D.R. Horton, Inc. v. Lyndoe

A group of New Mexico homeowners sued the developer who had constructed the homes in their subdivision for negligence and breach of contract based on damage to the homes resulting from compaction and settlement of soil under the houses. Upon discovering that their purchase agreements provided for arbitration of their claims, the homeowners moved to compel consolidated arbitration of the cases under New Mexico law, which the arbitration agreements incorporated. The New Mexico state courts ordered consolidated arbitration, and the developer filed a petition for certiorari. The petition claimed that the Federal Arbitration Act (FAA) preempted the state courts’ decision, based on the Supreme Court’s decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., which held that a court may not order class arbitration without a contractual basis.

Public Citizen as co-counsel for the homeowners, filed a brief in opposition, explaining that the contracts’ incorporation of New Mexico arbitration law, which specifically provides for consolidated arbitration, provided an express contractual basis for the state courts’ order; that the FAA permits parties to agree to the application of such state arbitration laws; that the consolidated arbitration ordered by the court was not a class arbitration; and that the state courts’ order evinced no hostility toward arbitration. The Supreme Court denied certiorari on March 18, 2013.