Enforceability of Class Action Waivers in Arbitration Agreements: What You Need to Know

Class action waivers are becoming more common in arbitration agreements. These provisions prohibit employees and consumers from joining together to file lawsuits or arbitration proceedings. Instead, they must bring claims as individuals. But can these class action waivers be enforced? The answer is not always clear, and recent court decisions have added to the confusion.

Arbitration agreements are contracts between two parties that agree to resolve disputes through arbitration rather than litigation in court. These agreements often include class action waivers, which prevent individuals from joining together in a class action lawsuit. Instead, each individual must pursue their claim individually.

Several court decisions have addressed the enforceability of class action waivers in these agreements. In 2018, the Supreme Court upheld the enforceability of class action waivers in employment arbitration agreements in the case of Epic Systems Corp v. Lewis. The Court held that the Federal Arbitration Act (FAA) allows employers to use class action waivers in their arbitration agreements with employees. This decision means that employees who sign an arbitration agreement with a class action waiver must bring their claims individually, and cannot join together with other employees in a class action lawsuit.

However, in the consumer context, the enforceability of class action waivers in arbitration agreements is still an open question. In the case of AT&T Mobility v. Concepcion, the Supreme Court held that a class action waiver in a consumer arbitration agreement was enforceable. However, several state courts have refused to follow this decision and have invalidated class action waivers in consumer arbitration agreements.

One recent example of this is the case of Blair v. Rent-a-Center, in which the Ninth Circuit Court of Appeals held that a class action waiver in a consumer arbitration agreement was unenforceable. The Court held that the waiver violated California state law, which deems them unconscionable and against public policy. The Court stated that the waiver was so one-sided that it effectively deprived the consumers of their rights under the law.

In conclusion, the enforceability of class action waivers in arbitration agreements can be a complicated issue, with different rules applying to employment and consumer contexts and varying by state. As a professional, it is important to stay up to date on the latest developments in this area to ensure that your content is accurate and informative. Employers and companies should also consult with legal counsel to ensure that their arbitration agreements and class action waivers are compliant with current laws and regulations.

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