Court Upholds Class Action Waivers in Arbitration Clauses

Many contracts contain arbitration clauses. These clauses require the parties to submit to binding arbitration, rather than having their day in court. Typically, larger companies push for arbitration clauses. Part of the reason for a larger company to prefer an agreement to arbitrate is that such a clause may effectively waive an adverse party’s right to form a class and prosecute a class action.

In McKenzie Check Advance of Florida, LLC d/b/a National Cash Advance v. Betts, ____ So. 3d ____; 4D15-1893 (Fla. 4th DCA May 18, 2016) the court issued an opinion upholding such a provision. Reviewing a class action waiver in an arbitration clause, the court held that “the arbitration provision’s class action waiver is enforceable, and, therefore,” plaintiff would only be permitted to pursue an individual claim in arbitration.

The outcome of this case stems from a United States Supreme Court case, AT&T Mobility, LLC v. Concepion, 563 U.S. 333 (2011), in which the Supreme Court reasoned that “Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.”

It appears that a class action waiver contained within an arbitration clause may be enforceable, depending upon other issues concerning the particular contract or agreement. Please contact Van Ness Law Firm, PLC, if you would like to discuss such a provision.