at&t mobility llc v. concepcion and its progeny and ... kaplinsky... · dmeast #16043515 v1 5...
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DMEAST #16043515 v1
AT&T Mobility LLC v. Concepcion and its Progeny and
Scorecard on where Federal and State Appellate Courts
and Statutes Stand
on Enforcing Class Action Waivers in Pre-Dispute
Consumer Arbitration Agreements
By: Alan S. Kaplinsky
Senior Partner and Practice Leader
of Consumer Financial Services Group
Ballard Spahr LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
Telephone: (215) 864-8544
Telecopier: (215) 864-8999
E-Mail: [email protected]
Blog: CFPBMonitor.com
Web Site: http://www.ballardspahr.com
Copyright 2012 All rights reserved.
This outline was last revised on April 16, 2012
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Alan S. Kaplinsky, Practice Leader
Consumer Financial Services Group
Ballard Spahr LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
Phone: 215-864-8544
Fax: 215-864-8999
E-mail: [email protected]
Alan S. Kaplinsky is a senior partner and Practice Leader of the Consumer Financial Services
Group at Ballard Spahr LLP. He devotes his practice exclusively to: (i) counseling financial
institutions with respect to bank regulatory and transactional matters, particularly consumer
financial services law, and (ii) defending financial institutions that have been sued by consumers
and governmental enforcement agencies in individual and class action lawsuits. He is widely
considered to be the pioneer of consumer arbitration provisions.
Mr. Kaplinsky’s accomplishments include
First President of the American College of Consumer Financial Services Lawyers,
founded to honor those lawyers who have made substantial contributions to the
development of consumer financial services law
Past Chair of the American Bar Association’s Committee on Consumer Financial
Services
Included in the 2006-2011 editions of Chambers USA: America’s Leading
Lawyers for Business in the area of banking (“a guru of consumer financial
services on both the regulatory and litigation sides. He earned his well-deserved
national reputation when successfully defending the very first class actions
brought against financial institutions”); in the 2011 edition, he is one of nine
lawyers ranked nationwide in Band 1 of Financial Services Regulation: Consumer
Financial Services Compliance, and one of six lawyers ranked in Band 1,
Pennsylvania, for Banking & Finance: Mainly Regulatory. A recent edition states:
“This practice ticks all the boxes, with one client praising its expertise in cutting-
edge matters and exemplary service. The team excels in consumer financial
services regulatory and enforcement work. Chair of the practice Alan Kaplinsky is
highly recommended by market sources. [He is] at the forefront of the latest
developments in the consumer financial services sector.”
Included under banking law in the 2007 through 2012 editions of The Best
Lawyers in America, considered the preeminent referral guide to the legal
profession in the United States, with inclusion based on an exhaustive peer review
survey. He was just named as the 2012 Philadelphia Lawyer of the Year for
Litigation-Banking & Finance Lawyer of the Year.
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Former adjunct professor at the University of Pennsylvania Law School and
Temple University James E. Beasley School of Law, where he taught banking
law.
Permanent member of the Judicial Conference of the Third Circuit Court of
Appeals.
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United States Supreme Court Opinion
Upholding Validity of Class Action Waivers
AT&T Mobility LLC v. Concepcion, No. 09-893, 131 S. Ct. 1740, 2011 U.S. LEXIS
3367. On April 27, 2011, the U.S. Supreme Court reversed the 9th Circuit Opinion (sub
nom Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. 2009)) and held that the FAA
preempts California state court decisions holding that arbitration agreements between
consumers and companies containing express class action waivers are unconscionable
and unenforceable. [Ballard Spahr amicus brief]
Important Opinions and Orders Following Concepcion
United States Supreme Court
Sonic-Calabasas A, Inc. v. Moreno, 132 S. Ct 496 (U.S. 2011) (vacating judgment of
California Supreme Court that waiver of statutory right to informal “Berman” hearing in
front of the Labor Commissioner was unconscionable and void as contrary to public
policy and remanding case to Supreme Court of California for further consideration in
light of Concepcion).
Branch Banking and Trust v. Gordon, No. 11-282, 2011 U.S. LEXIS 8155 (U.S. Nov. 14,
2011) (vacating judgment and remanding case to Eleventh Circuit for further
consideration in light of Concepcion).
Missouri Title Loans, Inc. v. Brewer, No. 10-1027, 2011 U.S. LEXIS 3378 (May 2,
2011) (Supreme Court granted the petition for a writ of certiorari, vacated opinion of
Missouri Supreme Court and remanded the case to the Missouri Supreme Court for
further consideration in light of Concepcion; upon remand, Missouri Supreme Court
adhered to its decision to invalidate the arbitration provision, but this time on grounds
unrelated to the class action waiver. See No. SC 90647, 2012 Mo. LEXIS 62 (MO
March 6, 2012)). [Ballard Spahr client]
Sonic Automotive v. Watts, No. 10-315, 2011 U.S. LEXIS 3532 (May 2, 2011) (Supreme
Court granted the petition for a writ of certiorari, vacated opinion of South Carolina
Supreme Court and remanded the case to the South Carolina Supreme Court for further
consideration in light of Concepcion). Upon remand, the South Carolina Supreme Court
held that the defendant had not preserved the FAA preemption issue for review. See
No. 26805, 2011 S.C. LEXIS 402 (S.C. Dec. 19, 2011).
Cellco Partnership v. Litman, No. 10-551, 2011 U.S. LEXIS 3383 (May 2, 2011)
(Supreme Court granted the petition for a writ of certiorari, vacated opinion of Third
Circuit and remanded the case to the Third Circuit for further consideration in light of
Concepcion; Third Circuit has obtained additional briefing). The Third Circuit later held
that the FAA preempts New Jersey law. See No. 08-4103, 2011 U.S. App. LEXIS 17649
(3d Cir. Aug. 24, 2011).
Fensterstock v. Educ. Partners, No. 10-987, 2011 U.S. LEXIS 4434 (June 13, 2011)
(Supreme Court granted the petition for a writ of certiorari, vacated the opinion of
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Second Circuit and remanded the case to the Second Circuit for further consideration in
light of Concepcion). Upon remand, Second Circuit concludes that its earlier opinion
holding that the class action waiver is unconscionable under California law is no longer
viable and remands to District Court to consider other arbitrability issues. No. 09-1562-
cv, 2011 WL 2582166 (2nd
Cir. June 30, 2011).
United States Court of Appeals
Second Circuit
In re: American Express Merchants’ Litig., 667 F.3d 204 (2d Cir. 2012), pet. rehearing en
banc filed February 14, 2012 (finding that Concepcion does not control the issue of
“whether a class-action arbitration waiver clause is enforceable even if the plaintiffs are
able to demonstrate that the practical effect of enforcement would be to preclude their
ability to vindicate their federal statutory rights” and holding that the arbitration
agreement was unenforceable because the class action waiver precluded the plaintiffs
from enforcing their statutory rights since the alleged federal antitrust claims could not
reasonably be pursued as individual actions as a result of the need to obtain and pay for
an expert opinion, which would dwarf the damages and which was not recoverable from
American Express.)
Fensterstock v. Educ. Partners, No. 09-1562, 2011 WL 2582166 (2nd
Cir. June 30, 2011).
Upon remand from the Supreme Court, Second Circuit concludes that its earlier opinion
holding that the class action waiver is unconscionable under California law is no longer
viable and remands to District Court to consider other arbitrability issues.
Third Circuit
Antkowiak v. TaxMasters, No. 11-1882, 2011 WL 6425567 (3d Cir. Dec. 22, 2011)
(unpublished) (“In its discussion, the District Court expressed significant concern with
the class action waiver. This concern, however, was based on case law that has
subsequently been overruled by the Supreme Court. Concepcion, 131 S. Ct. at 1748
(2011); Litman v. Cellco P'ship, 655 F.3d 225, 231 (3d Cir.2011) (stating that
Concepcion’s ’broad and clear’ holding pre-empts ‘impos[ing] class arbitration despite a
contractual agreement for individualized arbitration’). Because it is unclear to what
extent the District Court’s concern with the class action waiver influenced its conclusion
that the arbitration agreement is unconscionable in toto, we will remand to ensure that the
disposition of this case is consistent with Concepcion.”).
Quilloin v. Tenet Health System Philadelphia, Inc., -- F.3d --, 2012 WL 833742 (3d Cir.
March 14, 2012) (reversing decision of District Court denying motion to compel
arbitration that was predicated on Pennsylvania cases finding class action waivers
unconscionable because those cases were “clearly preempted under Concepcion….”, but
finding that the issue of whether class arbitration of employment claims is prohibited
when there exists a question of whether the agreement is “silent” as to class arbitration is
a question of interpretation and procedure for the arbitrator.)
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Litman v. Cellco Partnership, No. 08-4103, 2011 U.S. App. LEXIS 17649 (3d Cir. Aug.
24, 2011) (Upon remand from Supreme Court in aftermath of Concepcion opinion, Third
Circuit held that the earlier opinion in Homa v. American Express Company, 558 F.3d
225 (3rd Cir. 2009) concluding that the FAA did not preempt the New Jersey Supreme
Court opinion in Muhammad v. County Bank of Rehoboth Beach, Delaware, 189 N.J. 1
(2006) is now abrogated by Concepcion: “[W]e understand the holding of Concepcion to
be both broad and clear: a state law that seeks to impose class arbitration despite a
contractual agreement for individualized arbitration is inconsistent with, and therefore
preempted by the FAA, irrespective of whether class arbitration is desirable for unrelated
reasons.”) [Ballard Spahr amicus brief]
Fifth Circuit
Reed v. Florida Metropolitan University, Inc., No. 11–50509, 2012 WL 1759298 (5th
Cir. May 18, 2012) (finding that a district court correctly referred case to an arbitrator
where parties agreed that the arbitrator should decide whether the parties’ agreement
provided for class arbitration).
Eighth Circuit
Green v. SuperShuttle Int’l , Inc., No. 10-3310, 2011 U.S. App. LEXIS 18483 (8th Cir.
Sept. 6, 2011) (Relying upon Concepcion, Court affirms order of District Court
compelling arbitration in case alleging violations of Minnesota Fair Labor Standards Act)
Ninth Circuit
Smith v. Americredit Financial Services, Inc., No. 09-57016, 2011 WL 6170545 (9th Cir.
Dec. 13, 2011) (vacating district court order compelling arbitration and remanding matter
back to district court for reconsideration in light of Concepcion).
Kilgore et al v. Keybank, N.A., -- F.3d --, No. 09-16703, 2012 U.S. App. LEXIS 4736,
2012 WL 718344 (9th Cir. March 7, 2012) (“We hold that the Broughton-Cruz rule
[which prohibits arbitration for claims for public injunctive relief] does not survive
Concepcion because the rule ‘prohibits outright the arbitration of a particular type of
claim’ – claims for broad public injunctive relief. * * * Therefore, our statement in Davis
[v. O’Melveny & Meyers, 485 F.3d 1066 (9th Cir. 2007)] – that Broughton and Cruz
prohibit the arbitration of public injunctive relief claims in California – is no longer good
law. We are not blind to the concerns engendered by our holding today. It may be that
enforcing arbitration agreements even when the plaintiff is requesting public injunctive
relief will reduce the effectiveness of state laws like the UCL. It may be that FAA
preemption in this case will run contrary to a state’s decision that arbitration is not as
conducive to broad injunctive relief claims as the judicial forum. And it may be that state
legislatures will find their purposes frustrated. These concerns, however, cannot justify
departing from the appropriate preemption analysis as set forth by the Supreme Court in
Concepcion.”).
Coneff et al v. New Cingular Wireless Services, Inc., No. 09-35563, 2012 U.S. App.
LEXIS 5520 (9th Cir. March 16, 2012) (reversing and remanding district court decision
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denying individual arbitration on the basis that the class action waiver was
unconscionable and rejecting plaintiff’s “vindication of rights” argument because
Concepcion controls and the FAA preempts Washington state law invalidating class
action waivers; upon remand, the District Court is to perform a choice-of-law analysis to
determine whether the applicable laws of any state permit a contract to be invalidated
based on “freestanding procedural unconscionability”).
Eleventh Circuit
Jones v. DirecTV, Inc., No. 11-10887, 2011 WL 5903529 (11th Cir. Nov. 22, 2011)
(relying on Concepcion and affirming motion to compel individual arbitration of claims
subject to an arbitration agreement that contained a class action waiver previously
determined to be unconscionable under Georgia law).
Gordon, et al v. Branch Banking and Trust, No. 09-15399, 2012 U.S. App. LEXIS 1713
(11th Cir. Jan. 31, 2012) (remanding district court’s denial of motion to compel
arbitration for reconsideration in light of Concepcion after prior order affirming the
district’s denial of motion to compel arbitration was vacated and remanded by Supreme
Court).
Kardonick, et al v. CitiGroup, Inc., 449 Fed. Appx. 878 (11th Cir. 2011) (vacating
District Court’s denial of motion to compel arbitration based on procedural
unconscionability, in part, because of the “obvious disparity in bargaining power and
sophistication” of the parties and remanding matter to district court to reconsider in light
of Concepcion.)
In re Checking Account Overdraft Litigation – Hough v. Regions Financial Corporation,
No. 10-12376, 2011 WL 1663989 (11th
Cir. April 29, 2010); Barras v. Branch Banking
and Trust Company, No. 10-12377; 2011 WL 169562 (11th
Cir. April 28, 2011); Powell-
Perry v. Branch Banking and Trust Company, No. 10-12374, 2011 WL 1659559 (11th
Cir. April 28, 2011); 1659559 (11th
Cir. April 28, 2011; Given v. M&T Bank
Corporation, No. 10-12375, 2011 WL 16663991 (11th
Cir. April 29, 2011); Buffington v.
Suntrust Banks, Inc., No. 10-12373, 2011 WL 1659601 (11th
Cir. April 28, 2011). (Court
vacates and remands all five cases to the District Court for reconsideration in light of
Concepcion).
Cruz v. Cingular Wireless, LLC, No. 08-16080 (11th Cir. August 11, 2011) (Court
affirms District Court order compelling individual arbitration: “[T]o the extent that
Florida law would be sympathetic to the Plaintiffs’ arguments here, and would invalidate
the class waiver simply because the claims are of small value, the potential claims are
numerous, and many consumers might not know about or pursue their potential claims
absent class procedures, such a state policy stands as an obstacle to the FAA’s objective
of enforcing arbitration agreements according to their terms, and is preempted”; the Court
gave short shrift to (i) the affidavits of three Florida consumer law attorneys who attested
that they would not represent consumers in pursuing the claims in the case on an
individual basis and (ii) statistical evidence showing that an infinitesimal percentage of
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AT&T subscribers have arbitrated a dispute with AT&T which the plaintiff claims starkly
demonstrates the claims – suppressing effect of the class action ban).
Larsen v. J.P. Morgan Chase Bank, N.A., Nos. 10-12936, 10-12937, 2011 WL 3794755
(11th Cir. Aug. 26, 2011) (Court vacates and remands to the District Court to reconsider
the case in light of Concepcion)
United States District Court
California
Trompeter v. Ally Financial, Inc., No. C 12-00392, 2012 U.S. Dist. LEXIS 76456 (N.D.
Cal. June 1, 2012) (denying a motion to compel arbitration pending the California state
Supreme Court’s resolution of Sanchez v. Valencia Holding Company, LLC, 201 Cal.
App. 4th 74, 135 Cal. Rptr. 3d 19 (2011), petition for review granted, 139 Cal. Rptr. 3d 2,
272 P.3d 976 (2012), in which a California Court of Appeals declined to enforce a class
action waiver notwithstanding Concepcion).
Simmons v. Morgan Stanley Smith Barney, No. 11-2889, 2012 WL 1900110 (S.D.Cal.
May 24, 2012) (holding that employment discrimination claims are not subject to
arbitration where employees did not knowingly agree to submit disputes to arbitration).
Coleman v. Jenny Craig, Inc., No. 11-1301-MMA, 2012 U.S. Dist. LEXIS 70789 (S.D.
Cal. May 15, 2012) (holding arbitration agreements signed by employees are not
unconscionable based on the inclusion of the class action waiver).
Eshagh v. Terminix International Co., No. 1-0222, 2012 U.S. Dist. LEXIS 66527 (E.D.
Cal. May 11, 2012) (granting motion to compel arbitration and strike class claims where
arbitration agreement was silent regarding class arbitration).
Laster v. T-Mobile, Inc., No. 06-675, 2012 WL 1681762 (S.D. Cal. May 9, 2012)
(relying on Concepcion to conclude that a class arbitration waiver is not substantively
unconscionable).
In re Apple iPhone 3G Products Liability Litigation, No. 09-02045, 2012 U.S. Dist.
LEXIS 67334 (N.D. Cal. May 9, 2012) (granting motion to compel arbitration in light of
Concepcion).
Rosendahl, et al v. Bridgepoint Education, Inc., No. 11-61, 2012 U.S. Dist. LEXIS
26139, 2012 WL 667049 (S.D. Cal. Feb. 28, 2012) (finding that class action waiver that
prohibits plaintiff from pursuing public injunctive relief claims in arbitration on behalf of
others is enforceable under Concepcion but noting that there is a split in holdings on the
issue).
Sanders v. Swift Transportation Company of Arizona, LLC, No. 10-3739, 2012 U.S.
Dist. LEXIS 24234 (N.D. Cal. Jan. 17, 2012) (granting motion to compel individual
arbitration and rejecting argument that class action waiver was unenforceable because it
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required plaintiff to waive “unwaivable statutory rights” under California labor laws as
preempted by the FAA pursuant to Concepcion).
Martinez, et al v. The Welk Group, Inc., No. 09-2883, 2012 U.S. Dist. LEXIS 3893 (S.D.
Cal. Jan 12, 2012) (acknowledging enforceability of class action waivers post-
Concepcion but finding that defendant waived right to compel arbitration by failing to
previously move to compel individual arbitration of claims subject to agreements that
were silent on the issue of class actions and denying motion to compel individual
arbitration).
Estrella, et al v. Freedom Financial Network, LLC, No. 09-3156, 2012 U.S. Dist. LEXIS
7947, 2012 WL 214856 (N.D. Cal. Jan 24, 2012) (after court compelled individual
arbitration of claims of class members subject to class action waivers, plaintiffs amended
complaint to add named plaintiffs who signed arbitration agreements that did not have
class action waivers. Thereafter, the Court compelled arbitration of the new named
plaintiffs’ claims, including Credit Repair Organization Act claims, and decertified the
class, but did not specifically require individual arbitration of those claims).
Blau et al v. AT&T Mobility, No. 11-541, 2012 U.S. Dist. LEXIS 217 (N.D. Cal. Jan. 3,
2012) (rejecting argument that inability to obtain public injunctive relief renders
arbitration agreement unenforceable in light of Concepcion).
In re: Apple & AT&TM Antitrust Litigation, No. 07-5152, 2011 U.S. Dist. LEXIS
138539 (N.D. Cal. Dec. 1, 2011) (decertifying class and compelling individual arbitration
in light of Concepcion).
Alvarez et al v. T-Mobile USA Inc., No. 10-2373, 2011 U.S. Dist. LEXIS 146757, 2011
WL 6702424 (E.D. Cal. Dec. 21, 2011) (finding argument “that prohibitions on public
injunctive and declaratory relief and on punitive damages are unconscionable because
they undermine pro-consumer policies … [are] not viable post-Concepcion because state
laws advancing those policies are preempted by the FAA.”).
Daud et al v. Ameriprise Financial Services, Inc., No. 10-302, 2011 U.S. Dist. LEXIS
150972 (C.D. Cal. Oct. 12, 2011) (dismissing class allegations with prejudice and
compelling plaintiff to arbitrate her Financial Industry Regulatory Authority claims on an
individual basis in light of Concepcion).
AT&T Mobility v. Benardi et al, Nos. 11-3992, 11-4412, 2011 U.S. Dist. LEXIS 124084
(N.D. Cal. Oct. 26, 2011) (enjoining arbitration filed by plaintiffs seeking injunctive
relief upon motion by AT&T because the injunctive relief requested was a form of
representative action which was barred by the class action waiver and therefore outside of
the arbitration agreement, and noting that AT&T was likely to succeed on the merits of
the claim because the demands for injunctive relief constitute the sort of actions barred by
the class action waiver).
Lewis, et al v. UBS Financial Services, No. 10-4867, 2011 U.S. Dist. LEXIS 116433,
2011 WL 4727795 (N.D. Cal. Sept. 30, 2011) (compelling individual arbitration and
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rejecting argument that class action waivers in employment contracts remain
unconscionable under California law after Concepcion).
Hendricks v. AT&T Mobility, LLC, No. 11-409, 2011 U.S. Dist. LEXIS 124015 (N.D.
Cal. Oct. 26, 2011) (rejecting argument that arbitration agreement was unenforceable
because it required plaintiff to pay excessive fees and noting that “‘[i]f the Concepcion
majority had intended to allow for the plaintiffs to avoid class-action waivers by offering
evidence about particular costs of proof they would face – essentially applying the
underlying rationale of Discover Bank without relying on Discover Bank as a rule – one
would expect it to have drawn attention to such a significant point in response to the
dissent.’ Of course, it did not do so.”)
AT&T Mobility LLC v. Gonnello, No. 11-5636, 2011 U.S. Dist. LEXIS 116420, 2011
WL 4716617 (S.D. Cal. Oct. 7, 2011) (acknowledging enforceability of class action
waivers under Concepcion but denying motion to compel arbitration because the class
action waiver “withheld from the arbitrator the power to decide questions that would
necessarily affect the rights of more than the parties to the dispute through the grant of
declaratory or injunctive relief,” which brought the claims for injunctive relief outside the
scope of the arbitration provision).
Trent, et al v. T-Mobile USA, Inc., No. 10-2373, 2011 U.S. Dist. LEXIS 111784 (E.D.
Cal. Sept. 29, 2011) (acknowledging the scope of Concepcion’s prohibition against
challenges to class action waivers, but allowing discovery into whether the class action
waiver and opt out provision were so unclear in their written form as to render them
severable or unenforceable).
Urbino et al v. Orkin Services of California, Inc., No. 11-06456, 2011 U.S. Dist. LEXIS
114746 (C.D. Cal. Oct. 5, 2011) (finding agreement not to advance representative claims
under the Labor Code Private Attorney General Act (“PAGA”) unconscionable because it
undermined the very purpose and nature of a PAGA private attorney general enforcement
action and rejecting argument that Concepcion controlled because it was not an outright
prohibition against arbitrating PAGA claims.)
