Magazine article Dispute Resolution Journal

Class Action Waivers: Recent Developments

Magazine article Dispute Resolution Journal

Class Action Waivers: Recent Developments

Article excerpt

Federal District Courts

Alabama. A federal court in Alabama, in Patriot Manufacturing, Inc. v. Dixon, No. 05-0321-WS-M, 2007 WL 841745 (S.D. Ala. March 16, 2007), recently held that whether class arbitrations are permissible under the parties' agreement is a contract interpretation issue for the arbitrator to decide. Accordingly, it declined to rule on one side's motion to enjoin the adversary from seeking class arbitration status.

Arkansas. In Davidson v. Cingular Wireless LLC, No. 2:06CV00133-WRW, 2007 WL 896349 (E.D. Ark. Mar. 23, 2007), a federal district court enforced a clause barring classwide proceedings because the agreement permitted consumers to pursue low value claims against the wireless service provider in small claims court.

The court said that a class action waiver will be upheld "if the agreement containing the waiver is not burdened by other features limiting the ability of the plaintiff to obtain a remedy for the particular claim being asserted in a cost-effective manner."

The court found that while small claims court is conducive to prosecuting minor claims, arbitration is even more conducive because an appearance is required in small claims court while arbitration allows for a decision based on documents alone. Another difference it cited is the finality of arbitration, which is not present in small claims court where the losing party is entitled to a trial de novo in "regular court."

The court cited the American Arbitration Association policy not to administer class arbitration under an agreement that prohibits such proceedings "unless an order of a court directs the parties to the underlying dispute to submit any aspect of their dispute involving class claims ... or the enforceability of such provisions, to an arbitrator or to the Association." The court found that this case fell within the AAA policy because the court directed the parties to submit the enforceability of the class action waiver to the arbitrator. …

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