Feeds:
Posts
Comments

Posts Tagged ‘class arbitration’

Two op-eds published today highlight the philosophical debate over the impact of the Supreme Court’s recent decision in AT&T Mobility v. Concepcion.

The first, published by the New York Times, argues that the decision is a “devastating blow to consumer rights” because it makes it practically impossible for many consumers to seek vindication of their rights in any forum.

In response, Forbes contributor Daniel Fischer argues that Concepcion’s limitation on consumer class actions does not really harm consumers because consumer class actions really only benefit lawyers.  As a prime example, he points to the controversial proposed settlement in a class action involving DirectBuy to which 36 attorneys general and a consumer rights organization have objected.

I would recommend reading both articles for anyone interested in the possible social and legal implications of the Court’s recent decision.

Read Full Post »

As 2010 winds down, it’s time to review the key developments in class action law.  It was an especially busy year for the federal courts, and in particular the U.S. Supreme Court, on issues impacting class action practice.  Here, in chronological order, are 10 key developments from the year that was:

  1. January 5 – In In re Baycol Products Litigation, the Eighth Circuit follows the Seventh Circuit’s lead in upholding the right of a federal court to enjoin a putative statewide class action from proceeding where a federal court had already denied class certification in a case involving substantially similar claims.  (See CAB entries dated January 7 and January 12).
  2. February 23 – In a decision that will impact many class actions removed under the Class Action Fairness Act, the Supreme Court adopts the “nerve center test” as the standard for determining corporate citizenship, in Hertz Corp. v. Friend.  (See CAB entry dated March 2)
  3. March 31 – The Supreme Court holds that states may not regulate the types of claims that may be filed as class actions in the federal courts, in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co.  (See CAB entry dated April 8)
  4. April 7 – In American Honda Motor Co. v. Allen, the Seventh Circuit holds that a trial court must rule on challenges to the admissibility of expert testimony relevant to class certification before deciding whether a class may be certified.  (See CAB entry dated May 4)
  5. April 26 – The Ninth Circuit issues its decision in Dukes v. Wal-mart Stores, Inc., adopting rigorous class certification standards similar to those previously adopted by the Second Circuit in In re IPO Securities Litigation, 471 F.3d 24 (2d Cir. 2006), but nonetheless certifying under FRCP 23(b)(2), what has been called the largest employment discrimination class action in history.
  6. April 27 – The Supreme Court seemingly puts an end, for all practical purposes, to the concept of class arbitration by holding that a defendant could not be compelled to defend an arbitration on a class basis where the arbitration clause did not expressly provide for class arbitration, in Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp.  (See CAB entry dated May 11).
  7. June 24 – In Morrison v. National Australia Bank, the Supreme Court deals a fatal blow to “foreign-cubed” class actions, holding that § 10(b) of the Securities and Exchange Act of 1934 does not allow for fraud claims involving transactions on foreign exchanges that occurred outside the United States. (See case summary at SCOTUS blog).
  8. July 19, October 20 – An Eleventh Circuit panel issues a controversial decision in Cappuccitti v. DirecTV, Inc., severely restricting CAFA removal jurisdiction to cases where the amount in controversy exceeds $75,000 with respect to at least one class member, but later reverses itself in an October 15 opinion.  (See Guest Post from Eric Jon Taylor and Jon Chally at CAFA Law Blog for more on the first decision and this October 20 CAB entry on the second decision).
  9. November 9 – Supreme Court hears oral argument in AT&T Mobility v. Concepcion, in which the Court considers whether the Federal Arbitration Act preempts state law holding a class arbitration waiver unconscionable.  (See CAB fsummary of oral argument dated November 17).
  10. December 6 – Supreme Court grants certiorari in Wal-Mart Stores, Inc. v. Dukes, to decide the issue of whether a claim for monetary relief can be certified under FRCP 23(b)(2).  (See CAB entry dated December 7).

Just considering the cases still awaiting ruling before the Supreme Court, 2011 promises to be another exciting year in the world of class actions.  Happy New Year to all!

Read Full Post »

University of Missouri Law Professor S.I. Strong, guru of international class arbitration, has two new intriguing publications coming out soon.  In both works, she discuss the academic debate about the appropriate international arbitration rules for dealing with large groups of similar claims and discuss the ways in which multi-party or representative procedures are likely to evolve outside the United States.  Strong examines the common conception of “class action arbitration” as a “uniquely American device” and posits that a system of multi-party arbitration, better characterized as “collective” arbitration than “class” arbitration, may be more likely to emerge as the predominant procedural device in international disputes subject to arbitration.