Ferguson v. Corinthian Colleges, Nos. 11-0127, 11-259, 2011 U.S. Dist. LEXIS 119261,
2011 WL 4852339 (C.D. Cal. Oct. 6, 2011) (denying motion to compel arbitration of
injunctive relief claims; “because the statutory purpose of the injunctive relief provisions
of the [Unfair Competition Law, the False Advertising Law and the Consumer Legal
Remedies Act] and the public interest concerns in this case cannot likely be met through
arbitration, because there is no apparent conflict with the FAA, and because Concepcion
does not take a position on the arbitrability of public injunction actions….”). The
reasoning was subsequently repeated by Kilgore v. KeyBank Nat’l Ass’n, -- F.3d --, 2012
WL 718344 (9th Cir. March 7, 2012).
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Bellows v. Midland Credit Management, Inc., No. 09CV 1951-LAB (W.Me), 2011 WL
1691323 (S.D. Cal. May 4, 2011) (“[Concepcion] disapproved of “[the California
Supreme Court opinion in] Discover Bank, holding it impermissibly interfered with the
Federal Arbitration Act. That decision disposes of Bellow’s best argument, making clear
the agreement to arbitrate is not substantively unconscionable merely because it includes
a class action waiver. It is therefore not invalid, and will be enforced”).
Zarandi v. Alliance Data Systems Corp., et al, CV 10-8309 DSF (ICGx), 2011 WL
1827228 (C.D. Calif. May 9, 2011). (“Plaintiff argues that the Court should not compel
arbitration and stay proceedings because (1) Defendants have not shown a valid
arbitration agreement exists; and (2) the arbitration agreement is unconscionable under
state law due to its class action waiver. In the alternative, Plaintiff requests that the Court
bifurcate Plaintiff’s claims that seek injunctive relief because such relief is not subject to
arbitration under California law. Both of Plaintiff’s arguments lack merit. Plaintiff does
not dispute that she received the terms and conditions for her card. Her failure to opt out
of the Arbitration Provision constitutes consent to those terms. See Gentry v. Superior
Court, 42 Cal. 4th
443, 467-68 (2007) abrogated on other grounds, Concepcion, 2011 WL
1561956. Her second argument is no longer viable after Concepcion. See 2011 WL
1561956, *5-*13. The Court also rejects the request to bifurcate the claims seeking
injunctive relief because the FAA preempts state law to the extent it prohibits arbitration
of a particular type of claim See id. At *6.”); plaintiff’s motion for reconsideration
denied (July 21, 2011). [Ballard Spahr client]
Arellano v. T-Mobile USA, Inc., No. C 10-05663 WHA, 2011 WL 1842712 (N.D. Calif.
May 16, 2011) (Court holds that Concepcion compels individual arbitration at least in
federal court of claims seeking injunctive relief and preempts the California Supreme
Court opinions in Broughton v. Cigna Healthplans of California, 21 Cal. 4th
. 1066 (1999)
and Cruz v. PacificCare Healthy Sys., Inc., 30 Cal. 4th
303 (2003)
Quevado v. Macy’s Inc., No. CV 09-1522 GAF (MANx), 2011 WL 3135052 (C.D. Calif.
June 16, 2011) (Court holds that Concepcion applies to representative PAGA claims.)
Villegas v. US Bancorp, No. C 10-1762 RS, 2011 U.S. Dist. LEXIS 65032 (N.D. Cal.
June 20, 2011) (Relying upon Concepcion, Court compels individual arbitration in a case
that had been pending for 13 months; Court rejected waiver argument made by plaintiff
because it would have been futile for defendant to have sought arbitration until
Concepcion case was decided.)
In re California Title Insurance Antitrust Litigation, No. 08-01341 JSW, 2011 WL
2566449 (N.D. Calif. June 27, 2010) (Court compels individual arbitration of claims
alleging that defendant “manipulated, controlled and maintained the cost of title
insurance at supra-competitive levels” and “fixed prices at rates that far exceed the risk
and loss experience associated with the insurance” based on Concepcion and held that
there was no waiver even though case had been litigated since 2008.)
Estrella v. Freedom Financial, No. C 09-03156 SI, 2011 U.S. Dist. LEXIS 71606 (N.D.
Calif. July 5, 2011) (Court, relying upon Concepcion, compels individual arbitration of
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claims under California Unfair Competition Law, California Consumer Legal Remedies
Act and negligence claims and stays action on the Federal Credit Repair Organizations
Act (“CROA”) claim pending the outcome of CompuCredit Corp. v. Greenwood in the
U.S. Supreme Court where the Court will determine whether CROA claims can be
arbitrated.) The U.S. Supreme Court subsequently held that CROA claims may be
arbitrated.
Hamby v. Power Toyota Irvine, No. 11cv544-BTM (BGS), 2011 WL 2852279 (S.D.
Calif. July 18, 2011) (Court permits discovery on unconscionability of arbitration
provision and class action waiver after concluding that while plaintiff can no longer rely
on California’s Discover Bank rule to assert that the arbitration provision is substantively
unconscionable merely because it includes a class action waiver, Concepcion “does not
stand for the proposition that a party can never oppose arbitration on the ground that the
arbitration clause is unconscionable.)
In re Apple and AT&T iPad Unlimited Data Plan Litigation, No. C-10-02553 RMW,
2011 WL 2886407 (N.D. Calif. July 19, 2011 (Court holds that Concepcion preempts
Massachusetts and Washington laws holding that class action waivers are invalid as well
as California’s arbitration exemption for claims requesting public injunctive relief as held
in Broughton v. Cigna Health Plans of California, 21 Cal. 412 1066, 1079-80 (1999) and
Cruz v. PacifiCare Health Systems, Inc., 30 Cal. 4th
303, 316 (2003))
Cardenas v. AmeriCredit Financial Services Inc., Nos. C 09-04978 SBA, C 09-04892
SBA, 2011 WL 2884980 (N.D. Calif. July 19, 2011) (Court stays proceeding pending
outcome of appeal in 9th
Circuit and observes that since Broughton v. Cigna Health Plans
of California, 21 Cal. 412 1066, 1079-80 (1999) and Cruz v. PacifiCare Health Systems,
Inc., 30 Cal. 4th
303, 316 (2003)) “create an outright prohibition to the arbitration of
certain claims [i.e., for pubic injunctive relief], the application of Concepcion’s
‘straightforward’ analysis arguably compels the conclusion that the FAA preempts both
of these cases”)
Kanbar v. O’Melveny & Myers, No. C-11-0892 EMC, 2011 WL 2940690 (N.D. Calif.
July 21, 2011) (Court compels individual arbitration based on plaintiff’s waiver of
judicial forum after holding that Concepcion does not preempt holding in Davis v.
O’Melveny & Myers, 485 F.3d 1066 (9th
Cir. 2007) that following features of arbitration
provision are unconscionable under California law: (1) provision giving employee only
one year to give notice from when any claim was known to him or her or with reasonable
effort should have been known to him or her; (2) provision barring an employee from
mentioning what took place during the arbitration or even the fact that the arbitration
existed in the first place; and (3) provision exempting defendant from arbitration.)
In re Gateway LX6810 Computer Products Litigation, No. SACV 10-1563-JST (JEMx),
2011 Wl 3099862 (C.D. Cal. July 21, 2011). (Court relies upon Concepcion and compels
individual arbitration of claims for (i) violations of the California Consumer Legal
Remedies Act (“CLRA”); (ii) violation of the California Unfair Business Practices Act
(“UCL”); (iii) violations of the California False Advertising Law; (iv) violations of the
Song-Beverly Warranty Act; (v) strict liability; (vi) breach of warranty; (vii) Common
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counts, assumes it and declaratory relief. Based on Concepcion, Court also rejects
argument that claims for injunctive relief under CLRA and UCL are nonarbitrable under
California law and that the arbitration provision is therefore unenforceable)
Boyer v. AT&T Mobility Services, LLC, Civil No. 10CV1258 JAH (WMc), 2011 U.S.
Dist. LEXIS 80607 (S.D. Calif. July 25, 2011 (Court relies upon Concepcion and
compels individual arbitration of claims for (i) fraudulent inducement; (ii) violation of
California Consumer Legal Remedies Act; (iii) violation of the California Unfair
Competition Law; and (iv) false and deceptive advertising.)
Nakano v. ServiceMaster Global Holding, Inc., No. C 09-05152 SI, 2011 U.S. Dist.
LEXIS 81949 (N.D. Cal. July 27, 2011) (Court relies on Concepcion in rejecting any
continuing viability of California Supreme Court opinion in Gentry v. Superior Court, 42
Cal. 4th
443 (2007), in case involving California Labor Code and Wage Orders and
California Business and Professions Code, Section 17200 and compels individual
arbitration; court also rejects waiver argument; petition for reconsideration denied on
August 9, 2011, 2011 U.S. Dist. LEXIS 88901)
Morse v. ServiceMaster Global Holdings, Inc., Civil Action No. C 10-00628 SI, 2011
U.S. Dist. LEXIS 82029 (N.D. Cal. July 27, 2011) (same result and reasoning as Nakano)
Murphy v. DirecTV, Inc., Case No. 2:07-cv-06465-JHN-VBKx, 2011 U.S. Dist. LEXIS
87625 (C.D. Calif. Aug. 2, 2011) (Based on Concepcion Court grants motion to
reconsider May 9, 2008 order denying motion to compel arbitration even though 9th
Circuit had affirmed that order)
Murphy v. DirecTV, Inc., Case No. 2:07-cv-0645650-JHN-VBKx, 2011 U.S. Dist.
LEXIS 87625 (C.D. Calif. Aug. 2, 2011) (Court applies Concepcion retroactively and
enforces class action waiver despite plaintiff’s argument that the court should apply
California law pre-Concepcion based on the following language in the arbitration
provision: “If, however, the law of your state would find this agreement to dispense with
class arbitration procedures unenforceable, then this entire Section 9 is unenforceable”;
Court also holds that the FAA preempts the provision in the California Consumer Legal
Remedies Act (which purports to create a non-waivable right to pursue a class action in
Court) and the California Supreme Court opinion in Gentry v. Superior Court, 42 Cal. 4th
443 (2007)
Saincome v. Truly Nolen of America, Inc., Case No. 11-CV-825-JM (BGS), 2011 U.S.
Dist. LEXIS 85880 (S.D. Calif. Aug. 3, 2011) (Court compels arbitration of class action
brought under Fair Labor Standards Act (“FLSA”) and authorizes the arbitrator to decide
whether to permit class arbitration; court distinguishes (i) Stolt-Nielsen based on the fact
that the employment arbitration agreement which contained no class action waiver was an
adhesion contract, and (ii) Concepcion because the FLSA permits class members to
participate in the class on an opt-in basis only)
Swift v. Zynga Game Network, Inc., No. C-09-5443 EDL, 2011 U.S. Dist. LEXIS 85983
(N.D. Cal. Aug. 4, 2011) (Court follows Concepcion and compels individual arbitration
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and found no waiver even though case was pending for 18 months before motion was
filed)
Pablo v. Service Master Global Holdings, Inc., No. C 08-03894 SI, 2011 U.S. Dist.
LEXIS 87918 (N.D. Calif. Aug. 9, 2011) (Court denied motion for class certification
based on a failure to satisfy the “superiority” requirement by virtue of the fact that
numerous arbitration agreements were signed by defendants and their employees and
defendants utilized these agreements for at least 8 years and the class action waivers
therein are now enforceable post-Concepcion)
Carney v. Verizon Wireless Telecom, Inc., Case No. 09CV1854 DMS (WVG), 2011 U.S.
Dist. LEXIS 88172 (S.D. Calif. Aug. 9, 2011) (Court compels individual arbitration post-
Concepcion)
Plows v. Rockwell Collins, Inc., Case No. SACV 10-01936 (MANx), 2011 U.S. Dist.
LEXIS 88781 (C.D. Calif. Aug. 9, 2011). (Court distinguishes Concepcion and holds
that (i) a class action waiver in an employment agreement is still invalid under the
California Supreme Court’s opinion in Gentry v. Superior Court, 42 Cal. 4th
443 (2007)
which is not preempted by the FAA, and (ii) Concepcion does not apply to representative
actions under the California Private Attorney General Act of 2004).
Nelson v. AT&T Mobility, LLC, No. C10-4802 TEH, 2011 U.S. Dist. LEXIS 92290
(N.D. Calif. Aug. 18, 2011) (Court compels individual arbitration of claims for public
injunctive relief under the California Unfair Competition Law and California Consumer
Legal Remedies Act and holds that the Concepcion overrules the California Supreme
Court opinion in Broughton v. Cigna Healthplan of California, 21 Cal. 4th 1066 (1999)
and Cruz v.PacificCare Health Systems, 30 (Cal. 4th 303 (2003))
Valle v. Lowe’s HIW, Inc., Case No. 11-1489 SC, 2011 U.S. Dist. LEXIS, 93639 (N.D.
Cal. Aug. 22, 2011) (Court compels individual arbitration of claims related to alleged
failure to pay certain employees proper overtime compensation and accurate itemized
wage statements brought under the Fair Labor Standards Act (“FLSA”), Section 17200 of
California Business and Professional Code, various provisions of the California Labor
Code and the California Private Attorney General Act (“PAGA”) and holds: (1)
compelling arbitration is not contrary to Section 7 of FLSA; (2) PAGA claims are
arbitrable if brought individually and on behalf of the State of California; (3) “Like
Discover Bank, Gentry [v. Superior Court, 42 Cal. 4th 443 (2007)] provides a rule of
enforceability that applies only to arbitration provisions. Both opinions rely on the same
California precedent and logic. As such, the Court concluded that in light of Concepcion,
Gentry is no longer good law, and rejects Plaintiffs’ argument.”
In re DirectTV Early Cancellation Fee Marketing and Sales Practices Litigation, Case
No. ML 09-2093 AG (ANx), 2011 U.S. Dist. LEXIS 102027 (C.D. Calif. Sept. 6, 2011)
(Court issues indicative ruling with respect to case on appeal to Ninth Circuit stating that
Concepcion applies to all claims except those claims under the California Unfair
Competition Law and California Consumer Legal Remedies Act based on the following:
(1) the defendant has not waived its right to compel arbitration as to plaintiffs from
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California, Washington, Oregon and New Jersey since it would have been futile to have
filed a motion before Concepcion got decided; (2) “Plaintiffs’ arguments about
prohibitive expense and difficulty are an attempt to re-litigate Concepcion” and “fails”;
and (3) Concepcion does not apply to claims under the California Unfair Competition
Law and California Consumer Legal Remedies Act based on the following: “Plaintiffs’
bring their [California Unfair Competition Law and California Consumer Legal
Remedies Act] claims as private attorneys general, seeking to vindicate a public right.
The claims are not intended to remedy a primarily private right or rights merely
incidental to the public benefit. See Cruz v. PacificCare Health Systems, Inc., 30 Cal. 4th
303, at 315. The holdings of Cruz and Broughton [v. Cigna Healthplans of California, 21
Cal. 4th 1066] are not inconsistent with Concepcion, and they protect important public
rights and remedies.”
Grabowski v. C.H. Robinson Company, Case No. 10 cv 1658-WQH-MDD, 2011 U.S.
Dist. LEXIS 105680 (S.D. Calif. Sept. 19, 2011) (Applying Concepcion, the Court
enforces class action waiver and compels individual arbitration after (1) determining that
there was waiver despite an eight-month delay between filing of answer and motion to
compel arbitration since it would have been futile prior to Concepcion to have sought
arbitration; (2) holding that the class action waiver does not violate Section 7 of the
National Labor Relations Act, 29 U.S.C. §157 (which provides that “[e]mployees shall
have the right…to engage in…concerted activities for the purpose of collective
bargaining or other mutual aid or protection”) since Section 7 deals only with union
organizing activities and they are not implicated by the complaint; (3) concluding that the
adhesive nature of the contract no longer weighs strongly in favor of procedural
unconscionability after Concepcion; (4) severing certain other features of the arbitration
provision dealing with a carve-out of some potential employer claims, confidentiality and
attorneys fees for defendant it could not recover in court; and (5) holding that the
California Private Attorney General Act claim is arbitrable and that the arbitration
agreement’s provision barring plaintiff from bringing that claim on behalf of other
employees is enforceable)
Kaltwasser v. AT&T Mobility LLC, Case No. C 07-00411, 2011 U.S. Dist. LEXIS
106783 (N.D. Calif. Sept. 20, 2011) (Court applies Concepcion and compels individual
arbitration and, in so doing, holds that the (1) “Vindication-of-Right Doctrine” has no
viability after Concepcion at least insofar as class action waivers are concerned; (2)
California Supreme Court opinions in Cruz and Broughton are overridden since they
apply public policy principles applicable to public injunctions to disfavor and prohibit
arbitration of an entire category of claim); and (3) there is no waiver of the right to
compel arbitration since it would have been futile to seek arbitration before Concepcion
got decided)
Meyer v. T-Mobile USA Inc., No. C 10-05858 CRB, 2011 WL 4434810 (N.D. Calif.
Sept. 23, 2011) (Applying Concepcion, Court holds that the FAA preempts claims for
public injunctive relief under the California Consumer Legal Remedies Act and the
California Unfair Competition Law notwithstanding the California Supreme Court
opinion in Broughton v. Cigna Healthplans of Calif., 21 Cal. 4th
1066 (1999) and Cruz v.
PacificCare Health Systems, Inc., 30 Cal. 4th
303 (2003); Court also concludes that even
DMEAST #16043515 v1 15
though the carve-out for collection claims makes the arbitration provision substantively
unconscionable, there was no procedural unconscionability because of 30-day opt-out
feature and, therefore, the arbitration provision was not unconscionable under California
law; plaintiff’s claim under the Federal Communication Act is arbitrable
Ho v. Ernst & Young, LLP, Case No. 5:05-cv-04867, 2011 U.S. Dist. LEXIS 106658
(N.D. Calif. Sept. 26, 2011) (Court denies motion to compel arbitration based on a waiver
because the defendant could have possibly convinced the Court to apply a New York
choice-of-law provision)
Alvarez v. T-Mobile USA, Inc., No. CIV S-10-2373 WBS GGH, 2011 U.S. Dist. LEXIS
111784 (E.D. Calif. Sept. 29, 2011) (Court largely refuses to permit discovery because of
Concepcion and opt-out feature: “Of importance here, the Concepcion court concluded
that only principles of unconscionability that applied generally to all contracts could
avoid the arbitration requirement; state law carving out special unconscionability rules
for types of contracts, e.g., consumer contracts, would not pass muster.” “But even going
one step further, if this were a Gentry situation, Alvarez’s motion for discovery still fails,
for the most part, on the basis that he clearly cannot show substantive unconscionability
(unduly oppressive result) given the opt out clause at issue. No one could reasonably
argue that if one is given a reasonable opportunity to opt out of an otherwise (assumed)
unconscionable arbitration provision, he can fail to opt out and still argue that the
provision is substantively unconscionable. It is undisputed and conceded (now) that the
arbitration provision at issue allowed Alvarez to opt out of both the arbitration provision
and any class action waiver. At hearing, defendant represented that the contract
contained the above cited provisions permitting the consumer to opt out of arbitration,
and if the consumer opts out, he or she is freed from the class action waiver provision.
The undersigned cannot fathom even a good faith argument that the arbitration provision
containing such an opt out could be considered oppressive.”)
Colorado
Vernon, et al v. Qwest Communications International, Inc., No. 09-1840, 2012 U.S. Dist.
LEXIS 31076, 2012 WL 768125 (D. Col. Mar. 8, 2012) (rejecting argument that
arbitration agreement was substantively unconscionable for policy reasons – including
the impropriety of class action waivers – as “attempts to resurrect policy arguments
rejected by the majority in Concepcion”).
Bernal v. Burnett, Civil Action No. 10-cv-01917-WJM-KMT, 2011 WL 2182903 (D.
Colo. June 6, 2011) (Court compels individual arbitration of claims of named-plaintiffs
after applying Concepcion; Court rejects notion that Concepcion does not affect
procedural unconscionability)
Daugherty v. Encana Oil & Gas (USA) Inc., Civil Action No. 10-cv-02272 – WJM-
KLM, 2011 WL 2791338 (D. Colo. July 15, 2011) (Court compels individual arbitration
of Fair Labor Standards Act (“FLSA”) class action after severing two features of
arbitration provision which Court held were unconscionable under Colorado law or
incompatible with FLSA: (1) provision requiring application of AAA Commercial Rules
DMEAST #16043515 v1 16
which permit assessment of any costs on plaintiffs; and (2) provision allowing for award
of attorneys’ fees to defendant in the event it is prevailing party. While Concepcion does
not preempt Colorado law on these points, Concepcion does preempt argument that
arbitration provision is unconscionable because it is adhesion contract.)
Connecticut
D’Antuono v. Serv. Rd. Corp., No. 3:11 CV 33 (MRK), 2011 U.S. Dist. LEXIS 57367
(D. Conn. May 25, 2011) (Although Court concludes that class action waiver is valid
under Connecticut law, court also reads Concepcion broadly to cover both substantive
and procedural unconscionability and to the federal common law doctrine involving the
vindication of federal statutory rights); certifies order to Second Circuit for interlocutory
review, 2011 WL 2222313 (D. Conn. June 6, 2011) [Ask Dan whether Second Circuit
agreed to hear case.] ALAN – ALTHOUGH SECOND CIRCUIT PACER IS
DOWN, D. CONN PACER SHOWS THAT PLAINTIFFS NEVER FILED THEIR
PETITION FOR LEAVE TO APPEAL WITH SECOND CIRCUIT.
District of Columbia
Aneke, et al v. American Express Travel Related Services, Inc., No. 11-1008, 2012 U.S.
Dist. LEXIS 11568 (D.D.C. Jan. 31, 2012) (rejecting argument that class action waiver
was unconscionable because it prohibited the plaintiff from seeking injunctive relief
under the federal Right to Financial Privacy Act (“RFPA”) and noting that individual
injunctive relief, as opposed to public or class-wide injunctive relief, may be available in
arbitration under the RFPA).
Hawkins v. Hooters of America, Civil Case No. 09-1475 (RJL), 2011 U.S. Dist. LEXIS
72024 (D.D.C. July 6, 2011) (Court denies motion to vacate arbitrator’s clause
construction award determining that class arbitration was not permitted under the
arbitration provision with respect to a claim under the Fair Labor Standards Act; Court
relied, in part, on Concepcion’s holding that class arbitration is generally disfavored as
undermining the efficiency benefits of the arbitration process.)
Florida
Luciana de Oliveira v. Citicorp North America, Inc., No. 251-T-26TGW, 2012 U.S. Dist.
LEXIS 69573 (M.D. Fla. May 18, 2012) (granting motion to compel arbitration in light
of Concepcion and Cruz v. Cingular Wireless, LLC, 648 F.3d 1205 (11th Cir. 2011)).
