill rule by narrowly defining the types of claims that seek “public injunctive relief.” The court defined such relief as “prospective injunctive relief that aims to restrain future violations of law for the benefit of the general public as a whole, rather than a discrete subset of similarly situated persons, and that does so without requiring consideration of the individual claims of non-parties.” Since the Hodges plaintiff, a former cable subscriber, brought a putative class action seeking injunctive relief that would benefit only cable subscribers, the court held that he did not seek public injunctive relief and the case should have been sent to arbitration.
In reaching this conclusion, the court recognized that its definition of public injunctive relief was narrower than that adopted by California state appellate courts in Mejia v. DACM Inc., 54 Cal. App. 5th 691 (2020), and Maldonado v. Fast Auto Loans, Inc., 60 Cal. App. 5th 710 (2021), which held that an injunction affecting the contract terms a business can offer to the public—not just its existing customers—should qualify as public injunctive relief. In light of Hodges, companies seeking to compel arbitration should consider strategies to litigate McGill issues in federal courts, which currently embrace a narrower definition of “public injunctive relief” than may be encountered in state courts.