Drafts of both articles are available for download at SSRN via the links below.

From Class to Collective: The De-Americanization of Class Arbitration, 26 ARBITRATION INTERNATIONAL 493 (2010)

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1656511

Class Arbitration Outside the United States: Reading the Tea Leaves, DOSSIER VII – MULTIPARTY ARBITRATION (ICC Institute of World Business Law, 2010).

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1517272

Read Full Post »

The Supreme Court recently issued a decision addressing the issue of class arbitration.  In Stolt-Nielson S.A. v.  Animalfeeds International Corp., No. 08-1198 (April 27, 2010), an antitrust class action involving allegations of illegal price-fixing by international shipping companies, the Court held that an arbitration panel’s decision to force class arbitration was invalid because the arbitration agreement was silent about whether arbitration could proceed on a class basis.   

Beyond its impact in cases involving class arbitration and the interpretation of arbitration clauses in domestic disputes, the decision partially closes the door on arbitration as a possible global forum for litigating class actions.  The Second Circuit Court of Appeals had upheld the arbitration panel’s decision to compel class arbitration and certify a class of all purchasers worldwide of the defendants’ shipping services.  The Supreme Court’s decision leaves open the possibility of global class arbitration based on an arbitration agreement that expressly permits class arbitration, but class arbitration cannot be compelled simply because the agreement is silent on the issue.

Read Full Post »

Unless you’ve been living under a rock, you’ve probably already heard about the Second Circuit Court of Appeals’ opinion on class arbitration waivers in In re: American Express Merchants’ Litigation.  But in case you’re as out of the loop as I have been over the past week, the court has posted a copy of the slip opinion on its website, here.  (3/9/11 – The official link is no longer good.  However, you can still download a copy here courtesy of Michael J. Hassan’s Class Action Defense Blog.)

The court’s holding is summarized in this quote:

[W]e do not decide whether class action waiver provisions are either void or enforceable per se.  Rather, we are concerned solely with the class action waiver contained in the contract between the parties before us on this appeal. We conclude that, on the record before us, the plaintiffs have adequately demonstrated that the class action waiver provision at issue should not be enforced because enforcement of the clause would effectively preclude any action seeking to vindicate the statutory rights asserted by the plaintiffs.

Slip op. at 7.

In reaching this conclusion, the court addressed several threshold questions of note.  First, the court concluded that the issue of whether the class arbitration waiver was enforceable was a matter that could be decided by the courts rather than the arbitrator, since the issue was the enforceability of that provision, not whether the provision unambiguously required individual arbitration.  Id. at 18. 

The court went on to address the standard for proving that a class arbitration waiver would deprive a plaintiff of a substantive right conveyed under the federal antitrust statutes, recognizing that the plaintiff bears the burden of proving that the cost of pursuing individual relief would be prohibitively expensive.  Id. at 24-26.  In rejecting the trial court’s reasoning that the Clayton Act’s fee shifting provisions might allow an individual plaintiff to pursue vindication of his or her rights in an individual arbitration, the Second Circuit noted that expert witness fees and other litigation expenses would not be recoverable as costs to the prevailing party.  Id. at 29.  Finding that expert testimony would be essential to a successful claim in the complex antitrust case before it, the court found that the claims could not reasonably be pursued as individual actions given the cost involved.

The end of the opinion offers to “caveats”: 1) that the decision was not at all dependent on the characterization of the plaintiffs as “small merchants” or “small businesses” and that the only important consideration was whether a class action mechanism was the only way for the plaintiffs to vindicate their statutory rights; and 2) that the court was not holding class arbitration waivers per se unenforceable.  Id. at 34-35.

The opinion does not decide whether the arbitration provision itself is enforceable and whether the case would proceed as a class action in court or as a class arbitration proceeding.  The court noted that the plaintiffs had said that they would be amenable to proceeding in an arbirtration forum on a class action basis but that the defendant had said that it would reconsider its motion to compel arbirtration if the class arbitration waiver was struck down.  Id. at 36.