De Oliveira v. Citicorp North America, Inc., No. 8–251–T–26TGW, 2012 WL 1831230
(M.D.Fla. May 18, 2012) (granting a motion to compel individual arbitration of Fair
Labor Standards Act overtime claims based on a collective action waiver).
Day v. Persels & Associates, LLC, Case No. 8:10-CV-2463-T- 33 TGW, 2011 U.S. Dist.
LEXIS 49231(M.D. Fla. May 9, 2011) (Relying upon Concepcion, Court holds that FAA
preempts Florida law to the extent that it would invalidate as substantively
unconscionable a class action waiver in class action brought against debt settlement
company under the Florida Deceptive and Unfair Trade Practices Act and the Federal
DMEAST #16043515 v1 17
Credit Repair Organizations Act; there was no procedural unconscionability by virtue of
Concepcion and opt-out feature)
In re: Checking Account Overdraft Litigation, 459 Fed. Appx. 855 (11th Cir. Mar. 1,
2012), cert. den’d, -- S.Ct. --, 2012 WL 3134482 (Oct. 9, 2012) (reversing and remanding
decision denying motion to compel individual arbitration.)
In re: Checking Account Overdraft Litigation, MDL No. 2036, Powell-Perry v. Branch
Banking & Trust Company, Case No. 10-cv-20820-JLK, Barras v. Branch Banking &
Trust Company, Case No. 10-cv-20813-JLK, Given v. M&T Bank Corporation, Case No.
10-cv-20478-JLK, Hough v. Regions Financial Corporation, Case No. 10-cv-20476-JLK,
Buffington v. SunTrust Banks, Inc., Case No. 09-cv-23632-JLK (S.D. Fla. Sept. 1, 2011),
reversed and remanded, 459 Fed. Appx. 855 (11th Cir. Mar. 1, 2012) cert. den’d, -- S.Ct.
--, 2012 WL 3134482 (Oct. 9, 2012) (Upon remand from the Eleventh Circuit, Court
denies motion to compel arbitration on grounds other than the invalidity of class action
waivers (which the Court concluded was dealt with by Concepcion): “Here, the terms of
the Agreement place nearly all the risks of engaging in dispute resolution on Plaintiff. If
SunTrust wins in arbitration or small claims court, it is automatically entitled to an award
of costs and attorneys’ fees. [By virtue of set-off language in its checking account
agreement,] SunTrust may take its award directly from Plaintiff’s account at any time,
without notice to her. It may take funds from Plaintiff, even if they are jointly owned
with someone else. SunTrust need not engage in any garnishment process or await the
outcome of an appeal. Although the FAA entitles Plaintiff to challenge an adverse
arbitral award in federal court within three months, SunTrust is not required to wait that
long to deduct its costs and fees from her account. See 9 U.S.C. §12 (providing notice of
filing a motion to vacate or modify an arbitral award must be served within three months
after arbitral award is delivered). Furthermore, the FAA permits a district court to stay
proceedings to enforce an arbitral award when that award is challenged in court. 9
U.S.C. §12. But here, there are no enforcement proceedings to stay. In fact, SunTrust
may very well have already deducted the funds from her account. In this way, Plaintiff
loses all the protection of the FAA under the Agreement.
On the other hand, if Plaintiff wins, she too is entitled to an award of costs and attorneys’
fees. However, Plaintiff does not then enjoy the guaranteed, immediate recovery of that
award at a time of her choosing. At worst, she will have to incur the expense of engaging
in legal process to recover her award from SunTrust. At best, she will have to wait until
SunTrust decides to pay her. If SunTrust exercises its right to challenge an arbitral award
in federal court, it would be entitled to a stay of any enforcement proceedings by
Plaintiff. Thus, while the Agreement strips Plaintiff of the protection afforded by the
FAA, SunTrust enjoys these benefits in full.”)
Georgia
Hopkins v. World Acceptance Corporation, No. 1-10-cv-03429- SCJ, 2011 U.S. Dist.
LEXIS 79770 (N.D. Ga. June 29, 2011) (Court compels arbitration in reliance upon
Concepcion: “The [Supreme] Court’s ruling is quite broad, and allows for the
enforcement of class action waivers in arbitration agreements, even when (1) the
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arbitration agreement is a contract of adhesion, (2) the plaintiff can only recover a small
amount, and (3) the plaintiff alleges that the defendant had schemed to cheat its
customers.” The Court also holds that there is no procedural unconscionability, in part
because of the opt-out feature. The Court also refuses to allow the plaintiff to conduct
arbitration-related discovery.)
Illinois
Tory v. First Premier Bank, Case No. 10 C 7326, 2011 U.S. Dist. LEXIS 110126 (N.D.
Ill. Sept. 26, 2011) (Court enforces class action waiver under Illinois and South Dakota
law because of opt-out feature and, alternatively, because “Concepcion moots any
argument on the cost benefits to the plaintiff of a class action versus an individual
arbitration”)
Dan Valentine et al v. WideOpen West Finance LLC, No. 09-7653, 2012 U.S. Dist.
LEXIS 40396 (N.D. Ill. March 26, 2012) (compelling individual arbitration in light of
Concepcion and rejecting argument that individual arbitration was economically
infeasible but noting in dicta that Concepcion would not foreclosure the argument if
plaintiffs could demonstrate that it would “always be economically irrational to pursue
arbitration”).
Kansas
Spears, et al v. Mid-America Waffles, Inc., No. 11-2273, 2012 U.S. Dist. LEXIS 90902
(D. Kan. July 2, 2012) (compelling individual arbitration under Concepcion and rejecting
argument that, under DR Horton, Inc., 357 N.L.R.B. No. 184 (Jan. 3, 2012), Concepcion
does not apply to federal claims).
Louisiana
In re Apple iPhone 3G and 3GS “MMS” Marketing and Sales Practices Litig., No. MDL
2116 Section J, 2012 U.S. Dist. LEXIS 43971 (E.D. La. March 29, 2012) (compelling
individual arbitration of claims against Apple because those claims were sufficiently
intertwined with the claims against AT&T, which plaintiffs conceded were subject to
individual arbitration post Concepcion as a result of a class action waiver).
Missouri
Medicine Shoppe International, Inc. v. Edlucy, Inc., No. 4-161, 2012 U.S. Dist. LEXIS
67133 (E.D. Mo. May 14, 2012) (denying motion to compel individual arbitration and
concluding that whether an arbitration agreement permitted class-wide arbitration must
be resolved by an arbitrator).
Owen v. Bristol Care, Inc., No. 11-4258, 2012 U.S. Dist. LEXIS 33671 (W.D. Mo. Feb.
28, 2012) (revoking arbitration agreement with class action waiver because “Concepcion,
is not controlling [in the employment context, rather] [i]n the employment context,
waivers of class arbitration are not permissible.” (citing D.R. Horton Inc., 357 N.L.R.B.
No. 184 (2012)).
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Sakalkowski v. Metron Services, Inc., No. 4:10cv2052 AGF, 2011 U.S. Dist. LEXIS
101652 (E.D. Mo. Sept. 8, 2011) (Relying upon Concepcion, Court compels individual
arbitration and finds no waiver because prior to Concepcion class action waivers were
invalid in Missouri).
Nevada
Sussex. Turnberry/MGM Grand Towers, LLC., Case No.: 2:08-cv-0073 – RLH- PAL,
2011 U.S. Dist. LEXIS 105051 (D. Nev. Sept. 15, 2011) (Court denies motion to vacate
AAA arbitration decision refusing to entertain classwide arbitration and denies motion to
reconsider earlier order compelling arbitration and applies Concepcion to a situation not
involving a class action waiver; court concludes that Concepcion overrides Nevada
Supreme Court in Gonski v. Second Judicial Dist. Court, 245 P. 3d 1164 (Nev. 2010) – a
case not involving class action waivers)
Giles v. GE Money Bank, Case No. 2:11-cv-434-JCM (CWH), 2011 U.S. Dist. LEXIS
111018 (D. Nev. Sept. 27, 2011) (Court applies Utah choice-of-law clause and enforces
class action waiver based on opt-out feature and Utah statute validating class action
waivers; additionally, Court relies on Concepcion after observing that Concepcion
“provide clear guidance that class action waivers are enforceable despite any negative
effect on small dollar claims…Giles attempt to limit the Supreme Court’s holdings to its
particular facts are unpersuasive. Several courts have recognized that holding in AT&T
Mobility is broadly applicable to state rules limiting the effect of class action waivers, are
not limited to the California rule it was abrogating.”)
New Jersey
Muhammad v. Delaware Title Loans, Inc., No. 09-3920 (D. N.J. March. 29, 2012)
(Magistrate Judge’s Order compelling individual arbitration of claims subject to
agreements containing express class action waivers in light of Concepcion but ruling that
whether class arbitration can be pursued on claims subject to agreements that do not
contain express class action waivers must be decided by the arbitrator), app. pending, No.
09-3920 (D. N.J. July 3, 2012). [Ballard Spahr client]
Matthew S. Wolf, et al v. Nissan Motor Acceptance Corp., No. 10-3338, 2012 U.S. Dist.
LEXIS 44854 (D. N.J. March 29, 2012) (denying motion for reconsideration of order
compelling individual arbitration of claims under the Servicemembers Civil Relief Act).
Brokers’ Services Marketing Group, et al v. Cellco Partnership, No. 10-3973, 2012 U.S.
Dist. LEXIS 42721 (D. NJ March 28, 2012) (compelling individual arbitration of claims
subject to class action waiver and rejecting “vindication of rights” argument and the
Second Circuit decision in In re American Express Merchs. Litig., 667 F.3d 204 (2d Cir.
2012) as a decision that “cannot be squared with the reasoning of either the Supreme
Court or the Third Circuit.”).
Villano, et al v. TD Bank, et al., No. 11-cv-6714, 2012 U.S. Dist. LEXIS 123013 (D. N.J.
Aug. 29, 2012) (granting motion to compel individual arbitration and rejecting contention
that class action waiver was unconscionable).
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Coiro, et al v. Wachovia Bank, N.A., No. 11-3587, 2012 U.S. Dist. LEXIS 24508, 2012
WL 628514 (D. N.J. Feb. 27, 2012) (compelling individual arbitration and rejecting
plaintiff’s attempt to avoid Concepcion by arguing that the class action waiver was
unconscionable under the FAA’s savings clause because plaintiff could not demonstrate
that enforcing the class action waiver would effectively preclude any action seeking to
vindicate the rights of the proposed class members).
Chassen et al v. Fidelity National Financial, Inc., No. 09-291, 2012 U.S. Dist. LEXIS
2848 (D. N.J. Jan. 10, 2012) (compelling individual arbitration and finding “untenable”
the argument that Concepcion did not overrule New Jersey Supreme Court decision
finding class action waivers unconscionable).
In re: Sprint Premium Data Plan Marketing And Sales Practices Litigation, No. 10-6334,
2012 U.S. Dist. LEXIS 33579 (D. N.J. March 12, 2012) (relying on Concepcion in
rejecting argument that class action waiver was unconscionable under New Jersey law,
but ordering discovery on actual costs of arbitration to determine whether arbitration
agreement which did not have a specific provision regarding costs would be prohibitive
to individual plaintiffs and, therefore, unconscionable under Green Tree Fin. Corp. v.
Randolph, 531 U.S. 79 (2000)).
Opalinski v. Robert Half International, No. 10-2069, 2011 U.S. Dist. LEXIS 115534 (D.
N.J. Oct. 6, 2011) (finding plaintiff’s argument that Concepcion did not control the issue
of whether prohibiting class relief under federal Fair Labor Standards Act claim would be
unconscionable premature because the arbitration agreement was silent on class
arbitration and, therefore, the availability of class arbitration was an issue for the
arbitrator to decide).
Wolf v. Nissan Motor Acceptance Corporation, Civil Action No. 10-cv-3338 (NLH)
(KMW), 2011 U.S. Dist. LEXIS 66649 (D.N.J. June 22, 2011) (Court holds that
(i) Concepcion overrides New Jersey Supreme Court opinion in Muhammad v. County
Bank of Rehoboth Beach, 912 A.2d 88 (N.J. 2006) (which held that class action waiver is
unconscionable in small-dollar consumer case) and (ii) there is no non-waivable right to
bring a class action under the Servicemembers Civil Relief Act.)
New York
Vincent Emilio v. Sprint Spectrum L.P., No. 11-3041, 2012 U.S. Dist. LEXIS 37611
(S.D. N.Y. March 16, 2012) (vacating arbitrator’s decision that the express class action
waiver was unconscionable and that, therefore, the plaintiff could not be compelled to
proceed with bilateral arbitration and rejecting argument that bilateral arbitration would
prohibit plaintiff from effectively vindicating her rights despite the Second Circuit’s
decision in In re American Express because the plaintiff failed to present any evidence in
support of the claim).
Khanna v. American Express Company, No. 11-6245, 2011 WL 6382603 (S.D. N.Y.
Dec. 14, 2011) (compelling individual arbitration pursuant to Concepcion and Utah law).
DMEAST #16043515 v1 21
Sanders et al v. Forex Capital Markets, LLC, No. 11-0864, 2011 U.S. Dist. LEXIS
137961 (S.D. N.Y. Nov. 29, 2011) (compelling arbitration and rejecting argument that
the unavailability of class arbitration is a ground for finding substantive
unconscionability in light of Concepcion).
Sutherland, et al v. Ernst & Young, LLP, -- F. Supp. 2d --, No. 10-3332, 2012 U.S. Dist.
LEXIS 31412 (S.D. N.Y. March 6, 2012) (granting stay of discovery pending appeal of
denial of motion to compel individual arbitration of claims under the federal Fair Labor
Standards Act and Title 12 of the Codes, Rules and Regulations of the State of New
York, but noting that defendant has little likelihood of prevailing on appeal because In re
American Express Merchants’ Litig., 667 F.3d 204 (2d Cir. 2012) “authorizes the
invalidation of an agreement to arbitrate if the agreement bars class arbitration and the
plaintiff demonstrates that pursuing non-class arbitral proceedings to assert a federal
statutory claim would be financially or otherwise unfeasible”).
Schatz et al v. Cellco Partnership, 10-5414, 2012 U.S. Dist. LEXIS 13551, 2012 WL
360284 (S.D. N.Y. Feb. 3, 2012) (after compelling individual arbitration in light of
Concepcion, denying Plaintiffs’ motion to strike portion of arbitration agreement that
prohibited “general injunctive relief” and leaving it to arbitrator to determine whether
“general injunctive relief” or individual injunctive relief were available to the plaintiffs).
Chen-Oster v. Goldman, Sachs & Co., 10 Civ. 6950 (LBS) (JCF), 2011 U.S. Dist. LEXIS
73200 (S.D. N.Y. July 7, 2011) (Court denies motion for reconsideration of Chen-Oster
v. Goldman, Sachs & Co., 2011 U.S. Dist. LEXIS 46994 (S.D. N.Y. April 28, 2011)
where Court denied motion to compel individual arbitration of pattern and practice claim
of gender discrimination under Title VII of Civil Rights Act of 1964 on the basis that
such a claim, as opposed to a disparate impact claim, may only be prosecuted on a class
basis; Court distinguishes Concepcion on the basis that Concepcion involved the
preemption of state contract law while this case involves rights created by a competing
federal statute.)
Ohio
Webster v. Freedom Debt Relief, LLC, Case No. 1:10-cv-1587, 2011 U.S. Dist. LEXIS
85843 (N.D. Ohio July 15, 2011) (Court compels individual arbitration after concluding:
“In the wake of Concepcion, any public policy in favor of class action for consumers in
the [Ohio Consumer Sales Practices Act] is clearly superseded by the FAA….”)
Oregon
Willis et al v. Debt Care, USA, Inc., No. 11-430, 2011 U.S. Dist. LEXIS 153007, 2011
WL 7121288 (D. Or. Oct. 24, 2011) (finding class action waiver enforceable in light of
Concepcion and compelling arbitration of state statutory claims despite argument that
those claims were not governed by Concepcion).
Willis et al v. Debt Care, USA, Inc., No. 11-430, 2012 U.S. Dist. LEXIS 45005 (D. Or.
March 30, 2012) (rejecting renewed argument that class action waiver was unenforceable
and rejecting renewed contention that Concepcion was limited to California law).
DMEAST #16043515 v1 22
Pennsylvania
Williams v. Securitas Security Services USA, Inc., Civil Action No. 10-7181, 2011 WL
2713741 (E.D. Pa. July 13, 2011) (Court grants emergency motion of plaintiffs for a
protective order and corrective mailing to address defendant’s improper communications
with absent class members—namely, implementing an arbitration provision which could
apply to pending putative class actions—and holds that Concepcion is not relevant to the
issue.)
King v. Advance America, Cash Advance Centers, Inc., Civil Action No. 07-237 and
Johnson v. Advance America Cash Advance Centers Inc., Civil Action No. 07-3142,
2011 WL 3861898, (E.D. Pa. Aug 3, 2011) (Relying upon Concepcion, and the Third
Circuit’s opinion Litman, and after concluding that there is no difference among
California, New Jersey and Pennsylvania law with respect to FAA preemption, the Court
holds that the class action waiver provisions are not unconscionable and compels
arbitration after denying Johnson’s discovery motion). [Ballard Spahr client]
Alfeche v. Cash America Int’l, Inc., Civil Action No. 09-0953, 2011 U.S. Dist. LEXIS
90085, reconsideration denied on Sept. 15, 2011 (E.D. Pa. Aug. 12, 2011) Relying upon
Concepcion, Court enforces class action waiver and orders individual arbitration: “Like
the California Supreme Court’s decision in Discover Bank, the Pennsylvania Superior
Court’s decision in Thibodeau [v. Comcast Corp., 912 A.2d 874 (2006)], in its analysis of
the circumstances under which class action waivers are procedurally and substantively
unconscionable has the effect of requiring the availability of classwide arbitration. The
Supreme Court has held that state law requiring the availability of classwide arbitration
undermines the FAA’s central purpose and is preempted by the FAA. The FAA
preempts Pennsylvania’s unconscionability law with regard to class action waivers in
arbitration agreements. Under FAA § 2, the instant arbitration clause containing a class
action waiver is valid and enforceable.” (citations and footnote omitted). [Ballard
Spahr client]
Clerk v. Cash AmericaNet of Nevada, LLC, Civil Action No. 09-2245, 2011 U.S. Dist.
LEXIS 95489 (E.D. Pa. Aug. 25, 2011) (Court compels individual arbitration and holds:
“Like the California Supreme Court decision in Discover Bank, the Pennsylvania
Supreme Court decision in Thibodeau [v. Comcast Corp., 912 A.2d 874 (2006)], in its
analysis of the circumstances under which class action waivers are procedurally and
substantively unconscionable, effectively requires the availability of classwide
arbitration. See Id. Under Concepcion, the FAA preempts Pennsylvania’s
unconscionability laws with regard to a class action waiver in an arbitration agreement.
The instant arbitration clause containing a class action waiver is valid and enforceable
under Section 2 of the FAA”). [Ballard Spahr client]
Black v. J.P. Morgan Chase & Co., Civil Action No. 10-848, 2011 U.S. Dist. LEXIS
99428 (W.D. Pa. Aug. 25, 2011), report and recommendation of Magistrate Judge
adopted as opinion of Court on Sept. 14, 2011 (In connection with federal antitrust claim,
DMEAST #16043515 v1 23
Court holds that class action waiver in Discover Bank’s arbitration provision is not
unconscionable under Delaware or Pennsylvania law and that, in any event, Concepcion
preempts Pennsylvania law to the extent that it would hold otherwise). [Ballard Spahr
client]
Clerk v. Cash Central of Utah, LLC, Civil Action No. 09-4964, 2011 U.S. Dist. LEXIS
95494 (E.D. Pa. Aug 25, 2011) (Relying upon Concepcion, Court held that FAA
preempts Pennsylvania Law after concluding that the FAA preempts the Pennsylvania
Supreme Court opinion in Thibodean v. Comcast Corp., 912 A.2d 874.
Tractenberg v. Citigroup Inc., No. 2:10-cv-03092-LS (E.D. Pa. Sept. 1, 2011) (Applying
Concepcion, Court refuses to distinguish Pennsylvania law from California law and based
the differences between the arbitration agreement in this case and Concepcion. “In
Concepcion, the Supreme Court did not rely on the other terms of the arbitration
provision for its determination the FAA preempts California’s rate regarding class
arbitration”)
Tennessee
Dean, et al. v. Draughons Junior College, Inc. et al., No. 12-157, 2012 U.S. Dist. LEXIS
158294 (M.D. Tenn. Nov. 5, 2012) (denying motion to compel arbitration as cost-
prohibitive and relying on Schnuerle v. Insight Commc’ns Co., L.P., 376 S.W.3d 561
(Ky. 2012) which found that Concepcion did not disturb the principle that an arbitration
clause is not enforceable if it fails to provide plaintiffs with an adequate opportunity to
vindicate their claims, which includes prohibitively high arbitration costs and
inconvenient arbitration location).
Reeners v. Verizon Communications, Inc., No. 3-11-0573, 2011 WL 2791262 (M.D.
Tenn. July 14, 2011) (Court follows Concepcion and compels individual arbitration after
refusing to allow plaintiff to conduct arbitration-related discovery.)
Texas
Wilson v. Cash America International, Inc., No. 110421, 2012 U.S. Dist. LEXIS 1224
(N.D. Tex. Feb. 1, 2012) (compelling arbitration of claims based on fourteen “short term”
loans and noting that “[t]o whatever extent plaintiff is contending that the class action
provisions of the arbitration agreements cannot be enforced, the court notes that the
contention would be at odds with the decision of the Supreme Court in [Concepcion]”).
[Ballard Spahr client]
Vermont
Bergman et al v. Spruce Peak Realty, LLC, No. 11-127, 2011 U.S. Dist. LEXIS 131366
(D. Vt. Nov. 14, 2011) (granting motion to compel arbitration but denying motion to
enjoin class arbitration where agreement did not contain class action waiver because,
while Concepcion held that “class arbitration could not be required by state law,” class
arbitration is not prohibited by federal law and, therefore, “whether there is a contractual
DMEAST #16043515 v1 24
basis for concluding that the Defendants agreed to submit to class arbitration is an issue
that must be referred to the arbitrator….”)
Wisconsin
Pamela Herrington et al v. Waterstone Mortgage Corp., No. 11-779, 2012 U.S. Dist.
LEXIS 36220 (W.D. Wis. March 16, 2012) (following decision of National Labor
Relations Board in D.R. Horton that collective action waivers conflict with the National
Labor Relations Act and rejecting argument that D.R. Horton conflicts with Concepcion
because “the class action waiver in [Concepcion] did not conflict with the substantive
right of a federal statute. Rather the question was whether the FAA preempted a ruling
under state law by the California Supreme Court.”)
