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Class Action Waivers - What are your thoughts?

Should arbitral institutions handle arbitrations with class action waivers?

Please provide your thoughts/comments below.

Comments (8)

Great question.

If existing institutions resisted, the Supreme Court's class waiver policy would theoretically be eviscerated. However, other institutions would be launched to provide the service. Therefore, the courts (with Congress AWOL), not the institutions, set public policy.

Judge Gerald Harris:

Since the inclusion of class action waivers have been upheld by the courts, an arbitral institution would have no legal basis to decline administering arbitrations arising from agreements containing such a provision. Indeed, the prevalence of such agreements would make it economically unfeasible for such institutions to turn away such arbitrations. That does not mean that arbitral institutions should not weigh in on the the desirability of allowing individuals to seek relief in an arbitral forum on behalf of others similarly situated.

andrew gerber:

Judge Harris: Why would an arbitral institution need a legal basis for declining? What law would require an institution to administer a case that it prefers to decline on a policy basis?

Mr. Skulnik: Granted that arbitral institutions don't set policy, aren't they free to set their own policies? Declining cases on this ground might be uncompetitive, but it would certainly seem to be within an institution's discretionary power.

Beyond that, neither comment above seems to answer the question whether arbitral institutions SHOULD handle cases with class action waivers. I'd argue that the answer is a value judgment for each institution to make on its own.

I see no reason not to do so. Class actions are not holy writ.

Judge Gerald Harris:

Mr. Ferber: I am not saying that an institution requires a legal basis to decline administering any particular type of dispute; just making the observation that the institution is not compelled, by force of law, to make such declination. As to the issue of a policy choice, that was addressed by the final sentence of my initial post which, I believe, is consistent with the conclusion expressed in your comment.

Arbitrability and arbitration procedure are very largely creatures of contract. If parties contract, in a legally enforceable way (and without foreknowledge that the adminstrative organization they select has a policy of not enforcing such provisions), for non-class arbitration, why should the organization override their contractual choice? Organizations may be under no legal compulsion to honor class action waivers, but refusing to do so strikes me as a little haughty, and inconsistent with principles favoring private consent to ADR mechanisms.

andrew gerber:

Thanks Judge. That clarifies.

Edwin H. Stern:

The states are handling the issue differently, and SCOTUS seems committed to upholding class action provisions whereas a state like New Jersey has been very restrictive by requiring clear and complete waivers of the right to sue in court. Class action waivers are not the same as waivers of the right to bring an action in court and the right to jury trial, but they are analogous in terms of being the only way some people can afford to seek a remedy. It seems to me that, at least in new Jersey, the issue of arbitrability is an issue for the court to decide, so if the arbitration is ordered, I would proceed. If an issue arises during the arbitration, I would consider the position of the parties and decide it (including the forum to consider the issue, including waiver by filing pleadings).

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