Class Arbitration—Dying but Not Dead
In their Southern District Civil Practice Roundup, Edward M. Spiro and Judith L. Mogul analyze a decision by Judge Colleen McMahon demonstrating that even when a business holds all the cards in drafting an arbitration agreement with its customers, it can over-play that hand.
August 17, 2015 at 02:50 PM
10 minute read
Many entities doing business with the public have long preferred arbitration as a forum for resolving disputes with their customers. Arbitration is generally faster and less expensive than litigation and offers an efficient and generally non-public forum for handling the complaints of unhappy clients and customers. For businesses whose client and customer relationships are based on contracts that include arbitration clauses, the Supreme Court's 2010 decision in Stolt-Nielsen v. Animal Feeds International Corp.1 provided strong protection against class litigation.
Stolt-Nielsen held that a party cannot be compelled to arbitrate on a class-wide basis unless there is a contractual basis for doing so, and that an agreement that is silent on the topic of class arbitration does not constitute an agreement to arbitrate class disputes. By requiring arbitration of disputes arising out of the customer relationship, and declining to agree to class arbitration, businesses dealing with consumers can effectively foreclose the option of class litigation.
'Edwards v. Macy's'
Judge Colleen McMahon issued a decision in June in Edwards v. Macy's2 demonstrating that even when a business holds all the cards in drafting an arbitration agreement with its customers, it can over-play that hand. The plaintiff in Edwards had opened a credit card account at a Macy's department store when making some purchases. The Macy's store credit card for which she applied was offered by DSNB, a subsidiary of Citibank that issues credit cards for retail stores. At the time she opened the account, the plaintiff was offered, and accepted enrollment in a 30-day free trial of DSNB's “Credit Card Protection Program.” The Credit Card Protection Program's terms and conditions were contained in an amendment to the credit card agreement, both of which contained arbitration clauses.
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Trending Stories
- 1BD Settles Thousands of Bard Hernia Mesh Lawsuits
- 2First Lawsuit Filed Alleging Contraceptive Depo-Provera Caused Brain Tumor
- 3The Law Firm Disrupted: For Big Law Names, Shorter is Sweeter
- 4The Growing Tension—And Opportunity—in Big Law Nonequity Tiers
- 5The 'Biden Effect' on Senior Attorneys: Should I Stay or Should I Go?
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250