National Labor Relations Board
D.R. Horton, Inc. and Michael Cuda, No. 12-25761, 2012 NLRB LEXIS 11 (NLRB Jan.
3, 2012) appeal pending (holding that a general class action waiver in an arbitration
agreement in an employment contract is unenforceable because it violates Rule 7 of the
National Labor Relations Act (“NLRA”), which provides employees the substantive right
“to engage in concerted activities for the purpose of collective bargaining or other mutual
aid or protection”, and finding that Concepcion did not require a different result because
such a waiver would violate an employees substantive rights regardless of whether it was
contained in an arbitration agreement or a contract that said nothing about arbitration;
however, noting that “[w]e need not and do not mandate class arbitration in order to
protect employees’ rights under the NLRA. Rather, we hold only that employers may not
compel employees to waive their NLRA right to collectively pursue litigation of
employment claims in all forums, arbitral and judicial. So long as the employer leaves
open a judicial forum for class and collective claims, employees’ NLRA rights are
preserved without requiring the availability of class wide arbitration. Employers remain
free to insist that arbitral proceedings be conducted on an individual basis.”)
24 Hour Fitness USA, Inc. v. Alton Sanders, No. 20-CA-035419, 2012 NLRB LEXIS
761 (NLRB Nov. 6, 2012) (finding inclusion of class action waiver in employment
agreement to be an unfair labor practice and rejecting arguments that: (1) D.R. Horton is
invalid in light of Concepcion and CompuCredit; and (2) D.R. Horton does not apply
when the class action waiver is not mandatory but rather the employee is able to opt out
of the provision)
State Courts
California
Nelsen v. Legacy Partners Residential, Inc., 297 Cal. App. 4th
. 1115 (Cal. App. 1st Dist.
2012) (compelling individual arbitration of wage-and-hour claims in light of
Concepcion.)
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Iskanian v. CLS Transportation Los Angeles, LLC, 206 Cal. App. 4th 949 (Ct. App.
2012), pet. for review granted, 147 Cal. Rptr.3d 324 (2012) (compelling individual
arbitration of wage-and-hour claims in light of Concepcion.)
Lee Anne Caron et al v. Mercedes-Benz Financial Services, USA LLC, No. 044550,
2012 WL 25797662 (Cal. App. 4th Dist. June 29, 2012) (holding that the FAA preempts
the California's Consumer Legal Remedies Act's prohibition against class action waivers
and reversing trial court's Order denying petition to compel individual arbitration that
was grounded in contrary holding).
Lewis v. 24 Hour Fitness USA, Inc., No. B227869, 2011 WL 5223153 (Cal. App. 2 Dist.
Nov. 3, 2011) (reversing order denying “motion to enforce” class action waiver provision
of arbitration agreement).
Moran v. Superior Court of Kern County, No. 061801, 011 Cal. App. LEXIS 8766 (Cal.
App. 5th Dist. Nov. 16, 2011) (rejecting argument that class action waiver was
unconscionable under Concepcion but noting that “AT&T Mobility did not hold that all
state unconscionability law, as it applies to arbitration agreements, is preempted by the
FAA. It acknowledged that an arbitration agreement may be invalidated by
unconscionability under state law to the same extent as contracts in general. Its
consideration was limited to California’s Discover Bank rule, a rule it found was
inconsistent with the purposes and objectives of arbitration and ‘interfere[d] with the
purposes and objectives or arbitration.’ Real parties have not shown that other aspects of
California’s unconscionability law, which petitioner invoked in an attempt to invalidate
his arbitration agreement with real parties, are fundamentally at odds with arbitration.”)
Sanchez v. Valencia Holding Company, LLC, 200 Cal. App. 4th 11 (Cal. App. 2 Dist.
2011), vacated 201 Cal. App. 4th 74 (Cal. App. 2 Dist. 2011) superseded Mar. 21, 2012
(finding arbitration agreement procedurally and substantively unconscionable on various
grounds and rejecting argument that Concepcion implicitly overruled Broughton-Cruz
rule which prohibits arbitration of claims for public injunctive relief).
Ajamian v. CantorCO2e, L.P., No. A131025, 2012 Cal. App. LEXIS 148 (Cal. App. 1st
Div. Feb. 16, 2012) (rejecting argument that Concepcion applies to a waiver of special or
statutory damages available under California law and affirming decision finding
arbitration agreement unconscionable for containing those provisions).
Brown v. Ralph’s Grocery Company, B222689, 2011 WL 2685959 (Calif. Ct. App., 2nd
Dist. July 12, 2011) (Court holds that Concepcion does not apply to representative
actions under the California Private Attorney General Act of 2004 (“PAGA”) and affirms
order of trial court that waiver of right to pursue a representative action under PAGA was
not enforceable; case remanded to determine whether such waiver should be severed.)
Missouri
Brewer v. Missouri Title Loans, No. SC90647, 2012 Mo. LEXIS 62 (Mo. March 6, 2012)
(finding class action waiver not unconscionable under Concepcion but finding arbitration
DMEAST #16043515 v1 26
agreement as a whole unconscionable because it lacked mutuality and because the
evidence established that individual arbitration was financially impossible).
Robinson, et al v. Title Lenders, Inc., No. S.C.91728, 2012 Mo. LEXIS 63 (Mo. March 6,
2012) (reversing trial court’s decision that defendant’s arbitration agreement was
unconscionable because of its class action waiver in light of Concepcion and remanding
for trial court to determine whether the arbitration agreement was unconscionable on
grounds that remain available post-Concepcion).
New Jersey
NAACP of Camden County East v. Foulke Management Corp., Docket No. A-1230-
09T3, 2011 WL 3273896 (N.J. Super. Ct. App. Div. August 2, 2011) (Although Court
reversed order compelling arbitration because disparate arbitration provisions were too
confusing, too vague, and too inconsistent to be enforced, the Court strongly endorsed
Concepcion and stated: “[T]he Court in AT&T Mobility held that the FAA preempts
courts from nullifying class action waiver provisions in arbitration agreements based
upon state-law notions of unconscionability and public policy. The Court unambiguously
ruled that the FAA trumps state laws in this respect. Consequently, we must reject
plaintiffs’ specific attempt to have us declare the class action waiver provisions in this
case invalid on the basis that such waivers, as a policy matter, unconscionably discourage
the pursuit of ‘low-value’ claims such as those involved here.” The Court then rejected
each of these arguments made by plaintiffs to distinguish Concepcion: (1) the case does
not involve interstate commerce, (2) Concepcion does not apply to allegations of class-
wide fraud; (3) the defendant’s arbitration provision in Concepcion was more consumer
friendly than the AT&T provision; and (4) Concepcion condemns only generalized state-
law nullifications of class waivers, not case-specific ones. With respect to the third
argument, the Court stated: “The fact that the arbitration provisions in AT&T Mobility
may have been more generous to consumers than the provisions here does not affect the
force of the Supreme Court’s preemption analysis. The Court’s analysis turned on
general doctrinal principles rather than the specific wording of the cellular contracts.”
New York
Gomez et al v. Brill Securities, Inc., -- N.Y.S. 2d --, No. 652113/10, 2012 N.Y. App. Div.
LEXIS 1854, 2012 WL 851644 (N.Y. App. Div. 1st Dept. March 15, 2012) (affirming
denial of motion to compel arbitration of class action because arbitration agreement
incorporated the Financial Industry Regulatory Authority (“FINRA”) which prohibits
arbitration of class action claims or enforcement of any arbitration agreement against a
member of a putative class action with respect to any claim that is subject of the class
action and finding Concepcion not dispositive on this issue because FINRA was not a
state law antithetical to the goals of the FAA).
Ohio
Wallace v. The Ganley Group, No. 95081, 2011 WL 2434093 (Ohio Ct App. 8th
Dist.
June 16, 2011) (Relying upon Concepcion, Court affirms order of trial court compelling
DMEAST #16043515 v1 27
individual arbitration of claim against used-car dealer under Ohio Consumer Sales
Protection Act.)
South Carolina
Herron, et al v. Century BMW, No. 26805, 2011 S.C. LEXIS 402 (S.C. Dec. 19, 2011)
(reinstating opinion denying motion to compel individual arbitration; original decision
was based on ground that class action waiver was invalid under state law; after being
ordered by United States Supreme Court to reconsider that opinion in light of
Concepcion, court held that the issue of preemption had not been preserved for review in
the South Carolina proceeding).
West Virginia
Richmond American Homes of West Virginia, Inc. v. Honorable David H. Sanders, 717
S.E.2d 909 (W. Va. 2011) (finding that circuit court erred in ruling that class action
waiver rendered arbitration provision unconscionable in light of Concepcion, but
affirming circuit court’s denial of motion to compel arbitration on other grounds, namely
that the entire arbitration agreement was unconscionable because it, inter alia,
“exculpated Richmond from misconduct”).
Wisconsin
Cottonwood Financial LTD v. Estes, No. 2009AP760, 2011 Wisc. App. LEXIS 1009
(Wis. App. Dec. 20, 2011) (affirming circuit court’s order that class arbitration waiver
was enforceable and not unconscionable in light of Concepcion).
Cottonwood Financial LTD v. Estes, No. 2009AP760, 2012 WL 265716 (Wis. App. Jan.
31, 2012) (affirming judgment on order compelling arbitration and stating that
“Concepcion’s holding is clear: the FAA preempts any state law that classifies an
arbitration agreement as unconscionable, and therefore unenforceable, simply because the
agreement prohibits an individual from proceeding as a member of a class. Accordingly,
under Concepcion, the waiver of class-wide proceedings in Estes's arbitration agreement
with Cottonwood does not render the agreement substantively unconscionable.”)
Other Relevant U.S. Supreme Court Opinions
Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., No. 08-1198, 2010 WL 1655826 (April
27, 2010) (although not dealing directly with validity of class action waiver, Court held
that imposing class arbitration on parties who have not agreed to authorize class
arbitration is inconsistent with the Federal Arbitration Act).
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991) (although not dealing
with validity of class action waiver, Court held that federal statutory age discrimination
claim was subject to arbitration under the FAA “even if the arbitration could not go
forward as a class action or class relief could not be granted by the arbitrator”).
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Federal Circuit Court Opinions
Upholding Validity of Class Action Waivers
Second Circuit
JLM Industries, Inc. v. Stolt-Nielson SA, 387 F.3d 163 (2nd
Cir. 2004) (in dictum, Court
states in footnote 9, in relevant part: “We also note that we do not understand JLM to be
making an argument to the effect that its assertion of class claims should serve as a bar or
deterrent to sending the instant case to an arbitral panel. We would likely view such an
argument skeptically because [f]ederal courts have . . . consistently enforced arbitration
provisions in the context of class action lawsuits where federal statutory claims have been
at issue. Lewis Tree Serv., Inc. v. Lucent Techs, Inc., 239 F. Supp. 2d 332, 338 (S.D.
N.Y. 2002).”
Third Circuit
Vilches v. The Travelers Cos., Inc., 413 F. App’x 487 (3d Cir. 2012) (unpublished)
(dispute as to whether employee agreed to class waiver in amended employment
agreement to be determined by arbitrator).
Quilloin v. Tenet Health System Philadelphia, Inc., 673 F.3d 221 (3d Cir. 2012)
(reversing decision of District Court denying motion to compel arbitration that was
predicated on Pennsylvania cases finding class action waivers unconscionable because
those cases were “clearly preempted under Concepcion….”, but finding that the issue of
whether class arbitration of employment claims is prohibited when there exists a question
of whether the agreement is “silent” as to class arbitration is a question of interpretation
and procedure for the arbitrator.)
Antkowiak v. TaxMasters, No. 11-1882, 2011 WL 6425567 (3d Cir. Dec. 22, 2011)
(unpublished) (“In its discussion, the District Court expressed significant concern with
the class action waiver. This concern, however, was based on case law that has
subsequently been overruled by the Supreme Court. Concepcion, 131 S. Ct. at 1748
(2011); Litman v. Cellco P'ship, 655 F.3d 225, 231 (3d Cir.2011) (stating that
Concepcion’s ’broad and clear’ holding pre-empts ‘impos[ing] class arbitration despite a
contractual agreement for individualized arbitration’). Because it is unclear to what
extent the District Court’s concern with the class action waiver influenced its conclusion
that the arbitration agreement is unconscionable in toto, we will remand to ensure that the
disposition of this case is consistent with Concepcion.”).
Cappalli v. National Bank of Great Lakes, 281 F.3d 219 (3d Cir. 2001) (in context of
usury action under Section 85 of National Bank Act involving claim of $33.02, rejecting
plaintiff’s contention that the arbitration agreement made it difficult for individuals to
vindicate their rights “in small claim consumer cases”). [Ballard Spahr client]
Johnson v. West Suburban Bank, 225 F.3d 366 (3d Cir. 2000), cert. denied, 531 U.S.
1145 (2001) (no non-waivable right to class action under Truth-in-Lending Act).
[Ballard Spahr client]
DMEAST #16043515 v1 29
Lloyd v. MBNA America Bank, N.A., 2001 U.S. Dist. LEXIS 8279 (D. Del. Feb. 22,
2001), aff’d, 27 Fed. Appx. 82, 2002, WL 21932 (3d Cir. Jan. 7, 2002) (because right to a
class action is “merely procedural” and may be waived, “an arbitration clause barring
classwide relief for claims brought under Truth-in-Lending Act is not unconscionable”)
Sagal v. First USA Bank, N.A., 69 F. Supp. 2d 627 (D. Del. 1999), aff’d, 254 F.3d 1078
(3d Cir. 2001) (enforcing a class action waiver in an arbitration agreement despite
plaintiff’s contention that consumer claims are “too small to litigate” on an individual
basis)
Delta Funding Corporation v. Harris, No. 04-1951 (3rd
Cir. July 27, 2005) (petition to
New Jersey Supreme Court to determine whether class action waiver is unconscionable).
New Jersey Supreme Court granted petition. Docket No. 58,437, 185 N.J. 255 (2005).
[Ballard Spahr client]
Delta Funding Corporation v. Harris, No. 04-1951, 2006 U.S. App. LEXIS 24649 (3d
Cir. Oct. 3, 2006) (Court affirms the opinion of the District Court which compelled
arbitration after upholding the validity of class action waiver based on the New Jersey
Supreme Court opinion in Delta Funding Corp. v. Harris, A44 September Term 2005,
2006 WL 2277984 (Aug. 9, 2006)). [Ballard Spahr client]
Gay v. CreditInform, 511 F.3d 369 (3d Cir. 2007) (in context of a claim for $39.92 under
the Federal Credit Repair Organizations Act and the Pennsylvania Credit Services Act,
Court enforces class action waiver after enforcing a Nevada choice-of-law clause and
then stating that the result would be the same under Pennsylvania law because the FAA
preempts Pennsylvania law invalidating class action waivers). In Puleo v Chase Bank
USA, N.A., No. 08-3837, 2010 WL 1838762 (3d Cir. May 10, 2010 (en banc), the Third
Circuit stated in footnote 2: “While perhaps dicta itself, it is worth noting our agreement
that Gay’s discussion of Pennsylvania law was indeed dicta, since our holding in Gay
was that Virginia law governed the parties’ arbitration agreement. Gay, 511 F.3d at 390.
In any event, the New Jersey case law at issue in Homa did not evince hostility toward
arbitration clauses, which was the concern about Pennsylvania law expressed in Gay.
Compare Homa, 558, F.3d at 230 with Gay, 511 F.3d at 394-95.” Another panel of the
Third Circuit reiterated this dicta in Litman v. Cellco Partnership, No. 08-4103, 2010 WL
2017665 (3d Cir. May 21, 2010).
Cronin v. Citifinancial Services, Inc., No. 09-2310, 2009 WL 2873252 (3rd
Cir. Sept. 9,
2009) petition for rehearing den’d, Dec. 21, 2009 (in context of Fair Credit Reporting Act
(“FCRA”) claim, enforcing a class action waiver noting that “Cronin sought actual and
punitive damages, costs and attorneys’ fees, all of which are permitted under the FCRA
and potentially recoverable in an arbitration under that statute . . . . We have noted that
the statutory ability to recover attorneys’ fees helps to preserve an individual’s ability to
pursue claims, even in those situations where the class forum has been foreclosed.”)
Kaneff v. Delaware Title Loans, Inc., No. 08-1007, 2009 WL 4042926 (3rd
Cir. Nov. 24,
2009) petition for rehearing den’d, Dec. 21, 2009 (affirms order compelling individual
DMEAST #16043515 v1 30
arbitration after enforcing class action waiver under Pennsylvania law even though the
dollar amount of the claim was less than $900). [Ballard Spahr client]
Vilches v. The Travelers Companies, Inc., No. 10-2888 (3rd
Cir. Feb. 9, 2010) (non-
precedential) (applying New Jersey law, Court upholds validity of class action waiver in
plaintiff’s employment agreement after distinguishing prior New Jersey decisions that
had invalidated class action waivers in consumer adhesion contracts involving small
amounts of damages; court further concluded, however, that it was for the arbitrator to
decide whether the arbitration agreement had been properly amended to add a class
action waiver)
Litman v. Cellco Partnership, No. 08-4103, 2011 U.S. App. LEXIS 17649 (3d Cir. Aug.
24, 2011) (Upon remand from Supreme Court in aftermath of Concepcion opinion, Third
Circuit held that the earlier opinion in Homa v. American Express Company, 558 F.3d
225 (3rd Cir. 2009) concluding that the FAA did not preempt the New Jersey Supreme
Court opinion in Muhammad v. County Bank of Rehoboth Beach, Delaware, 189 N.J. 1
(2006) is now abrogated by Concepcion: “[W]e understand the holding of Concepcion to
be both broad and clear: a state law that seeks to impose class arbitration despite a
contractual agreement for individualized arbitration is inconsistent with, and therefore
preempted by the FAA, irrespective of whether class arbitration is desirable for unrelated
reasons.”). [Ballard Spahr amicus brief]
Fourth Circuit
Adkins v. Labor Ready, Inc., 303 F.3d 496 (4th
Cir. 2002) (arbitration compelled despite
inability to maintain class action under Fair Labor Standards Act)
Snowden v. CheckPoint Check Cashing, 290 F.3d 631 (4th
Cir. 2002), cert. denied, 537
U.S. 187 (2002) (class action waiver not unconscionable under Maryland law)
Deiulemar Compagnia di Navigazione S.p.A. v. M/V Allegra, 198 F.3d 473 (4th Cir
1999), cert denied, 529 U.S. 1109 (2000) (“The parties here did not include in their
agreement an express term providing for class arbitration. Thus, one could say that
through the proper application of 9 U.S.C. §4, the FAA has already provided the type of
procedure to be followed in this case, namely, non-class arbitration.”)
In Re Cotton Yarn Antitrust Litigation, Nos. 05-2392, 05-2393, 505 F.3d 274 (4th Cir.
Oct. 12, 2007) (Class action waiver is enforceable under federal antitrust laws.)
Fifth Circuit
Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294 (5th
Cir. 2004) (class action
waiver not unconscionable under Texas law and no non-waivable right to class action
exists under Fair Labor Standards Act)
Iberia Credit Bureau, Inc. v. Cingular Wireless LLC, No. 379 F.3d 159 (5th
Cir. 2004)
(class action waiver not unconscionable under Louisiana law; also suggests that FAA
would preempt state law if it invalidated class action waiver)
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Sixth Circuit
Burden v. Check into Cash of Kentucky, LLC, 267 F.3d 483 (6th
Cir. 2001) cert. denied,
535 U.S. 970 (2002) (court suggests that there is no non-waivable right to maintain class
action under Truth-in-Lending Act, RICO and Kentucky law)
Seventh Circuit
Caudle v. American Arbitration Association, 230 F.3d 920 (7th
Cir. Oct. 17, 2000) (“A
procedural device aggregating multiple persons’ claims in litigation does not entitle
anyone to be in litigation; a contract promising to arbitrate the dispute removes the person
from those eligible to represent a class of litigants”)
Livingston v. Associates Finance, Inc., 339 F.3d 553 (7th
Cir. 2003) (court enforced class
action waiver based on FAA principle that arbitration agreement must be enforced in
accordance with its terms)
Iowa Grain v. Brown, 171 F.3d 504 (7th
Cir. 1999) (“Because arbitration is based
fundamentally on an agreement between parties, [a class action] is normally unavailable
in arbitration.”)
Champ v. Siegel Trading Co., Inc., 55 F.3d 269 (7th
Cir. 1995) (“Since the parties’
arbitration agreement does not expressly provide for class arbitration, the district court
correctly concluded that it was prohibited from reading such a procedure into these
arbitration agreements.”)
Eighth Circuit
Green v. Super Shuttle Int’l, Inc., No. 10-3310, 2011 U.S. App. LEXIS (8th
Cir. Sept. 6,
2011) (Relying upon Concepcion, Court affirms order of District Court compelling
arbitration in case alleging violations of Minnesota Fair Labor Standards Act)
Cicle v. Chase Bank, USA, No 08-1362, 2009 WL 3172157 (8th
Cir. Oct. 6, 2009)
(holding that class action was not unconscionable under Missouri law or contrary to the
public policy permitting class actions under the Missouri Merchandising Practices Act)
Pleasants v. American Express Company, 541 F.3d 853 (8th Cir. 2008) (holding that
class action waiver was not unconscionable under Missouri law because of fee-shifting
feature in Truth-in-Lending Act and the fact that class action waiver was prominently
disclosed; court distinguished Missouri Court of Appeals opinion in Whitney on the basis
that the American Express arbitration provision did not limit the plaintiff’s remedy)
In re Piper Funds, Inc., 71 F.3d 298 (8th
Cir. 1995) (a party’s “contractual and statutory
right to arbitrate may not be sacrificed on the altar of efficient class action management”)
Dominium Austin Partners, L.L.C. v. M.J. Emerson, 248 F.3d 720 (8th Cir. 2001)
(“[B]ecause the partnership agreements make no provision for arbitration as a class, the
DMEAST #16043515 v1 32
district court did not err by compelling appellants to submit their claims to arbitration as
individuals.”)
Ninth Circuit
Smith v. Americredit Financial Services, Inc., No. 09-57016, 2011 WL 6170545 (9th Cir.
Dec. 13, 2011) (vacating district court order compelling arbitration and remanding matter
back to district court for reconsideration in light of Concepcion).
