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U.S. Supreme Court Rules Against Class Actions in Arbitration

By Alan E. Tannenbaum

The United States Supreme Court just published its opinion in Stolt-Nielson S.A., et al v. Animalfeeds International Corp., 22 Fla. L. Weekly Fed. S269A.  In its holding, the Supreme Court determined that absent the express agreement of the parties or a state or federal law mandating it, a defending party cannot be forced to arbitrate separate contract disputes on a class basis.  The plaintiffs in the case had attempted to file a class action in federal court.  The class action was rejected on the basis that the individual contracts required arbitration.  The plaintiffs sought to pursue their claims in arbitration on a class basis.  The arbitrator approved the class action and the Federal Second Circuit Court of Appeals affirmed.

In Florida, there are rules of procedure allowing class actions in the condominium and homeowner association settings.  Consequently, this holding by the Supreme Court is not likely to affect the ability of residents of condominium and homeowner associations to proceed on a class basis even where individual contracts call for arbitration.  Who the decision will affect are home buyers whose homes are not part of a community association.

Full post as published by Florida Community Association Construction Law Blog on April 30, 2010 (boomark / email).