Increasing Prevalence Of Class Action Waivers

1166 WordsFeb 17, 20175 Pages
This part of the Note provides a background of the increasing prevalence of class action waivers in arbitration. The first challenge towards them, as explained below, involved the California state contract law doctrine of unconscionability. Nonetheless, the Supreme Court eventually struck down this argument but the decision eventually sparked the now controversial circuit split which has led to the Supreme Court granting certiorari to grant clarity on the issue of class action arbitration waivers. A. The Unconscionability Doctrine and the State Court Challenges Arising Out of California Before the current developments, class action waivers in arbitration agreements came under fire through state law and the unconscionability doctrine.…show more content…
In June, 2010, the Supreme Court issued an opinion which provided “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” This case served as a precursor for the eventual maiming of the unconscionability doctrine as applied to class action waivers in arbitration. Ten months later in April, 2011, the Supreme Court released an opinion directed at the issue of unconscionability law in AT&T Mobility, LLC. V. Concepcion. Although Concepcion involved a consumer claim, this decision struck down state unconscionability challenges under two separate factors. First, the Supreme Court reasoned that the Ninth Circuit and California Supreme Court implemented a process in Gentry and Discover which disfavored arbitration because it went above and beyond the state law rules of contract interpretation, therefore making the process unenforceable. Second, the Court determined the California Supreme Court, which determined class action waivers were unenforceable due to unconscionability, interfered with the purpose of the FAA to avoid judicial hostility towards arbitration and to promote arbitration in accordance with the parties’ agreements. In conclusion, the Supreme Court specifically explained the “point of affording parties discretion in designing arbitration processes is to allow for efficient, streamlined procedures tailored to the type of
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