Kilgore et al v. Keybank, N.A., -- F.3d --, No. 09-16703, 2012 U.S. App. LEXIS 4736,
2012 WL 718344 (9th Cir. March 7, 2012), rehearing granted and Opinion deemed non-
precedential (9th
Cir. Sept. 21, 2012) (“We hold that the Broughton-Cruz rule [which
prohibits arbitration for claims for public injunctive relief] does not survive Concepcion
because the rule ‘prohibits outright the arbitration of a particular type of claim’ – claims
for broad public injunctive relief. * * * Therefore, our statement in Davis [v. O’Melveny
& Meyers, 485 F.3d 1066 (9th Cir. 2007)] – that Broughton and Cruz prohibit the
arbitration of public injunctive relief claims in California – is no longer good law. We
are not blind to the concerns engendered by our holding today. It may be that enforcing
arbitration agreements even when the plaintiff is requesting public injunctive relief will
reduce the effectiveness of state laws like the UCL. It may be that FAA preemption in
this case will run contrary to a state’s decision that arbitration is not as conducive to
broad injunctive relief claims as the judicial forum. And it may be that state legislatures
will find their purposes frustrated. These concerns, however, cannot justify departing
from the appropriate preemption analysis as set forth by the Supreme Court in
Concepcion.”).
Coneff et al v. New Cingular Wireless Services, Inc., No. 09-35563, 2012 U.S. App.
LEXIS 5520 (9th Cir. March 16, 2012) (reversing and remanding district court decision
denying individual arbitration on the basis that the class action waiver was
unconscionable and rejecting plaintiff’s “vindication of rights” argument because
Concepcion controls and the FAA preempts Washington state law invalidating class
action waivers; upon remand, the District Court is to perform a choice-of-law analysis to
determine whether the applicable laws of any state permit a contract to be invalidated
based on “freestanding procedural unconscionability”).
Ting v. AT&T, 319 F.3d 1126 (9th
Cir. 2003) cert. denied, 540 U.S. 811 (2003) (FAA
preempts provision under California Consumer Legal Remedies Act creating non-
waivable right to class action)
Horenstein v. Mortgage Market, Inc., 9 Fed. Appx. 618 (9th
Cir. 2001) (“Appellants’
contention that the arbitration clause in the Employment Agreements may not be
enforced because it eliminates their statutory right to a collective action [under the Fair
Labor Standards Act] is insufficient to render an arbitration clause unenforceable”)
Lozano v. AT&T Wireless Services, Inc., 504 F.3d 718 (9th
Cir. 2007) (Court affirms
order of District Court denying certification of a national class for claims based on
Federal Communications Act because of the need for a state-by-state inquiry into the
DMEAST #16043515 v1 33
enforceability of the arbitration agreement and class action waiver with the result that
individual questions would predominate over class-wide questions.)
Eleventh Circuit
Jones v. DirecTV, Inc., No. 11-10887, 2011 WL 5903529 (11th Cir. Nov. 22, 2011)
(relying on Concepcion and affirming motion to compel individual arbitration of claims
subject to an arbitration agreement that contained a class action waiver previously
determined to be unconscionable under Georgia law).
Gordon, et al v. Branch Banking and Trust, No. 09-15399, 2012 U.S. App. LEXIS 1713
(11th Cir. Jan. 31, 2012) (remanding district court’s denial of motion to compel
arbitration for reconsideration in light of Concepcion after prior order affirming the
district’s denial of motion to compel arbitration was vacated and remanded by Supreme
Court).
Kardonick, et al v. CitiGroup, Inc., 449 Fed. Appx. 878 (11th Cir. 2011) (vacating
District Court’s denial of motion to compel arbitration that was grounded on the District
Court’s finding that the arbitration agreement was procedurally unconscionable, in part,
because of the “obvious disparity in bargaining power and sophistication” of the parties
and remanding matter to district court to reconsider in light of Concepcion.)
Bowen v. First Family Financial Services, Inc., 233 F.3d 1331 (11th
Cir. 2000)
Randolph v. Green Tree Fin. Corp. – Ala., 244 F.3d 814 (11th
Cir. 2001) and Baron v.
Best Buy Co., Inc., 260 F.3d 625 (11th
Cir. 2001) (no non-waivable right to class action
under Truth-in-Lending Act)
Jenkins v. First American Cash Advance of Georgia, LLC and First National Bank in
Brookings, 400 F.3d 868 (11th
Cir. 2005), rehearing and rehearing en banc denied, 143
Fed. Appx. 311 (2005), cert. denied, 126 S. Ct. 1457 (2006) (class action waiver is not
unconscionable under Georgia law). [Ballard Spahr client]
Caley v. Gulfstream Aerospace Corporation, 428 F.3d 1359 (11th
Cir. 2005) (same; also
suggests that FAA would preempt state law if it invalidated class action waiver)
Pendergast v. Sprint Nextel Corporation, No. 09-10612, 2010 WL 6745 (11th
Cir. Jan. 4,
2010) Court certifies the following questions to the Florida Supreme Court:
(1) Must Florida courts evaluate both procedural and substantive
unconscionability simultaneously in a balancing or sliding scale approach, or
may courts consider either procedural or substantive unconscionability
independently and conclude their analysis if either one is lacking?
(2) Is the class action waiver provision in plaintiff’s contract with Sprint
procedurally unconscionable under Florida law?
DMEAST #16043515 v1 34
(3) Is the class action waiver in plaintiff’s contract with Sprint substantively
unconscionable under Florida law?
(4) Is the class action waiver provision in plaintiff’s contract with Sprint void
under Florida law for any other reason?
In the aftermath of Concepcion, Sprint filed a motion to withdraw certification and to
affirm.
Cappuccitti v. DirecTV, Inc., No. 09-14107, 2010 WL 4027719 (11th
Cir. Oct. 15, 2010)
(class action waiver not unconscionable under Georgia law despite the fact there was no
attorneys’ fees fee-shifting feature under common law claims for “money had and
received” and for “unjust money” and no contractual fee-shifting feature because the
plaintiff could have brought a claim under the Georgia Fair Business Practices Act—a
statute which does contain a mandatory fee-shifting feature for successful plaintiffs;
plaintiff admitted that he omitted such a claim because it only permitted an individual
action; unconscionability gets determined at the time the contract is entered into and not
when the lawsuit gets filed)
In re Checking Account Overdraft Litigation – Hough v. Regions Financial Corporation,
No. 10-12376, 2011 WL 1663989 (11th
Cir. April 29, 2010); Barras v. Branch Banking
and Trust Company, No. 10-12377; 2011 WL 169562 (11th
Cir. April 28, 2011); Powell-
Perry v. Branch Banking and Trust Company, No. 10-12374, 2011 WL 1659559 (11th
Cir. April 28, 2011); 1659559 (11th
Cir. April 28, 2011; Given v. M&T Bank
Corporation, No. 10-12375, 2011 WL 16663991 (11th
Cir. April 29, 2011); Buffington v.
Suntrust Banks, Inc., No. 10-12373, 2011 WL 1659601 (11th
Cir. April 28, 2011). (Court
vacates and remands all five cases to the District Court for reconsideration in light of
Concepcion).
Cruz v. Cingular Wireless, LLC, No. 08-16080 (11th Cir. August 11, 2011) (Court
affirms District Court order compelling individual arbitration: “[T]o the extent that
Florida law would be sympathetic to the Plaintiffs’ arguments here, and would invalidate
the class waiver simply because the claims are of small value, the potential claims are
numerous, and many consumers might not know about or pursue their potential claims
absent class procedures, such a state policy stands as an obstacle to the FAA’s objective
of enforcing arbitration agreements according to their terms, and is preempted”; the Court
gave short shrift to (i) the affidavits of three Florida consumer law attorneys who attested
that they would not represent consumers in pursuing the claims in the case on an
individual basis and (ii) statistical evidence showing that an infinitesimal percentage of
AT&T subscribers have arbitrated a dispute with AT&T which the plaintiff claims starkly
demonstrates the claims – suppressing effect of the class action ban).
Larsen v. J.P. Morgan Chase Bank, N.A., Nos. 10-12936, 10-12937, 2011 WL 3794755
(11th Cir. Aug. 26, 2011) (Court vacates and remands to the District Court to reconsider
the case in light of Concepcion)
DMEAST #16043515 v1 35
Federal Circuit Court Opinions
Invalidating Class Action Waivers1
1 Most of these opinions have been overruled by virtue of the U.S. Supreme Court’s
opinion in AT&T Mobility LLC v. Concepcion, No. 09-893, 2011 U.S. LEXIS 3367
(April 27, 2011). The only possible exceptions are those where the court invalidated the
class action waiver based on a federal statute as opposed to state law. Also, in most of
these opinions, the courts held that there was some degree of procedural
unconscionability as well as substantive unconscionability under state law. Many
companies now give consumers and employees the unconditional right to opt out of or
reject the arbitration provision without it having any adverse repercussions. Courts in
states that require that there be both procedural as well as substantive unconscionability
in order to invalidate a contract based on unconscionability have validated class action
waivers and other arbitration features that they considered substantively unconscionable
when an opt-out right was provided to the consumer or employee. See, e.g., Circuit City
Stores, Inc. v. Ahmed, 283 F.3d 1198 (9th Cir. 2002); Circuit City Stores, Inc. v. Najd,
294 F.3d 1104, 1108 (9th Cir. 2002); Providian National Bank v. Screws, 894 So. 2d 625
(Ala. Oct. 3, 2003) [Ballard Spahr client]; Tsadilas v. Providian Nat’l Bank, 13 A.D. 3d
190, 786 N.Y.S. 2d 478 (1st Dep’t. 2004) [Ballard Spahr client]; Marley v. Macy’s
South, No. CV 405-227, 2007 WL 1745619, at *3 (S.D. Ga. June 18, 2007) (court
enforced arbitration clause in employment agreement because “[w]hile Ms. Marley states
that she did not have a choice to enter the arbitration process because she was ‘in
jeopardy of losing [her] job’ if she did not, the record indicates that each employee was
mailed an election form to opt-out of the program at their home address”). Pivoris v.
TCF Financial Corporation, No. 07-C 2673, 2007 U.S. Dist. LEXIS 90562 (N.D. Ill. Dec.
7, 2007) [Ballard Spahr client]; SDS Autos, Inc. v. Chrzanowski, Case No. 1D06-4293,
2007 WL 4145222 (Fla Ct. App., 1st Dist. Nov. 26, 2007) (Invalidates class action waiver
for holders of small claims under Florida Deceptive and Unfair Trade Practices Act
whose attorney’s fees are limited by the amount of their actual damages. ) (arbitration
agreement with class action waiver not procedurally unconscionable where “[p]laintiff
had the absolute right to reject the arbitration provision without affecting her account
contract or the status of her account”); Honig v. Comcast of Georgia, LLC, Civil Action
No. 1:07-cv-1839-TCB, 537 F.Supp. 2d 1277 (N.D. Ga. Jan. 31, 2007) (“Finally, and
most importantly …, Honig was free to reject the terms of the arbitration provision
without a single adverse consequence. Specifically, the arbitration provision gave her the
right to opt out within thirty days without adversely affecting her cable service, but she
never exercised that right. Honig's ability to opt out of the arbitration provision dilutes
her unconscionability argument because the provision was not offered on a take-it-or-
leave-it basis. Courts have stressed the importance of such opt-out provisions in
enforcing class action waivers in arbitration agreements.”); Sanders v. Comcast Cable
Holdings, LLC, No. 3:07-cv-918-J-33HTS (M.D. Fla. Jan. 14, 2008) (class action waiver
provision was not unconscionable where arbitration provision allowed subscribers to opt
out); Davidson v. Cingular Wireless, LLC, No. 2:06-cv- 00133, 2007 WL 896349, at *6
(E.D. Ark. Mar. 23, 2007) (class action waiver in contract for cell phone service not (continued...)
DMEAST #16043515 v1 36
________________________ (...continued)
unconscionable where plaintiff failed to opt out);); Martin v. Delaware Title Loans, Inc.,
No. 08-3322, 2008 WL 444302 (E.D. Pa. Oct. 1, 2008) (finding plaintiff could not
establish procedural unconscionability under PA law in light of 15 day opt-out right)
[Ballard Spahr client]; Columbia Credit Services, Inc. v. Billingslea, No. B190776,
2007 WL 1982721 (Cal. Ct. App. July 10, 2007) (court affirmed lower court’s
confirmation of arbitration award after rejecting unconscionability challenge based in part
on the fact that cardholder was given the right to opt out of the arbitration provision and
failed to do so); Eaves-Leanos v. Assurant, Inc., No. 07-18, 2008 WL 1805431 (W.D.
Ky. Apr. 21, 2008) (finding arbitration agreement with class waiver not unconscionable
as plaintiff had opportunity to opt out); Enderlin v. XM Satellite Radio Holdings, Inc.,
No. 06-0032, 2008 WL 830262 (E.D. ark. March 25, 2008)(finding plaintiff could not
establish procedural unconscionability in light of opt-out right); Crandall v. AT&T
Mobility, LLC, No. 07-750, 2008 WL 2796752 (S.D. Ill. July 18,2008) (class action
waiver in cell phone service contract not unconscionable where plaintiff failed to opt
out); Webb v. ALC of West Cleveland, Inc., No. 90843, 2008 WL 4358554 (Ohio Ct.
App., 8th
App. Dist. Sept. 25, 2008) (citing Ahmed supra, the buyer in an automobile
retail installment contract “could not demonstrate that the arbitration clause was
unconscionable because the contract gave her the right to reject the arbitration clause”)
[Ballard Spahr client]; Wright v. Circuit City Stores, Inc., Case No. CV 97-B-0776-5
(N.D. Ala. Feb. 5, 2001) (employment arbitration provision with opt-out right is
enforced); Stiles v. Home Cable Concepts, Inc., 994 F. Supp. 1410 (1998)
(unconscionability challenge is rejected where credit card issuer gave the cardholder the
right to reject the arbitration provision and those who opted out had their 2% APR
reduction in interest rate reinstated to its previous rate: “Stiles was given a clear choice
in this case; he could take the arbitration provision or leave it”); Guadagno v. E*Trade
Bank, No. CV 08-03628 SJO (JCX), 2008 WL 5479062 (C.D. Calif. Dec. 29, 2008)
(Class action waiver does not violate fundamental policy of California because of opt-out
right: “Here, Guadagno had a meaningful opportunity to opt out of the Arbitration
clause, which contained the class action waiver, by notifying E*Trade in writing within
60 days of receiving the Agreement. The Agreement highlighted the Arbitration clause,
and the introduction to the Arbitration clause highlighted the opt-out term. Because the
Arbitration clause containing the waiver was not presented on a take-it-or-leave-it basis,
but gave Guadagno sixty days to opt out, it was not unconscionable. Thus, application of
Virginia law does not contradict California’s fundamental policy against enforcing
unconscionable consumer class action waivers.”); Magee v. Advance America Servicing
of Ark, Inc., No 6:08-CV-6105, 2009 WL 890991 (W.D. Ark. April 1, 2009) (Court
enforces class action waiver after noting that the arbitration agreement was clearly set off
from the rest of the contract and provided the consumers with a 30-day opt-out period – a
period which was actually longer than the term of the loan); Fluke v. CashCall, No. 08-
05776 (E.D. PA. May 21, 2009)(Court enforces class action waiver under Pennsylvania
law: “We predict that the Pennsylvania Supreme Court would agree with the reasoning
of the district courts in Guadagno and Honig. An opt-out provision, like the one in
Fluke’s agreement with FBD, seriously undermines a consumer’s contention that the
arbitration agreement is unconscionable. Fluke was given the option to say “no” to the (continued...)
DMEAST #16043515 v1 37
________________________ (...continued)
arbitration provision and he was given a full 60 days to do so. In that way, he had
complete control over the terms of the agreement and it cannot be said that the arbitration
agreement was presented to him on a take-it-or-leave-it basis. Furthermore, like the
agreements in Guadagno and Honig, the FBD loan agreement requires that FBD pay the
filing fee and any costs and fees charged by the arbitrator regardless of which party
initiated the arbitration. Moreover, under § 503 of the Loan Interest and Protection Law,
a borrower or debtor who prevails in an action “shall” recover a reasonable attorneys’
fee. 41 Pa. Cons. Stat. § 503. This should alleviate any concern regarding the
availability and willingness of counsel to represent him. Accordingly, this case differs
materially from Thibodeau and is more analogous to Guadagno and Honig. We predict
that the Pennsylvania Supreme Court would hold that the arbitration provision in the loan
agreement in issue is not unconscionable and is enforceable.”); Credit Acceptance
Corporation v. Davisson, Case No. 1:08 CV 107 (N.D. Ohio June 30, 2009) (in rejecting
Davisson’s argument that the arbitration provision violated the Ohio Consumer Sales
Practice Act since it purported to waive access to the court for vindicating a claim under
it, the Court noted that Credit Acceptance Corporation did not “waive her recourse to the
courts” because of the opt-out feature) [Ballard Spahr client]; Freedman v. Comcast
Corporation, Nos. 435, 2102, Sept. Term 2008, 2010 Md. App. LEXIS 12 (Ct. of Spec.
App. of Md. Jan. 28, 2010 (court holds that there is no procedural unconscionability
under Maryland law as a result of 30-day opt-out feature); Clerk v. ACE Cash Express,
Inc., No. 09-05117, 2010 U.S. Dist. LEXIS 7978 (E.D. Pa. Jan. 29, 2010) (court holds
that there is no procedural unconscionability when payday loan borrower was given a 30-
day right to reject the arbitration provision without it having any adverse effect on the
loan) [Ballard Spahr client]; Jackson v. The Payday Loan Store of Illinois, Inc., (Case
No. 09 C 4189 (N.D. Ill. March 17, 2010) (“Considering the totality of the circumstances
relevant to the class action waiver at issue here, the Court concludes that the waiver is
enforceable. The parties agreed to the Agreement as a whole, including the waiver, and
failed to opt-out as allowed by the provision for doing so described above. This allowed
either party to elect arbitration, and contains a clear and legible notice to Plaintiffs that it
limited certain rights, including the right to pursue a claim as a class action. Hante is
therefore barred by the terms of the Agreement from bringing a claim in arbitration on a
class basis”); Ambrose v. Comcast Corporation, No. 3:09-cv-182, 2010 WL 1270712
(E.D. Tenn. Mar. 31, 2010) (“the court finds that the arbitration provision was not a
‘contract of adhesion’ because plaintiff was provided with an opportunity to ‘opt-out’ of
arbitration with no adverse affect on his relationship with Comcast. The 30-day window
to ‘opt-out’ of arbitration afforded the consumer [plaintiff] with a realistic opportunity to
bargain . . . .”); Pellett v. TCF Bank, N.A., Civil No. 10-3943 (DSD/FLN), D. Minn.
Nov. 24, 2010 (“Plaintiffs first argue that they could not avoid the arbitration agreement
and that it was a contract of adhesion. One of the first pages of The Terms and
Conditions clearly states, in plain English and contrasting type, that plaintiffs had a right
to opt out of the arbitration agreement. The arbitration provisions again describe
plaintiffs’ 30-day right to opt out in plain, simple terms. As a result, plaintiffs had an
absolute right to opt out of the arbitration agreement, and their argument that the
agreement was unavoidable and offered on a take-it-or-leave-it basis fails. Plaintiffs’ next (continued...)
DMEAST #16043515 v1 38
First Circuit
Kristian v. Comcast Corp., 446 F.3d 25 (1st Cir. 2006) (invalidating class action waiver
where claims were asserted under federal and state antitrust laws because enforcing the
waiver would shield defendants from private consumer antitrust liability, impede
consumers from effectuating their statutory rights and frustrate the goals underlying the
antitrust laws)
________________________ (...continued)
argue that they were unfairly surprised by the terms because the opt-out provision was
‘buried’ in the Terms and Conditions and that they ‘could not find, and if found, could
not understand’ the opt-out provision. Pls.’ Mem. Opp’n 34. This argument is contrary to
the face of the documents. The Account Agreements clearly direct plaintiffs to the Terms
and Conditions. Moreover, on one of the first pages, the Terms and Conditions remind
plaintiffs that they have a 30-day right to opt out of the arbitration agreement. Plaintiffs
may not avoid their signed agreements by claiming that they did not read or understand
the contents of those agreement. See Gartner v. Eikill, 319 N.W.2d 397, 398 (Minn.
1982)” [Ballard Spahr client]; Day v. Persels & Associates, LLC, Case No. 8:10-CV-
2463-T-33 TGW (M.D. Fla. May 9, 2011) (“More importantly, the arbitration provision
was not a ‘take-it-or-leave-it’ situation, since it provided that the plaintiff could reject the
provision by sending a rejection notice to CareOne (Doc. 25-1, p.8). And the Client
Agreement itself was not particularly binding since the plaintiff was able to cancel it and
get her money back.”); Hopkins v. World Acceptance Corporation, No. 1:10-cv-03429-
SCJ, 2011 U.S. Dist. LEXIS 79770 (N.D. Ga. June 29, 2011) (Court compels individual
arbitration after finding no procedural unconscionablity, in part because of opt-out
feature: “[W]hen a party challenges an arbitration agreement that contains an opt-out
provision and fails to opt-out, the unconscionability argument is diluted because the
provision was not offered on a take-it-or-leave-it basis.”); Black v. J.P. Morgan Chase &
Co., Civil Action No. 10-848, 2011 U.S. Dist. LEXIS 99428 (W.D. Pa. Aug. 25, 2011)
(opt-out feature makes arbitration provision not procedurally unconscionable under
Pennsylvania law) [Ballard Spahr client]; Meyer v. T-Mobile USA, Inc., No. 10-05858
CRB, 2011 WL 4434810 (N.D. Calif. Sept. 23, 2011) (Court relies upon opt-out feature
and enforces arbitration provision despite substantive unconscionability); Giles v. GE
Money Bank, Case No. 2:11-cv-434 JCM (CWH), 2011 U.S. Dist. LEXIS 111018 (D.
Nev. Sept. 27, 2011) (Court relied upon opt-out feature to find no procedural
unconscionability of class action waiver; Tory v. First Premier Bank, Case No. 10 C
7326, 2011 U.S. Dist. LEXIS 110126 (N.D. Ill. Sept. 27, 2011) (Court finds no
unconscionability of class action waiver, under South Dakota and Illinois law because of
opt-out feature); Alvarez v. T-Mobile USA, Inc., No. CIV. S-10-2373 WBS GGH, 2011
U.S. Dist. LEXIS 111784 (E.D. Calif. Sept. 29, 2011) (Court limits discovery after
concluding that there can be no substantive unconscionability as a result of opt-out
feature). But, see Duran v. Discover Bank, 2009 WL 1873651 (Call. App. 2d Dist. June
19, 2009 (unreported)) (class action waiver invalidated despite opt-out feature.
