Second Circuit Affirms Its Rejection of a Class Action Waiver in an Arbitration Clause
Earlier this week, the U.S. Second Circuit Court of Appeals affirmed its previous decision in the In re American Express Merchants’ Litigation, finding a class action waiver provision in an arbitration clause unenforceable. The Second Circuit’s original ruling had been vacated by the U.S. Supreme Court and remanded for further consideration in light of a recent Supreme Court decision that held that class arbitration cannot be imposed on parties that never agreed to it. The Second Circuit upheld its original ruling that the class action waiver provision effectively precluded the plaintiffs from enforcing their statutory rights, and therefore, was unenforceable.
The decision, although limited by the Second Circuit to its facts, demonstrates the willingness of courts to scrutinize class action waivers in arbitration agreements. In addition, because the Second Circuit’s recent ruling is identical to its prior decision, which was vacated and remanded for reconsideration by the Supreme Court, this matter may very well come before the high court again.
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