Corporate Governance

Supreme Court to Decide Rule on Class Waivers in Arbitration Clauses

By Harvard Law School Program on Corporate Governance

The U.S. Supreme Court recently granted certiorari in a case that is likely to resolve important outstanding questions regarding attempts to limit arbitration clauses so that they do not permit class action arbitrations. The case, AT&T Mobility LLC v. Concepcion, No. 09-893, presents the question whether the Federal Arbitration Act preempts state laws holding such class action waivers unconscionable if they are contained in consumer contracts. This case follows closely on the Court?s holding last month in Stolt-Nielsen S.A. v. AnimalFeeds Int?l Corp., No. 08-1198 (Apr. 27, 2010), that contracts that are silent on class arbitration must be read to bar that procedure.

Class Arbitration Waivers and Unconscionability Law

The case on appeal is Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. 2009), which struck down a class waiver in an arbitration clause as unconscionable under California law. The Ninth Circuit held that the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (?FAA?), does not preempt California law in this respect. 584 F.3d at 852.

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Full post as published by The Harvard Law School Corporate Governance Blog on June 13, 2010 (boomark / email).