DMEAST #16043515 v1 39
Skirchak v. Dynamics Research Corporation, 508 F.3d 49 (1st Cir. Nov. 19, 2007)
(Without reaching the argument that class action waivers violate either the Fair Labor
Standards Act or public policy, the Court holds that a class action waiver is
unconscionable under Massachusetts law because of the timing (it was implemented two
days before the Thanksgiving holiday), the language (there was language which arguably
conflicted with the waiver) and format of the presentation (the communication was in the
form of an e-mail which required no acknowledgement by the employee and the waiver
was buried in the document)
Second Circuit
In re: American Express Merchants’ Litig., 667 F.3d 204 (2d Cir. 2012), pet. rehearing en
banc filed February 14, 2012 (finding that Concepcion does not control the issue of
“whether a class-action arbitration waiver clause is enforceable even if the plaintiffs are
able to demonstrate that the practical effect of enforcement would be to preclude their
ability to vindicate their federal statutory rights” and holding that the arbitration
agreement was unenforceable because the class action waiver precluded the plaintiffs
from enforcing their statutory rights since the alleged federal antitrust claims could not
reasonably be pursued as individual actions as a result of the need to obtain and pay for
an expert opinion, which would as a result of the need to obtain and pay for an expert
opinion, which would dwarf the damages and which was not recoverable from American
Express.)
In re American Express Merchants’ Litigation, 2009 WL 214525 (2nd
Cir. Jan. 30, 2009)
(invalidating class action waiver where claims were asserted under Section 4 of the
Clayton Act challenging AMEX’s “Honor all Cards” rule based on a vindication of
statutory rights analysis. Plaintiff had demonstrated that the size of the recovery by any
individual plaintiff would be too small to justify the expenditure of bringing an individual
action, which in this case exceeded several hundreds of thousands of dollars for an expert
report which would not be recoverable in arbitration). On May 3, 2010, the U.S.
Supreme Court (No. 08-1473) granted certiorari, vacated the Second Circuit judgment
and remanded the case to the Second Circuit for further proceedings in light of the
Supreme Court’s opinion in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., No 08-1198,
2010 WL 1655826 (April 27, 2010). On March 8, 2011, the Second Circuit adhered to its
original opinion after concluding that the Supreme Court’s Stolt-Nielsen opinion is
inapposite. 643 F.3d 187. On August 1, 2011, the panel announced that it is sua sponte
considering rehearing in light of AT&T Mobility LLC v. Concepcion.
Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2008) (In upholding
the arbitrators’ ruling that an arbitration agreement that is silent on the issue of class-wide
arbitration could be interpreted to permit class arbitration, the Court rejected Stolt-
Nielsen’s argument that the FAA itself precludes the imposition of class-wide procedures
unless they are expressly provided for in arbitration agreement), cert. granted No. 08-
1198 (June 15, 2009). On April 27, 2010, the U.S. Supreme Court, in a 5-3 decision,
reversed the Second Circuit decision and held that imposing class arbitration on parties
who have not agreed to authorize class arbitration is inconsistent with the Federal
Arbitration Act. No. 08-1198, 2010 WL 1655826
DMEAST #16043515 v1 40
Fenterstock v. Education Finance Partners, Case No. 09-1562-CV (2nd
Cir. July 12, 2010)
(invalidating class action waiver after applying California law and rejecting FAA
preemption; Court, however, refuses to order class-wide arbitration despite severability
clause because of U.S. Supreme Court opinion in Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp., 130 S.Ct. 1758 (2010)). On June 13, 2011, the U.S. Supreme Court granted cert.,
vacated the Second Circuit opinion and remanded the case to the Second Circuit for
further consideration in light of the Supreme Court’s opinion in AT&T Mobility LLC v.
Concepcion, No. 09-893, 2011 U.S. LEXIS 3367 (April 27, 2011). Upon remand,
Second Circuit concludes that its earlier opinion holding that the class action waiver is
unconscionable under California law is no longer viable and remands to District Court to
consider other arbitrability issues. No. 09-1562-cv, 2011 WL 2582166 (2nd
Cir. June 30,
2011).
Third Circuit
Homa v. American Express Company, 558 F.3d 225 (3rd
Cir. 2009) (court refuses to
enforce Utah choice-of-law clause after concluding that class action waiver violates
fundamental policy of New Jersey in light of New Jersey Supreme Court opinion in
Muhammad v. County Bank of Rehoboth Beach, Delaware, 912 A.2d 88 (NJ 2006); there
is no FAA preemption of Muhammad; Third Circuit opinion in Gay v. CreditInform, 511
F.3d 369 (3rd
Cir. 2007) saying that the FAA preempts Pennsylvania Superior Court
opinion in Lytle v. Citifinancial Services, Inc., 2002 Pa. Super. 327 (2002) may be dicta).
Opinion expressly abrogated by Litman opinion on Aug. 24, 2011.
Litman v. Cellco Partnership, No. 08-4103 2010 WL 2017665 (3rd
Cir. May 21, 2010)
(non-precedential) (court invalidates class action waiver after following Muhammad v.
County Bank of Rehoboth Beach, Delaware, 912 A. 2d 88 (NI 2006) and Homa v.
American Express Company, 558 F. 3d 225 (3rd
Cir. 2009); once again, reiterates that
discussion in Gay v. CreditInform, 511 F. 3d 369 (3rd
Cir. 2007) is dicta; it notes that the
Supreme Court’s ruling in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 2010 WL,
1655826 (Apr 27, 2010) is irrelevant). On May 2, 2011, the U.S. Supreme Court granted
the petition for a writ of certiorari, vacated the Third Circuit opinion, and remanded the
case to the Third Circuit for further consideration in light of the Supreme Court’s opinion
in AT&T Mobility LLC v. Concepcion, No. 09-893, 2011 U.S. LEXIS 3367 (April 27,
2011). Court on August 24, 2011 found FAA preemption.
Ninth Circuit
Ting v. AT&T, 319 F.3d 1126 (9th
Cir. 2003), cert. denied, 540 U.S. 811 (2003) (court
follows California Court of Appeal’s opinion in Szetela v. Discover Bank, 97 Cal. App.
4th
1094 (2002) and holds that class action waiver is unconscionable under California
law)
Ingle v. Circuit City Stores, 328 F.3d 1165 (9th
Cir. 2003), cert. denied, 540 U.S. 1160
(2004) (same)
DMEAST #16043515 v1 41
Circuit City Stores, Inc. v. Mantor, 335 F.3d 1101 (9th
Cir. 2003), cert. denied, 540 U.S.
1160 (2004) (same)
Ramsdell v. Lenscrafters, Inc., 135 Fed. Appx. 130, 2005 WL 14329241 (9th
Cir. 2005)
(in this unpublished conclusory opinion, court follows Ingle, Ting, and California Court
of Appeal opinion in Szetela and holds that class action waiver is unconscionable under
California law)
Al-Safin v. Circuit City Stores, Inc., 394 F.3d 1254 (9th
Cir. 2005) (in clause burdened by
other unfair features, court, in a divided opinion, also invalidated class action waiver
under Washington law; dissent points out that majority opinion may conflict with opinion
in Stein v. Geonerco, 17 P. 3d 1266 (WA 2001))
Tamayo v. Brainstorm USA, 154 Fed. Appx. 564 (9th
Cir. 2005) (in this unpublished
conclusory opinion, court follows California Supreme Court’s opinion in Discover Bank
v. Superior Court, 36 Cal. 4th
148, 30 Cal. Rptr. 3d 76, 113 P.3d 1100 (2005) and holds
that class action waiver is unconscionable under California law, that the Ohio choice-of-
law provision does not require a different result and that the FAA does not preempt
California law)
Shroyer v. New Cingular Wireless Services, Inc., 498 F.3d 976 (9th
Cir. Aug. 17, 2007)
(Court holds that class action waiver is unconscionable under California law and that
there is no FAA preemption)
Douglas v. U.S. Dist. Ct., 495 F.3d 1062 (9th
Cir. 2007) (per curiam) (court grants writ of
mandamus, refuses to apply New York law dealing with class action waivers and holds
that such waivers are unconscionable under California law)
Laster v. T-Mobile, USA, Inc., No. 06-55010, 252 Fed. Appx 777 (9th
Cir. Oct. 25, 2007)
(Court, in unreported opinion, follows Shroyer opinion), cert. denied, 128 S. Ct. 2500
(2008)
Ford v. Verisign, Inc., 252 Fed. App’x 781, 2007 WL 3194743 (9th
Cir. 2007 (court, in
unreported opinion, follows Shroyer opinion), cert. denied sub nom; T-Mobile USA, Inc.
V. Ford, 128 S. Ct. 2503 (2008)
Lowden v. T-Mobile USA, No. 06-35395, 513 F.3d 1213 (9th
Cir. Jan 22, 2008) (Court
holds that class action waiver is unconscionable under the Washington Supreme Court’s
opinion in Scott v. Cingular Wireless, 161 P.3d 1000 (Wash. 2007) and that there is no
FAA preemption in light of Shroyer v. New Cingular Wireless Servs., Inc., 498 F.3d 976
(9th
Cir. 2007))
Janda v. T-Mobile USA, Inc., No. 06-15712, 267 Fed Appx. 968 (9th
Cir. Feb. 25, 2008)
(Court, in unreported opinion, holds that class action waiver is unconscionable relying
upon Shroyer opinion)
DMEAST #16043515 v1 42
Hoffman v. Citibank (South Dakota), N.A., 546 F.3d 1078 (9th
Cir. 2008) (court remands
order of district court denying motion to compel individual arbitration to conduct a fact
finding regarding Citibank’s opt-out right)
Davis v. Chase Bank USA, No. 07-55561, ___ Fed. Appx. ___, 2008 WL 48322998 (9th
Cir. Nov. 3, 2008) (unpublished) (class action waiver was unconscionable because it was
“in the form of a bill stuffer the consumer would be deemed to accept if he did not close
his account”)
Doe 1 v. AOL, LLC, No. 07-15323 (9th
Cir. Jan. 16, 2009) (per curiam) (forum selection
clause calling for jurisdiction only in Virginia state court is unenforceable as to California
resident plaintiffs bringing class action claims under California consumer law since class
actions are not available in Virginia state court)
Chalk v. T-Mobile USA, Inc., No. 06-35909, 2009 WL 792517 (9th
Cir. Mar. 27, 2009)
(Court follows Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or. App. 553, and holds
that class action waiver is unconscionable under Oregon law because it is contained in a
consumer adhesion contract where individual damages are likely to be small)
Oestreicher v. Alienware Corporation, No. 07-16531, 2009 WL 902341 (9th
Cir. April 2,
2009) (unpublished) (court refused to apply Florida choice-of law clause and held that
class action waiver was unconscionable under California law even in the context of a
plaintiff’s claim of $4,000 for a defective computer)
Creighton v. Blockbuster, Inc., 321 Fed. Appx. 637, 2009, U.S. App. LEXIS 7238 (9th
Cir. April 6, 2009) (unpublished) (Court holds that class action waiver in adhesion
contract is unconscionable under Oregon law)
Detwiler v. T-Mobile USA, Inc., 305 Fed. Appx 353, 2008 WL 5213704 (9th Cir. 2008)
(Court holds that class action waiver is unlawful under Florida law after applying
Washington choice-of-law rules which called for application of the law of Florida, the
state where the plaintiff resides.)
Kaltwasser v. Cingular Wireless, LLC, No. 08-15962, 2009 WL 3157688 (9th
Cir. Oct. 1,
2009) (Court holds that class action waiver is unlawful under California law after
refusing to enforce Virginia choice-of-law clause; court also rules that AT&T’s “bump-
up” provision does not change the result)
Laster v. AT&T Mobility, LLC, 584 F.3d 849 (9th
Cir. 2009) (in affirming District Court
order denying motion to compel arbitration, Ninth Circuit holds that AT&T’s “bump-up”
provision (which provides for a “premium payment of $7,500, the jurisdictional limit of
California’s small claims court, and double counsel fees if the arbitrator awards the
customer an amount greater than AT&T’s last written settlement offer made before the
selection of an arbitrator) does not save the class action waiver from being
unconscionable under California law; court concludes that actual damages are
“predictably small” because AT&T will pay alleged overcharges to anyone who might
initiate arbitration and few customers will actually initiate the arbitration and receive the
premium; court finds no FAA preemption) AT&T has filed a Petition for a Writ of
DMEAST #16043515 v1 43
Certiorari with the U.S. Supreme Court sub nom ATT Mobility LLC v. Concepcion, No.
09-893. On May 24, 2010, the U.S. Supreme Court granted certiorari.
Masters v. DirecTV, Inc., 2009 WL 4885132 (9th
Cir. Nov. 19, 2009) (unpublished)
(court holds that California law governs the enforceability of class action waivers in the
contracts of customers of California-based businesses even when those contracts choose
the law of the customer’s home state)
Omstead v. Dell, Inc., No. 08-16479, 2010 WL396089 (9th
Cir. Feb. 5, 2010 (court holds
that class action waiver is unlawful under California law after refusing to enforce Texas
choice-of-law clause)
Greenwood v. CompuCredit Corporation, No. 09-15906, 2010 WL 3222415 (9th
Cir.
Aug. 17, 2010) (Court affirms denial of motion to compel arbitration of a claim brought
under the Credit Repair Organizations Act (the “CROA”) after concluding that it gives
the consumer the “right to sue” in court and precludes any consumer waiver of that right;
in doing so, the Court created a Circuit split since both the Third and Eleventh Circuits
have previously held that the CROA does not create a non-waivable right to sue in court.
Gay v. Credit Inform, 511 F.3d 369, 377 n.4 (3d Cir. 2007); Picard v. Credit Solutions,
Inc., 564 F.3d 1249, 1255 (11th
Cir. 2009)). The United States Supreme Court has
granted certiorari.
Eleventh Circuit
Rollins, Inc. v. Garrett, No. 05-14127, 176 Fed. Appx. 968, 2006 WL 1024166 (11th
Cir.
2006) (per curiam) (in affirming the District Court’s order denying the plaintiff’s motion
to vacate an AAA Clause Construction Award concluding that under Florida law
classwide arbitration could be entertained when the arbitration provision contains no
class action waiver, the 11th
Circuit held: “Under Florida law, a consumer contract that
prohibits class arbitration is unconscionable because it ‘preclude[s] the possibility that a
group of its customers might join together to seek relief that would be impractical for any
of them to obtain alone’ Powertel, Inc. v. Bexley, 743 So. 2d 570, 576 (Fla. 1st DCA
1999). Accordingly, the arbitrators did not exceed their power by interpreting the
contract to allow class arbitration, see 9 U.S.C. §10(a)(4) nor did the arbitration award
violate public policy.”)
Dale v. Comcast Corporation, 498 F.3d 1216 (11th
Cir. 2007) (Court holds that class
action waiver is substantively unconscionable under Georgia law because of the lack of a
contractual fee-shifting feature in the face of a claim under the federal Cable
Communications Policy Act of 1984, which does not provide for the award of attorneys’
fees to a prevailing consumer.)
Pendergast v. Sprint Nextel Corporation, No. 09-10612, 2010 WL 6745 (11th
Cir. Jan. 4,
2010) Court certifies the following questions to the Florida Supreme Court:
(1) Must Florida courts evaluate both procedural and substantive
unconscionability simultaneously in a balancing or sliding scale approach, or
DMEAST #16043515 v1 44
may courts consider either procedural or substantive unconscionability
independently and conclude their analysis if either one is lacking?
(2) Is the class action waiver provision in plaintiff’s contract with Sprint
procedurally unconscionable under Florida law?
(3) Is the class action waiver in plaintiff’s contract with Sprint substantively
unconscionable under Florida law?
(4) Is the class action waiver provision in plaintiff’s contract with Sprint void
under Florida law for any other reason?
Jones v. DirecTV, Inc., No. 09-15936 (11th
Cir. June 3, 2010) (per curiam and
unpublished) (Court follows Dale v. Comcast Corporation, 498 F. 3d 1216 (11th
Cir.
2007) and holds that class action waiver is unconscionable under Georgia law in a case
involving only common law claims because of a lack of a contractual fee-shifting feature;
the fact that the plaintiff could have, but did not, assert a claim under a Georgia statute
with a fee-shifting feature is irrelevant). The reasoning of this opinion has been
undermined by the later published opinion in Cappuccitti v. DirecTV, 2010 WL 4027719
(11th
Cir. Oct. 15, 2010 and later, Eleventh Circuit opinion in Jones v. DirecTV, Inc.,
No. 11-10887 2011 and 5963529 (Nov. 22, 2011)).
Gordon v. Branch Banking and Trust, No. 09-15399, 2011 WL 1111718 (11th
Cir.
March 28, 2011) (unpublished) (Court follows Dale v. Comcast Corporation, 498 F. 3d
1216 (11th
Cir. 2007) and holds that class action waiver is unconscionable under Georgia
law in a case involving only common law claims because of a lack of a contractual fee-
shifting feature; because the defendant failed to argue in the District Court that plaintiff
could have asserted a claim under a Georgia statute with a fee-shifting feature the Court
held that this argument based on Cappucitti v. DirecTV, 2010 WL 4027719 (11th
Cir.
Oct. 15, 2010) was waived; Court denied petition for rehearing on June 3, 2011. U.S.
Supreme Court subsequently granted cert and vacated this opinion after which Eleventh
Circuit remanded it to District Court for reconsideration in light of Concepcion.
DMEAST #16043515 v1 45
Federal Statutes Invalidating Arbitration Agreements
John Warner National Defense Authorization Act for Fiscal Year 2007, Pub. L. 109-364, Section
670(a), to be codified at 10 U.S.C. Chap. 49, by adding § 987 (Oct. 17, 2006). Effective October
1, 2007, it shall be unlawful for any creditor to extend consumer credit to an active duty member
of the military or his or her dependent which requires him or her to submit to arbitration.
(Section 987(e)(3)). It also provides that no agreement to arbitrate any dispute involving the
extension of consumer credit shall be enforceable against such persons. (Section 987(f)(4))
Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat.
1376 (July 21, 2010), Section 1414(a), to be codified as Section 129C(e) of the Truth-in-Lending
Act (July 21, 2010). No residential mortgage loan and no extension of credit under an open-end
consumer credit plan secured by the principal dwelling of the consumer may include terms which
require arbitration or any other nonjudicial procedure as the method for resolving any
controversy or settling any claims arising out of the transaction. It is unclear whether this
provision became effective on July 22, 2010 (Section 4) or will become effective 18 months after
the “designated transfer date” (Section 1400 (3)).
Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat.
1376 (July 21, 2010), Section 1028. The Consumer Financial Protection Bureau can issue
regulations to prohibit or restrict the use of mandatory arbitration agreements if, based on the
results of a mandated study which it provides to Congress, it finds this action to be “in the public
interest and for the protection of consumers.” Any such regulations can apply only to
agreements entered into more than 180 days after their effective date.
DMEAST #16043515 v1 46
State Court Appellate Opinions and Statutes Upholding
Validity of Class Action Waivers
California
Lewis v. 24 Hour Fitness USA, Inc., No. B227869, 2011 WL 5223153 (Cal. App. 2 Dist.
Nov. 3, 2011) (reversing order denying “motion to enforce” class action waiver provision
of arbitration agreement).
Moran v. Superior Court of Kern County, No. 061801, 011 Cal. App. LEXIS 8766 (Cal.
App. 5th
Dis. Nov. 16, 2011) (rejecting argument that class action waiver was
unconscionable under Concepcion but noting that “AT&T Mobility did not hold that all
state unconscionability law, as it applies to arbitration agreements, is preempted by the
FAA. It acknowledged that an arbitration agreement may be invalidated by
unconscionability under state law to the same extent as contracts in general. Its
consideration was limited to California’s Discover Bank rule, a rule it found was
inconsistent with the purposes and objectives of arbitration and ‘interfere[d] with the
purposes and objectives or arbitration.’ Real parties have not shown that other aspects of
California’s unconscionability law, which petitioner invoked in an attempt to invalidate
his arbitration agreement with real parties, are fundamentally at odds with arbitration.”)
Parrish v. Cingular Wireless, LLC, 28 Cal. Rptr. 3d 802 (Ct. App. 1st Dist. 2005) (class
action waiver is not unconscionable under California law), vacated by California
Supreme Court in light of Discover Bank v. Superior Court, 2005 Cal. LEXIS 9357 (Aug.
24, 2005)
Discover Bank v. Superior Court, 105 Cal. App. 4th
326 (Ct. App. 2d Dist. 2003), (pet.
for review granted, 65 P.3d 1285 (2003) (FAA preempts California law even if class
action waiver is unconscionable under California law), rev’d and remanded, 36 Cal 4th
148, 30 Cal. Rptr. 3d 76, 113 P.3d 1108 (2005). On remand, Court of Appeal upholds
validity of class action waiver based on Delaware choice-of-law clause, 134 Cal. App. 4th
886, 36 Cal. Rptr. 3d 456 (2005), pet. for review denied (Mar. 29, 2006)
Vernon v. Drexel Burnham & Co., 125 Cal. Rptr. 147 (Cal. Ct. App. 1975) (compelled
arbitration of claims of named-plaintiffs and held that “the policy of the law favoring
arbitration prevails over the policy of law pertaining to class actions . . . .”); Frame v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 97 Cal. Rptr. 811 (Cal. Ct. App. 1971)
(same); Patterson v. ITT Consumer Financial Corp., 18 Cal. Rptr. 2d 563 (Ct. App.) rev.
denied, 18 Cal. Rptr. 2d 563 (Cal. App. 1st Dist. 1993) (same), rehearing denied (May 13,
2005), review denied (Aug. 12 1993), cert. denied 510 U.S. 1176 (1994)
Vannier v. Gateway Companies, Inc., No. B179663, 2006 WL 121962 (Cal. Ct. App., 2nd
Dist. Jan. 18, 2006) (held in unpublished opinion that FAA and South Dakota choice-of-
law provision precluded a consumer who had agreed to arbitrate disputes from initiating a
DMEAST #16043515 v1 47
class action alleging violations of the California Consumer Legal Remedies Act (the
“CLRA”)2)
Gentry v. Superior Court, 135 Cal. App. 4th
944, 37 Cal. Rptr. 3d 790 (Cal. Ct. App., 2nd
Dist. 2006) (compelled arbitration of claim of named plaintiff after concluding that class
action waiver in employment agreement is neither procedurally unconscionable as a
result of the existence of an opt-out right nor substantively unconscionable because of the
potential substantial damages and penalties available to the employee if he prevails)3
Jones v. Citigroup, 135 Cal. App. 4th
1491, 38 Cal. Rptr. 3d 461 (Cal. Ct. App., 4th
Dist.
2006) (reverses trial court’s denial of motion to compel arbitration after holding that there
is no procedural unconscionability by virtue of the fact that Citibank allowed a
cardholder to opt out of the arbitration provision without his or her account being closed
2 The United States Court of Appeals for the Ninth Circuit has held that the FAA preempts
the class action anti-waiver language in the CLRA because the CLRA only applies to
consumer contracts. The only state law preserved from preemption by Section 2 of the
FAA are state laws which apply to all contracts within the state of California. See Ting
v. AT&T, 319 F.3d 1126, 1147-48 (9th
Cir. 2003), cert. denied, 540 U.S. 811 (2003);
Provencher v. Dell, Inc., 409 F. Supp. 2d 1196 (C.D. Cal. 2006), Accord Bradley v.