Read Full Post »

If you’re a Colorado attorney who didn’t make it to the quarterly CLE luncheon sponsored by the CBA class actions subsection, you missed out.  Dirk W. de Roos and O. Russel Murray gave excellent presentations on developments in class arbitration.  If you’d still like to hear the entire presentation, you’re in luck.  CLE Colorado recorded the audio of the presentation and will include it among its home-study materials.  We’ll have a link on the class action subsection website as soon as it is available.  In the meantime, here are some of the key points:

  • Class arbitration waivers, contracts requiring arbitration but specifying that arbitration proceed on an individual, not class, basis, have been used in a variety of contracts, including employment, executive compensation, consumer, franchise, and settlement agreements.
  • Outside the consumer context, class arbitration waivers have mostly been upheld.
  • Where class arbitration waivers are invalidated, courts most often do so based on traditional contract principles.
  • Class arbitration waivers are increasingly being struck down in consumer agreements, especially in “shrink-wrap” type agreements where the consumer is agreeing simply by using the product.
  • The key U.S. Supreme Court case recognizing the viability of class arbitration (not waivers) is Green Tree Financial Corp. v. Bazzle, 539 U.S., 444 (2003).
  • Class arbitration rules generally track FRCP 23, the main difference being that the decision maker is a private neutral instead of a judge.
  • Class arbitration rules differ from traditional arbitration because they lack the key element of privacy and confidentiality.

Each of the speakers had insights that I thought were interesting:

Dirk de Roos noted that a split among jurisdictions on the enforceability of class arbitration waivers may impact whether a nationwide class can be certified in court over a particular issue given the need to apply different standards to decide whether the action can proceed in court as a class action in the first place.

Russel Murray commented that class arbitration involves a convergence of two more general, controversial issues: 1) many people have an animosity toward class actions and favor ways to limit their application and effectiveness, but, on the other hand  2) many other people have deep concerns about the use of arbitration provisions in consumer agreements and are opposed to agreements that potentially limit the ability of consumers to enforce their rights.

Finally, here is one other item worthy of note.  Russel Murray noted that the National Arbitration Forum rules allow collective resolution of claims only on an opt-in basis, as opposed to the opt-out scheme contemplated by Rule 23 and most other class arbitration rules.  This means that only those plaintiffs who affirmatively opt in to the class after notice. 

The possibility of class arbitration agreements that involve restrictions on class actions less than a complete waiver of the right to bring the case on a collective basis is intriguing.  Imagine a cell phone company including a standard term in its agreements that every claim is subject to class arbitration but that the action would proceed under the National Arbitration Forum rules.  This provision would not be a class arbitration waiver in the strict sense, but it would involve a significant limitation on the ability of a plaintiff to seek collective redress as compared to a class action in court.   As far as I know, the enforceability of this type of class arbitration “reduction” provision has not been tested in court.

Read Full Post »

I’m pleased to report that the Colorado Bar Association Class Action, Derivative Suits, and Mass Torts Subsection has scheduled its Fall 2008 CLE Luncheon for December 16.  Dirk de Roos of Faegre & Benson will speak on class arbitration waivers and O. Russel Murray of ADR Source will talk about class arbitration generally.

Here are the particulars:

Legal Trends and Best Practices in Class Arbitration

Tuesday, December 16, 2008

CBA Offices, 1900 Grant Street, 9th Floor,
Capitol Conference Room Denver, CO 80203

Class arbitration waivers are clauses in contracts requiring that disputes be arbitrated, and prohibit claims from being brought as class actions.  Whether class arbitration waivers are enforceable, especially in consumer contracts, has been a hotly contested issue in the courts in recent years.  Where class arbitration waivers are not enforceable or are enforceable only in part, parties my find themselves litigating their dispute as a class action but in an arbitration setting rather than a court.  This program will cover trends, best practices, and recent decisions relating to class arbitration and class arbitration waivers.  Some of the topics to be addressed include:

• Trends in decisions on the enforceability of class arbitration waivers.
• How are the Colorado courts likely to rule on class arbitration waivers?
• What does a class arbitration look like?  How is it different from a class action?
• Who is bound by an arbitrator’s decision in class arbitration?
• Can the loser of a class arbitration appeal?

The cost of the luncheon is $15.00 for Litigation Section members, $20.00 for Non-Members.

Registration for the Luncheon begins at 11:30 a.m. and the Luncheon will begin at 12:00 PM.

To RSVP for the Luncheon:
Call 303.860.1115, X727 or SEND AN E-MAIL TO MAILTO:LUNCHES@COBAR.ORG, PLEASE INCLUDE YOUR NAME AND Class Action luncheon in your e-mail.

Read Full Post »

During a reception yesterday, I met Lance Tanaka, local Denver representative of the American Arbitration Association (AAA), who tipped me off to AAA’s class arbitrations page.  The site has several great public resources for anyone interested in class arbitration rules or cases, including:

If you are interested in the topic of class arbitrations more generally or are trying to find out more information on a specific case that is the subject of class arbitration, check out these essential resources.  Many thanks to Lance for the tip.

Read Full Post »

« Newer Posts