Harris Research, Inc., 275 F.3d 884, 892 (9th
Cir. 2001) (holding that the FAA preempted
Cal. Bus. & Prof. Code Section 20040.5 because it “is not a generally applicable contract
defense that applies to any contract, but only to forum selection clauses in franchise
agreements.”). See also KKW Enters. Inc. v. Gloria Jean’s Gourmet Coffees Franchising
Corp., 184 F.3d 42 (1st Cir. 1999); OPE Int’l LP v. Chet Morrison Contractors, Inc., 258
F.3d 443 (5th
Cir. 2001); Doctor’s Assocs. Inc. v. Hamilton, 150 F.3d 157, 163 (2d Cir.
1998), cert. denied 525 U.S. 1103 (1999), Management Recruiters Int’l, Inc. v. Bloor,
129 F.3d 851, 856 (6th
Cir. 1997); Alphagraphics Franchising, Inc. v. Whaler Graphics,
Inc., 840 F. Supp. 708 (D. Ariz. 1993); Michael v. NAP Consumer Elecs. Corp., 574 F.
Supp. 68 (D.P.R. 1983); Battle v. Nissan Motor Acceptance Corp., No. 05-C-0669, 2006
U.S. Dist. LEXIS 37917 at *14-15 (E.D. Wis. Mar. 9, 2006). The California Court of
Appeal has recently determined that the CLRA does not apply to loan or credit
transactions. Berry v. American Express Publishing, Inc., No. G036848, 147 Cal. App.
4th
224, 54 Cal. Rptr. 3d 91, (Calif. Ct. App., 4th
App. Dist. Jan. 31, 2007); Credit
Acceptance Corporation v. Davisson, Case No. 1:08 CV 107 (N.D. Ohio June 30, 2009)
[Ballard Spahr client]. The California Court of Appeal, in Fisher v. DCH Temecula
Imports, LLC, No. E047802 (Fourth District, Division 2 August 13, 2010) refused to
follow the Ninth Circuit opinion in Ting v. AT&T and, instead, held that the FAA does
not preempt the CLRA because in California private contracts that violate public policy
are unenforceable and that the right to bring a class action lawsuit, an unwaivable
statutory right under the CLRA, is a separate, generally applicable contract defense under
§ 2 of the FAA.
DMEAST #16043515 v1 48
until the end of the cardholder’s current membership year or the expiration date on the
card)3
Cardenas v. Chase Manhattan Bank, USA, N.A., No. G033939, 2006 WL 1454778 (Cal.
Ct. App. 4th
Dist. May 26, 2006) (in unpublished opinion, reverses trial court’s denial of
motion to compel arbitration after upholding validity of class action waiver based on
Delaware choice-of-law clause and the Court of Appeal, Second District’s opinion in
Discover Bank v. Superior Court, 134 Cal. App. 4th
886, 36 Cal. Rptr. 3d 456 (2005); in
ruling that the class action waiver was not contrary to a fundamental California policy,
the Court of Appeal concluded that there was no procedural unconscionability by virtue
of the fact that Chase allowed its cardholders to opt out of the arbitration provision
without their accounts being closed)
Konig v. U-Haul Company of California, No. B190547, 52 Cal. Rptr. 3d 244 (Calif. Ct.
App., 2nd
App. Dist., Div. 5 Dec. 19, 2006) (Court upholds validity of class action waiver
after determining that the claims of plaintiff and each member of the putative class did
not involve a “predictably . . . small amount of damages” per class member as required
by the California Supreme Court’s opinion in Discover Bank v. Superior Court in order
to invalidate a class action waiver)
Arguelles-Romero v. Superior Court (AmeriCredit Financial Services, Inc.) No. B219178
(Calif. Ct. App, 2nd
App. Dist., Div. 3 May 13, 2010). (Court affirms holding of trial
court that claim seeking to eliminate $16,000 deficiency balance after repossession and
sale of auto because of alleged failure to comply with post-repossession notice
requirements of California Automobile Sales Finance Act (the “CASFA”) was
sufficiently large so as to not make class action waiver substantively unconscionable;
however, the Court remanded the case to the trial court for it to do a discretionary
analysis on whether a class action is a significantly more effective practical means of
vindicating unwaiverable rights under the CASFA to bring a class action as required by
the California Supreme Court’s opinion in Gentry v. Superior Court, 42 Cal. 4th
443
(2007)e)
3 On April 26, 2006, the California Supreme Court granted review in both the Gentry and
Jones cases, which had the effect of depublishing the cited opinions. See Gentry, No.
S141502, 43 Cal. Rptr. 3d 748, 135 P.3d 1 (Cal. April 26, 2006); Jones, No. S141753, 43
Cal. Rptr. 3d 749 135 P.3d 2 (Cal. April 26, 2006). On November 28, 2007, the
California Supreme Court transferred the Jones case to the Court of Appeal with
directions to vacate its decision and to reconsider it in light of the decision in Gentry.
The Court of Appeal ordered new briefing. Thereafter, the Jones case settled on an
individual basis. The Gentry case has been reversed.
DMEAST #16043515 v1 49
Colorado
Rains v. Foundation Health Systems Life & Health, 23 P.3d 1249 (Ct. App. Colo. 2001)
(“arbitration clauses are not unenforceable simply because they might render a class
action unavailable)
Medina v. Sonic-Denver T. Inc., No. 10CAO275 (Colo. Ct. App., Div. 1 March 17, 2011)
(Court affirms trial court order which enforced class action waiver, but based its
conclusion on the U.S. Supreme Court’s opinion in Stolt-Nielsen SA v. AnimalFeeds
Int’l Corp., No. 09-14107, 2010 WL 4027719 (11th
Cir. Oct. 15, 2010))
Delaware
Westendorf v. Gateway 2000, Inc., 41 UCC Rep. Serv. 2d 1110 (Del. Ch. 2000), aff’d,
763 A.2d 92 (2000) (compelled arbitration of named-plaintiff’s claims under Delaware
Consumer Fraud Act)
District of Columbia
Forrest v. Verizon Communications, Inc., 805 A.2d 1007 (D.C. Ct. App. 2002) (upholds
validity of forum selection clause in putative class action stipulating for application of
Virginia law even though class actions are not available in Virginia)
Florida4
America Online, Inc. v. Booker, 781 So. 2d 423 (Fla. Ct. of App., Third Dist. 2001)
(“Florida plaintiffs cannot defeat otherwise valid provisions requiring suit in other states
simply by asserting a cause of action in the name of a putative class”)
4 See Pendergast v. Sprint Nextel Corporation, No. 09-10612, 2010 WL 6745 (11
th Cir.
Jan. 4, 2010) Court certifies the following questions to the Florida Supreme Court:
(1) Must Florida courts evaluate both procedural and substantive
unconscionability simultaneously in a balancing or sliding scale approach, or
may courts consider either procedural or substantive unconscionability
independently and conclude their analysis if either one is lacking?
(2) Is the class action waiver provision in plaintiff’s contract with Sprint
procedurally unconscionable under Florida law?
(3) Is the class action waiver in plaintiff’s contract with Sprint substantively
unconscionable under Florida law?
(4) Is the class action waiver provision in plaintiff’s contract with Sprint void
under Florida law for any other reason?
DMEAST #16043515 v1 50
Fonte v. AT&T Wireless Services, Inc., 903 So. 2d 1019 (Fla. Ct. of App., 4th
Dist. 2005)
(“We find that neither the text nor our review of the legislative history of [the Florida
Deceptive and Unfair Trade Practices Act] suggest that the legislature intended to confer
a non-waivable right to class representation. Moreover, there are numerous enforcement
mechanisms which can protect consumers other than class actions.”), review denied, 918
So. 2d 292 (2005)
Reeves v. ACE Cash Express, Inc., 937 So 2d 1136 (Fl. Ct of App, 2nd
Dist. Aug. 11,
2006), reh’g denied, Sept. 29, 2006 (follows Fonte, Supra and concludes that class action
waiver is valid)
Georgia
Crawford v. Great American Cash Advance, Inc., 284 Ga. App. 690, 644 S.E. 2d 522
(Ga. App. March 29, 2007) (affirms trial court order compelling arbitration and implicitly
rejects the notion that the inability to prosecute a class action is unconscionable under
Georgia law)
Hawaii
Brown v. KFC U.S.A., 82 Haw. 226, 921 P.2d 146 (Haw. 1996), recons. denied, 922 P.2d
973 (Haw. 1997) (compelled arbitration and rejected an argument that arbitration is
inherently unfair to employees because of the “alleged elimination of the opportunity for
class actions”)
Illinois
Hutcherson v. Sears Roebuck & Company, 342 Ill. App. 3d 109, 793 N.E. 2d 886 (Ill.
App. 2003), rev. denied, 205 Ill. 2d 582, 803 N.E. 2d 482 (2003) (class action waiver is
not unconscionable under Arizona law and FAA requires class action waiver to be
enforced in accordance with its terms)
Rosen v. SCIL, LLC and Saks Incorporated, 343 Ill. App. 3d 1075, 799 N.E. 2d 488 (Ill.
App. 2003), rev. denied, 207 Ill. 2d 627, 807 N.E. 2d 982 (2004) (class action waiver is
not unconscionable under Illinois law). [Ballard Spahr client]
Ragan v. AT&T Corp., 291 Ill. Dec. 933, 824 N.E. 2d 1183 (Ill. App. 2005) (class action
waiver is not unconscionable under New York law)
Hubbert v. Dell Corporation, 359 Ill. App. 3d 976, 835 N.E. 2d 113 (Ill. App. Ct. 5th
Dist.
2005) (class action waiver is not unconscionable under Texas law), appeal denied, 217
Ill. 2d 601 (2006)
Kansas
Wilson v. Mike Steven Motors, Inc., 111 P.3d 1076 (Table) (Kan. Ct. App. May 27,
2005) (class action waiver is not unconscionable under Kansas law)
DMEAST #16043515 v1 51
Maine
Stenzel v. Dell, Inc., 870 A.2d 133 (Me. 2005) (class action waiver is not unconscionable
under Texas law)
Maryland
Walther v. Sovereign Bank, 386 Md. 412, 872 A.2d 735 (Md. 2005) (upholds validity of
class action waivers in light of “the strong policy made clear in both federal and
Maryland law that favors the enforcement of arbitration provisions”)
Doyle v. Finance America, LLC, 173 Md. App. 370, 918 A.2d 1266 (Md. App. Mar. 15,
2007) (follows Walther and upholds validity of class action waiver)
Gilman v. Wheat, First Securities, Inc. 345 Md. 361, 692 A.2d 454 (1997) (upholds
validity of forum selection clause in putative class action stipulating for application of
Virginia law even though class actions are not available in Virginia)
Freedman v. Comcast Corporation, Nos. 435, 2102, September Term, 2008, 2010 Md.
App. LEXIS 12 (Ct. of Spec. App. of Md. Jan. 28, 2010) (Court follows Walther v.
Sovereign Bank, 386 Md. 412 (2005) and holds that class action waiver is valid under
Maryland law; Court further holds that there was no procedural unconscionability
because of provision giving customer 30 days to opt out of arbitration provision)
Mississippi
Mississippi has no class action rule or statute and Mississippi state courts do not
recognize class actions. American Bankers Ins. Co of Florida v. Booth, 830 So. 2d 1205,
1213 (Miss. 2002); Marx v. Broom, 632 So. 2d 1322, 1325 (Miss. 2004)
Missouri
Robinson, et al v. Title Lenders, Inc., No. S.C.91728, 2012 Mo. LEXIS 63 (Mo. March 6,
2012) (reversing trial court’s decision that defendant’s arbitration agreement was
unconscionable because of its class action waiver in light of Concepcion and remanding
for trial court to determine whether the arbitration agreement was unconscionable on
grounds that remain available post-Concepcion).
New Jersey
Gras v. Associates First Capital Corp., 346 N.J. Super. 42, 786 A.2d 886 (App. Div.
2001), review denied (Sup. Ct.) (enforced class action waiver stating that there is no
“overriding public policy in favor of class actions”)
Delta Funding Corporation v. Harris, 189 NJ 28, 912 A.2d 104 (N.J. Supreme Court Aug.
9, 2006) (upholds validity of class action waiver in context of high-value claim).
[Ballard Spahr client]
DMEAST #16043515 v1 52
Muhammad v. County Bank of Rehoboth Beach, Delaware, 379 N.J. Super 222, 877
A.2d 340 (2005) (follows Gras, supra), petition for review before New Jersey Supreme
Court granted, 185 N.J. 254 (2005). This case was reversed, 189 NJ 1, 912 A.2d 88
(2006).
NAACP of Camden County East v. Foulke Management Corp., Docket No. A-1230-
09T3, 2011 WL 3273896 (N.J. Super. Ct. App. Div. August 2, 2011) (Although Court
reversed order compelling arbitration because disparate arbitration provisions were too
confusing, too vague, and too inconsistent to be enforced, the Court strongly endorsed
Concepcion and stated: “[T]he Court in AT&T Mobility held that the FAA preempts
courts from nullifying class action waiver provisions in arbitration agreements based
upon state-law notions of unconscionability and public policy. The Court unambiguously
ruled that the FAA trumps state laws in this respect. Consequently, we must reject
plaintiffs’ specific attempt to have us declare the class action waiver provisions in this
case invalid on the basis that such waivers, as a policy matter, unconscionably discourage
the pursuit of ‘low-value’ claims such as those involved here.” The Court then rejected
each of these arguments made by plaintiffs to distinguish Concepcion: (1) the case does
not involve interstate commerce, (2) Concepcion does not apply to allegations of class-
wide fraud; (3) the defendant’s arbitration provision in Concepcion was more consumer
friendly than the AT&T provision; and (4) Concepcion condemns only generalized state-
law nullifications of class waivers, not case-specific ones. With respect to the third
argument, the Court stated: “The fact that the arbitration provisions in AT&T Mobility
may have been more generous to consumers than the provisions here does not affect the
force of the Supreme Court’s preemption analysis. The Court’s analysis turned on
general doctrinal principles rather than the specific wording of the cellular contracts.”
New Mexico
Fiser v. Dell Computer Corporation, 165 P.3d 325 (N.M. Ct. App. 2007), cert. granted,
No. 30,424 (June 26, 2007) (Class action waiver in arbitration provision in terms and
conditions of sale contained in “approve-or-return” contracts is neither procedurally
unconscionable (because plaintiff did not establish a lack of other alternatives in
purchasing a computer) or substantively unconscionable as a matter of Texas law and
such a result did not violate New Mexico policy.) This opinion was reversed by the New
Mexico Supreme Court, No. 30,424 (June 27, 2008).
New York
Ranieri v. Bell Atlantic Mobile, 304 A.D. 2d 353, 759 N.Y.S. 2d 448 (N.Y. App. Div. 1st
Dep’t 2003), leave denied, 1 N.Y. 3d 502, 775 N.Y.S. 2d 240, 807 N.E. 2d 290 (2003)
(class action waiver is not unconscionable or contrary to public policy)
Brower v. Gateway 2000, 246 A. D. 2d 246 (N.Y. 1st Dep’t 1998) (same)
Tsadilas v. Providian National Bank, 13 A.D. 3d 190, 786 N.Y.S. 2d 478 (N.Y. App. Div.
1st Dep’t 2004), reargument denied, 2005 N.Y. App. Div. LEXIS 247 (Mar. 8, 2005),
DMEAST #16043515 v1 53
appeal denied, 5 NY 3d 702, 832 N.E. 2d 1189, 799 N.Y.S. 2d 773 (June 4, 2005)
(same). [Ballard Spahr client]
Johnson v. Chase Manhattan Bank, N.A., 2 Misc. 3d 1003(A), 784 N.Y.S. 2d 921 (table),
2004 WL 413213 (N.Y. Sup.) 2004 N.Y. Slip. Op. 50086(U) (2004), aff’d, 786 N.Y.S. 2d
302 (N.Y. App. Div. 2004) (same)
Hayes v. County Bank, 2006 NY Slip Op 1460, 26 AD3d 465, 811 N.Y.S. 2d 741 (Feb.
28, 2006) (same)
Harris v. Shearson Hayden Stone, 82 A. D. 2d 87, 441 N.Y.S. 2d 70 (1981); aff’d 56
N.Y. 2d 627, 450 N.Y.S. 2d 482, 435 N. E. 2d 1097 (1982)
North Carolina
Tillman v. Commercial Credit Loans, Inc., 177 N.C. App. 568, 629 S.E. 2d 865 (N.C. Ct.
App. June 6, 2006) (North Carolina Court of Appeals, reversing the trial court, upheld the
validity of the class action waiver in defendants’ financing contracts. The court relies
heavily on prior federal circuit court decisions holding that a class action waiver in an
arbitration agreement is not per se unenforceable and is not unconscionable where the
prevailing plaintiff is permitted to recover attorney’s fees and costs under applicable
substantive fee-shifting statutes. The court emphasized that “[t]he great majority of
federal and state jurisdictions who have addressed this issue” have upheld the validity of
class action waivers and have recognized that such waivers do not choke off the supply of
attorneys willing to represent consumers on an individual basis where applicable
substantive law permits successful plaintiffs to recover fees and costs.). This opinion was
reversed by the North Carolina Supreme Court, 362 N.C. 93, 655 S.E. 2d 362 (2008).
North Dakota
Strand v. U.S. Nat’l Bank, N.A., 2005 N.D.68, 693 N.W. 2d 918 (N.D. March 31, 2005)
(upholds validity of class action waiver: “Merely restricting the availability of a class
action is not, by itself, a restriction on substantive remedies. The right to bring an action
as a class action is purely a procedural right”)
Ohio
Hawkins v. O’Brien, No. 224900, 2009 WL 50616 (Ohio App. 2 Dist. Jan. 9, 2009)
(court upholds the validity of the class action waiver in a payday lender’s arbitration
provision and distinguished the earlier Ohio Court of Appeals opinion in Eagle v. Fred
Martin Motor Co., 157 Ohio App. 3d 150 (2004), based on the fact that in Eagle case the
dealer’s arbitration agreement contained certain unfair features, including a
confidentiality provision: "The private attorney general and class action provisions of
R.C. 1345.09(D) are procedural mechanisms that aid consumers in their prosecution of
SCPA violations. They confer no additional substantive rights. The arbitration clause in
the present case preserves the statutory substantive rights and remedies Hawkins sought
in the action he commenced. Therefore, and because no showing has been made that
those statutory rights and remedies are not arbitrable, the arbitration clause in the contract
DMEAST #16043515 v1 54
between Hawkins and Kentucky Check is enforceable. The trial court did not err when it
held the issues in the action Hawkins commenced are referable to arbitration, and stayed
the litigation until arbitration is had. R.C. 2711.02.")
Alexander v. Wells Fargo Financial Ohio 1, Inc., No. 89277, __WL______ (Ohio Ct.
App., 8th
App. Dist., Cuyahoga Cty. Sept. 17, 2009) (class action waiver contained in
arbitration agreement which was part of mortgage loan is neither procedurally not
substantively unconscionable or against public policy; court distinguishes Eagle v. Fred
Martin Motor Co., 157 Ohio App. 3d 150 (2004) on the basis that Eagle, unlike
Alexander, specifically addressed class actions under the Consumer Sales and Practices
Act (the “CSPA”) and that the arbitration provision in Eagle, unlike Alexander, contained
a confidentiality clause; court distinguishes Schwartz v. Alltel Corp., 2006 WL 2243649
(Ohio App. 8th
Dist. June 29, 2006), on the basis that in Schwartz, as in Eagle, the
plaintiff filed his claims under the CSPA and presented considerable evidence of
procedural unconscionability.
Garber v. Buckeye Chrysler-Jeep-Dodge of Shelby, L.L.C., No. 2007-CA-0121, 2008
WL 2789074 (Ohio App. 5 Dist. July 14, 2008) rev. den. by Ohio Sup. Ct. (although the
case does not deal with the validity of a class action waiver as such, the court holds that
because appellants’ complaint did not challenge the arbitration clause and instead alleged
only that defendants committed various acts which were unfair, deceptive and
unconscionable in selling a used car, appellants waived any such challenge and the trial
court did not err in compelling arbitration based solely on its review of the pleadings and
the motion to compel arbitration without giving the appellants the right to oppose such
motion)
Wallace v. The Ganley Group, No. 95081, 2011 WL 2434093 (Ohio Ct App. 8th
Dist.
June 16, 2011) (Relying upon Concepcion, Court affirms order of trial court compelling
individual arbitration of claim against used-car dealer under Ohio Consumer Sales
Protection Act.)
South Carolina
Herron, et al v. Century BMW, No. 26805, 2011 S.C. LEXIS 402 (S.C. Dec. 19, 2011)
(reinstating opinion denying motion to compel individual arbitration; original decision
was based on ground that class action waiver was invalid under state law; after being
ordered by United States Supreme Court to reconsider that opinion in light of
Concepcion, court held that the issue of preemption had not been preserved for review in
the South Carolina proceeding).
Tennessee
Schnuerle v. Insight Commc’ns Co., L.P., 376 S.W.3d 561 (Ky. 2012) (holding that
Concepcion did not disturb the principle that an arbitration clause is not enforceable if it
fails to provide plaintiffs with an adequate opportunity to vindicate their claims and that,
“[a]ccordingly, arbitration clauses certainly may continue to be struck down as
unconscionable if their terms strip claimants of a statutory right, which cannot be
DMEAST #16043515 v1 55
vindicated by arbitration, because, for example, the arbitration costs on the plaintiffs are
prohibitively high; or the location of the arbitration is designated as a remote location.”)
Pyburn v. Bill Heard Chevrolet, 63 S.W. 3d 351 (Tenn. Ct. App. May 9, 2001) (FAA
preempts any non-waivable right which might exist to maintain class action under
Tennessee Consumer Protection Act)5
Spann v. American Express Travel Related Services Company, Inc., No. M2004-02786 -
COA - R3 - CV December 16, 2005 Term; 224 S.W. 3d 698 (Tenn. Ct. App. Aug, 30,
2006) (applies Utah choice-of-law clause in cardholder agreement and holds that class
action waiver is not unconscionable under Utah Common law; new Utah statute
validating class action waivers is cited as additional support)
Chapman v. H&R Block Mortg. Corp., 2005 WL 3159774 (Tenn. Ct. App. 2005) (class
action waiver is valid)
Texas
AutoNation USA Corporation v. Leroy, 105 S.W. 3d 190 (Tex. App. Hous. (14 Dist.)
2003) (right to arbitrate under the FAA trumps right to maintain a class action)
NCP Finance Limited Partnership v. Escatiola, No. 04-10-00644-CV, 2011 WL 1572208
(Texas Ct. App. April 27, 2011) (Court reverses trial court and holds, based on Stolt-
Nielsen, that the lender was entitled to compel individual arbitration)
Utah
Act of March 1, 2006, Chapter 172, Utah Laws of 2006, effective March 15, 2006 (to be
codified at Utah Code Ann. §§ 70C-3-104, 70C-4-102, 70C-4-105) (validates class action
waivers in consumer credit transactions as long as they are disclosed in all capital letters
or bold-face type). [Ballard Spahr promoted, drafted and lobbied for enactment]
Virginia
Virginia has no class action rule or statute. Nationwide Mut. Ins. Co. v. Housing
Opportunities Made Equal, Inc., 259 Va. 8, 22, 523 S.E. 2d 217 (2000) (quoting W.S.
Carnes, Inc. v. Bd of Supervisors, 252 Va. 377, 478 S.E. 2d 295, 300 (Va. 1996)
5 The Tennessee Supreme Court denied the plaintiff’s petition for review and ordered the
Court of Appeal’s opinion to be published which means that the decision “may be relied
upon by the bench and bar of [Tennessee] as representing the present state of the law with
the same confidence and reliability the published opinions of [the Tennessee Supreme]
Court.” Meadows v. State, 849 S.W. 2d 748, 752 (Tenn. 1993)
DMEAST #16043515 v1 56
Washington
Stein v. Geonerco, Inc., 105 Wash. App. 41, 17 P.3d 1266 (WA 2001) (court rejects
argument that arbitration agreement is unenforceable because it prevented plaintiff from
bringing class action)
Heaphy v. State Farm Mutual Automobile Insurance Co., 117 Wash App. 438 (2003),
review denied, 150 Wash. 2d 1037 (2004) (same)
West Virginia
Richmond American Homes of West Virginia, Inc. v. Honorable David H. Sanders, 717
S.E.2d 909 (W. Va. 2011) (finding that circuit court erred in ruling that class action
waiver rendered arbitration provision unconscionable in light of Concepcion, but
affirming circuit court’s denial of motion to compel arbitration on other grounds, namely
that the entire arbitration agreement was unconscionable because it, inter alia,
“exculpated Richmond from misconduct”).
The West Virginia Supreme Court granted a Writ of Prohibition with respect to an order
of the trial court which had denied a motion to compel arbitration filed by AT&T
Mobility because of its determination that the class action waiver was unconscionable
under the West Virginia Supreme Court’s earlier opinion in State ex rel Dunlap v. Berger,
211 W. Va. 549, 567 S.E. 2d 265 (2002). In doing so the Supreme Court stated: “Based
on the limited record that is before us, it appears that this case stands in severe contrast to
the concerns of legal representation; burdensome mediation costs; and nominal recovery
that we articulated in Dunlap. Pursuant to the arbitral provisions that the trial court found
to be controlling (2005 agreement plus the 2006 and 2009 modifications), Ms. Shorts
bears no costs with regard to an arbitration proceeding. As to her potential recovery, the
governing arbitration clause provides that there is a minimum recovery of $10,000 for
any customer who is awarded more in arbitration than the last written settlement offer
made by AT&T Mobility. And if the arbitral award exceeds the last settlement offer
extended by AT&T Mobility, the claimant has a right to double attorney’s fees. This
double award is in addition to any attorney’s fees and expenses the customer has a right
to under applicable state laws. Finally, as mentioned above, Ms. Shorts’ relief is not
limited by the arbitration forum as she is entitled, under the provisions the trial court
found to govern, to an award that provides for all statutory and punitive relief that is
available in a court. These same arbitration provisions were recently upheld by a federal
district court judge. See Wince v. Easterbrooke Cellular Corp., 681 F.Supp.2d 679, 685
(N.D. W.Va. 2010). [footnotes omitted]” State of West Virginia, ex rel AT&T Mobility,
LLC et al v. Honorable Ronald E. Wilson, Judge of the Circuit Court of Brooke County
and Charlene A. Shorts, September 2010 Term, No. 35537 (Oct. 28, 2010). The case was
remanded to the trial court to “evaluate the provisions of the arbitration clause it has
found to control against the ability of Ms. Shorts to enforce her rights in connection with
her claims. This determination will necessarily involve a consideration of the financial
costs to proceed in arbitration; the opportunity to address her claims in arbitration; and
the ability to seek redress for her claims in arbitration.” [footnote omitted]
DMEAST #16043515 v1 57
Wisconsin
Cottonwood Financial LTD v. Estes, No. 2009AP760, 2011 Wisc. App. LEXIS 1009
(Wis. App. Dec. 20, 2011) (affirming circuit court’s order that class arbitration waiver
was enforceable and not unconscionable in light of Concepcion).
Cottonwood Financial LTD v. Estes, No. 2009AP760, 2012 WL 265716 (Wis. App. Jan.
31, 2012) (affirming judgment on order compelling arbitration and stating that
“Concepcion’s holding is clear: the FAA preempts any state law that classifies an
arbitration agreement as unconscionable, and therefore unenforceable, simply because the
agreement prohibits an individual from proceeding as a member of a class. Accordingly,
under Concepcion, the waiver of class-wide proceedings in Estes's arbitration agreement
with Cottonwood does not render the agreement substantively unconscionable.”)
DMEAST #16043515 v1 58
State Court Appellate Opinions
Invalidating Class Action Waivers6
6 Most of these opinions have been overruled by virtue of the U.S. Supreme Court’s
opinion in AT&T Mobility LLC v. Concepcion, No. 09-893, 2011 U.S. LEXIS 3367 (April 27,
2011). The only possible exceptions are those where the courts invalidated the class action
waiver based on a federal statute as opposed to state law. Also, in most of these opinions, the
courts held that there was some degree of procedural unconscionability as well as substantive
unconscionability under state law. Many companies now give consumers and employees the
unconditional right to opt out of or reject the arbitration provision without it having any adverse
repercussions. Courts in states that require that there be both procedural as well as substantive
unconscionability in order to invalidate a contract based on unconscionability have validated
class action waivers and other arbitration features that they considered substantively
unconscionable when an opt-out right was provided to the consumer or employee. See, e.g.,
Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198 (9th Cir. 2002); Circuit City Stores, Inc. v.
Najd, 294 F.3d 1104, 1108 (9th Cir. 2002); Providian National Bank v. Screws, 894 So. 2d 625
(Ala. Oct. 3, 2003) [Ballard Spahr client]; Tsadilas v. Providian Nat’l Bank, 13 A.D. 3d 190,
786 N.Y.S. 2d 478 (1st Dep’t. 2004) [Ballard Spahr client]; Marley v. Macy’s South, No. CV
405-227, 2007 WL 1745619, at *3 (S.D. Ga. June 18, 2007) (court enforced arbitration clause in
employment agreement because “[w]hile Ms. Marley states that she did not have a choice to
enter the arbitration process because she was ‘in jeopardy of losing [her] job’ if she did not, the
record indicates that each employee was mailed an election form to opt-out of the program at
their home address”). Pivoris v. TCF Financial Corporation, No. 07-C 2673, 2007 U.S. Dist.
LEXIS 90562 (N.D. Ill. Dec. 7, 2007) [Ballard Spahr client]; SDS Autos, Inc. v. Chrzanowski,
Case No. 1D06-4293, 2007 WL 4145222 (Fla Ct. App., 1st Dist. Nov. 26, 2007) (Invalidates
class action waiver for holders of small claims under Florida Deceptive and Unfair Trade
Practices Act whose attorney’s fees are limited by the amount of their actual damages. )
(arbitration agreement with class action waiver not procedurally unconscionable where
“[p]laintiff had the absolute right to reject the arbitration provision without affecting her account
contract or the status of her account”); Honig v. Comcast of Georgia, LLC, Civil Action No.
1:07-cv-1839-TCB, 537 F.Supp. 2d 1277 (N.D. Ga. Jan. 31, 2007) (“Finally, and most
importantly …, Honig was free to reject the terms of the arbitration provision without a single
adverse consequence. Specifically, the arbitration provision gave her the right to opt out within
thirty days without adversely affecting her cable service, but she never exercised that right.
Honig's ability to opt out of the arbitration provision dilutes her unconscionability argument
because the provision was not offered on a take-it-or-leave-it basis. Courts have stressed the
importance of such opt-out provisions in enforcing class action waivers in arbitration
agreements.”); Sanders v. Comcast Cable Holdings, LLC, No. 3:07-cv-918-J-33HTS (M.D. Fla.
Jan. 14, 2008) (class action waiver provision was not unconscionable where arbitration provision
allowed subscribers to opt out); Davidson v. Cingular Wireless, LLC, No. 2:06-cv- 00133, 2007
WL 896349, at *6 (E.D. Ark. Mar. 23, 2007) (class action waiver in contract for cell phone
service not unconscionable where plaintiff failed to opt out);); Martin v. Delaware Title Loans,
Inc., No. 08-3322, 2008 WL 444302 (E.D. Pa. Oct. 1, 2008) (finding plaintiff could not establish
procedural unconscionability under PA law in light of 15 day opt-out right) [Ballard Spahr (continued...)
DMEAST #16043515 v1 59
________________________ (...continued)
client]; Columbia Credit Services, Inc. v. Billingslea, No. B190776, 2007 WL 1982721 (Cal. Ct.
App. July 10, 2007) (court affirmed lower court’s confirmation of arbitration award after
rejecting unconscionability challenge based in part on the fact that cardholder was given the right
to opt out of the arbitration provision and failed to do so); Eaves-Leanos v. Assurant, Inc., No.
07-18, 2008 WL 1805431 (W.D. Ky. Apr. 21, 2008) (finding arbitration agreement with class
waiver not unconscionable as plaintiff had opportunity to opt out); Enderlin v. XM Satellite
Radio Holdings, Inc., No. 06-0032, 2008 WL 830262 (E.D. ark. March 25, 2008)(finding
plaintiff could not establish procedural unconscionability in light of opt-out right); Crandall v.
AT&T Mobility, LLC, No. 07-750, 2008 WL 2796752 (S.D. Ill. July 18,2008) (class action
waiver in cell phone service contract not unconscionable where plaintiff failed to opt out); Webb
v. ALC of West Cleveland, Inc., No. 90843, 2008 WL 4358554 (Ohio Ct. App., 8th
App. Dist.
Sept. 25, 2008) (citing Ahmed supra, the buyer in an automobile retail installment contract
“could not demonstrate that the arbitration clause was unconscionable because the contract gave
her the right to reject the arbitration clause”) [Ballard Spahr client]; Wright v. Circuit City
Stores, Inc., Case No. CV 97-B-0776-5 (N.D. Ala. Feb. 5, 2001) (employment arbitration
provision with opt-out right is enforced); Stiles v. Home Cable Concepts, Inc., 994 F. Supp. 1410
(1998) (unconscionability challenge is rejected where credit card issuer gave the cardholder the
right to reject the arbitration provision and those who opted out had their 2% APR reduction in
interest rate reinstated to its previous rate: “Stiles was given a clear choice in this case; he could
take the arbitration provision or leave it”); Guadagno v. E*Trade Bank, No. CV 08-03628 SJO
(JCX), 2008 WL 5479062 (C.D. Calif. Dec. 29, 2008) (Class action waiver does not violate
fundamental policy of California because of opt-out right: “Here, Guadagno had a meaningful
opportunity to opt out of the Arbitration clause, which contained the class action waiver, by
notifying E*Trade in writing within 60 days of receiving the Agreement. The Agreement
highlighted the Arbitration clause, and the introduction to the Arbitration clause highlighted the
opt-out term. Because the Arbitration clause containing the waiver was not presented on a take-
it-or-leave-it basis, but gave Guadagno sixty days to opt out, it was not unconscionable. Thus,
application of Virginia law does not contradict California’s fundamental policy against enforcing
unconscionable consumer class action waivers.”); Magee v. Advance America Servicing of Ark,
Inc., No 6:08-CV-6105, 2009 WL 890991 (W.D. Ark. April 1, 2009) (Court enforces class
action waiver after noting that the arbitration agreement was clearly set off from the rest of the
contract and provided the consumers with a 30-day opt-out period – a period which was actually
longer than the term of the loan); Fluke v. CashCall, No. 08-05776, 2009 U.S. Dist. Lexis 43231
(E.D. PA. May 21, 2009)(Court enforces class action waiver under Pennsylvania law: “We
predict that the Pennsylvania Supreme Court would agree with the reasoning of the district courts
in Guadagno and Honig. An opt-out provision, like the one in Fluke’s agreement with FBD,
seriously undermines a consumer’s contention that the arbitration agreement is unconscionable.
Fluke was given the option to say “no” to the arbitration provision and he was given a full 60
days to do so. In that way, he had complete control over the terms of the agreement and it cannot
be said that the arbitration agreement was presented to him on a take-it-or-leave-it basis.
Furthermore, like the agreements in Guadagno and Honig, the FBD loan agreement requires that
FBD pay the filing fee and any costs and fees charged by the arbitrator regardless of which party
initiated the arbitration. Moreover, under § 503 of the Loan Interest and Protection Law, a
borrower or debtor who prevails in an action “shall” recover a reasonable attorneys’ fee. 41 Pa. (continued...)
DMEAST #16043515 v1 60
________________________ (...continued)
Cons. Stat. § 503. This should alleviate any concern regarding the availability and willingness of
counsel to represent him. Accordingly, this case differs materially from Thibodeau and is more
analogous to Guadagno and Honig. We predict that the Pennsylvania Supreme Court would hold
that the arbitration provision in the loan agreement in issue is not unconscionable and is
enforceable.”); Credit Acceptance Corporation v. Davisson, Case No. 1:08 CV 107 (N.D. Ohio
June 30, 2009) (in rejecting Davisson’s argument that the arbitration provision violated the Ohio
Consumer Sales Practice Act since it purported to waive access to the court for vindicating a
claim under it, the Court noted that Credit Acceptance Corporation did not “waive her recourse
to the courts” because of the opt-out feature) [Ballard Spahr client]; Freedman v. Comcast
Corporation, Nos. 435, 2102, Sept. Term 2008, 2010 Md. App. LEXIS 12 (Ct. of Spec. App. Of
Md. Jan. 28, 2010 (court holds that there is no procedural unconscionability under Maryland law
as a result of 30-day opt-out feature); Clerk v. ACE Cash Express, Inc., No. 09-05117, 2010 U.S.
Dist. LEXIS 7978 (E.D. Pa. Jan. 29, 2010) (court holds that there is no procedural
unconscionability when payday loan borrower was given a 30-day right to reject the arbitration
provision without it having any adverse effect on the loan) [Ballard Spahr client]; Jackson v.
The Payday Loan Store of Illinois, Inc., (Case No. 09 C 4189 (N.D. Ill. March 17, 2010)
(“Considering the totality of the circumstances relevant to the class action waiver at issue here,
the Court concludes that the waiver is enforceable. The parties agreed to the Agreement as a
whole, including the waiver, and failed to opt-out as allowed by the provision for doing so
described above. This allowed either party to elect arbitration, and contains a clear and legible
notice to Plaintiffs that it limited certain rights, including the right to pursue a claim as a class
action. Hante is therefore barred by the terms of the Agreement from bringing a claim in
arbitration on a class basis”); Ambrose v. Comcast Corporation, No. 3:09-cv-182, 2010 WL
1270712 (E.D. Tenn. Mar. 31, 2010) (“the court finds that the arbitration provision was not a
‘contract of adhesion’ because plaintiff was provided with an opportunity to ‘opt-out’ of
arbitration with no adverse effect on his relationship with Comcast. The 30-day window to ‘opt-
out’ of arbitration afforded the consumer [plaintiff] with a realistic opportunity to bargain . . . .”);
Pellett v. TCF Bank, N.A., Civil No. 10-3943 (DSD/FLN), D. Minn. Nov. 24, 2010 (“Plaintiffs
first argue that they could not avoid the arbitration agreement and that it was a contract of
adhesion. One of the first pages of The Terms and Conditions clearly states, in plain English and
contrasting type, that plaintiffs had a right to opt out of the arbitration agreement. The arbitration
provisions again describe plaintiffs’ 30-day right to opt out in plain, simple terms. As a result,
plaintiffs had an absolute right to opt out of the arbitration agreement, and their argument that the
agreement was unavoidable and offered on a take-it-or-leave-it basis fails. Plaintiffs’ next argue
that they were unfairly surprised by the terms because the opt-out provision was ‘buried’ in the
Terms and Conditions and that they ‘could not find, and if found, could not understand’ the opt-
out provision. Pls.’ Mem. Opp’n 34. This argument is contrary to the face of the documents. The
Account Agreements clearly direct plaintiffs to the Terms and Conditions. Moreover, on one of
the first pages, the Terms and Conditions remind plaintiffs that they have a 30-day right to opt
out of the arbitration agreement. Plaintiffs may not avoid their signed agreements by claiming
that they did not read or understand the contents of those agreement. See Gartner v. Eikill, 319
N.W.2d 397, 398 (Minn. 1982)” [Ballard Spahr client]; Day v. Persels & Associates, LLC,
Case No. 8:10-CV-2463-T-33 TGW (M.D. Fla. May 9, 2011) (“More importantly, the arbitration
provision was not a ‘take-it-or-leave-it’ situation, since it provided that the plaintiff could reject (continued...)
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Alabama
Leonard v. Terminix Int’l. Co., 854 So. 2d 529 (Ala. 2002) (in clause burdened by other
unfair features, court invalidates clause containing class action waiver)
California
[Sanchez v. Valencia Holding Company, LLC, 200 Cal. App. 4th 11 (Cal. App. 2 Dist.
2011), vacated 201 Cal. App. 4th 74 (Cal. App. 2 Dist. 2011) superseded Mar. 21, 2012
(rejecting argument that Concepcion implicitly overruled Broughton-Cruz rule which
prohibits arbitration for claims for public injunctive relief and finding arbitration
agreement unconscionable because it prohibited injunctive relief and also because it was
discreetly located on the back of the last page of the contract, printed in small font with
reduced line spacing, and it provided appeal provisions that would be practically pursued
only if the defendant lost at arbitration) The California Supreme Court has granted
review.
Ajamian v. CantorCO2e, L.P., No. A131025, 2012 Cal. App. LEXIS 148 (Cal. App. 1st
Div. Feb. 16, 2012) (rejecting argument that Concepcion applies to a waiver of special or
________________________ (...continued)
the provision by sending a rejection notice to CareOne (Doc. 25-1, p.8). And the Client
Agreement itself was not particularly binding since the plaintiff was able to cancel it and get her
money back.”); Hopkins v. World Acceptance Corporation, No. 1:10-cv-03429- SCJ, 2011 U.S.
Dist. LEXIS 79770 (N.D. Ga. June 29, 2011) (Court compels individual arbitration after finding
no procedural unconscionablity, in part because of opt-out feature: “[W]hen a party challenges
an arbitration agreement that contains an opt-out provision and fails to opt-out, the
unconscionability argument is diluted because the provision was not offered on an take-it-or-
leave-it basis.”); Black v. J.P. Morgan Chase & Co., Civil Action No. 10-848, 2011 U.S. Dist.
LEXIS 99428 (W.D. Pa. Aug. 25, 2011) (opt-out feature makes arbitration provision not
procedurally unconscionable under Pennsylvania law) [Ballard Spahr client]; Meyer v. T-
Mobile USA, Inc., No. 10-05858 CRB, 2011 WL 4434810 (N.D. Calif. Sept. 23, 2011) (Court
relies upon opt-out feature and enforces arbitration provision despite substantive
unconscionability); Giles v. GE Money Bank, Case No. 2:11-cv-434 JCM (CWH), 2011 U.S.
Dist. LEXIS 111018 (D. Nev. Sept. 27, 2011) (Court relied upon opt-out feature to find no
procedural unconscionability of class action waiver; Tory v. First Premier Bank, Case No. 10 C
7326, 2011 U.S. Dist. LEXIS 110126 (N.D. Ill. Sept. 27, 2011) (Court finds no
unconscionability of class action waiver, under South Dakota and Illinois law because of opt-out
feature); Alvarez v. T-Mobile USA, Inc., No. CIV. S-10-2373 WBS GGH, 2011 U.S. Dist.
LEXIS 111784 (E.D. Calif. Sept. 29, 2011) (Court limits discovery after concluding that there
can be no substantive unconscionability as a result of opt-out feature). But, see Duran v.
Discover Bank, 2009 WL 1873651 (Call. App. 2d Dist. June 19, 2009 (unreported)) (class action
waiver invalidated despite opt-out feature. But, see Duran v. Discover Bank, 2009 WL 1873651
(Call. App. 2d Dist. June 19, 2009 (unreported)) (class action waiver invalidated despite opt-out
feature).
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statutory damages available under California law and affirming decision finding
arbitration agreement unconscionable for containing those provisions).
Discover Bank v. Superior Court of Los Angeles, 36 Cal. 4th
148, 30 Cal. Rptr. 3d 76,
113 P.3d 1100 (2005) (class action waiver in a consumer contract of adhesion is
unconscionable if California law applies when the dispute involves small amounts of
damages and is not preempted by the FAA; case remanded to determine whether
Delaware choice-of-law clause should be enforced)
Mandel v. Household Bank (Nevada) N.A., 129 Cal. Rptr. 2d 380 (Cal. Ct. App., 4th
Dist.
2003), rev. granted and opinion superseded pending appeal, 132 Cal. Rptr. 2d 525, 65
P.3d 1284 (Cal. 2003), rev. dismissed, 29 Cal. Rptr. 3d 1, 112 P.3d 1 (Cal. 2005) (class
action waiver unconscionable under Nevada law)
Castillo v. Dollar Financial Group, 2004 WL 2191551 (Cal. App. 4th
Dist. 2004) (class
action waiver unconscionable in employment arbitration agreement because it was
unilateral)
Ramirez v. Circuit City Stores, Inc., 90 Cal. Rptr. 2d 916 (Cal. App. 1st Dist. 1999),
review granted and opinion superseded pending appeal, 94 Cal. Rptr. 2d 1, 995 P.2d 137
(Cal. 2000), review dismissed, cause remanded, 101 Cal. Rptr. 2d 199, 11 P.3d 955 (Cal.
2000) (class action waiver unconscionable in employment agreement)
Parrish v. Cingular Wireless, LLC, No. A105518, 2005 Cal. App. Unpub. LEXIS 9021,
2005 WL 2420719 (Calif. Ct. App., 1st App. Dist., Div. 5 Oct. 3, 2005) (follows Discover
Bank v. Superior Court in unpublished opinion), as modified on denial of rehearing (Nov.
2, 2005), pet. for review denied (Dec. 14, 2005), cert. denied in U.S. Supreme Court
Mendoza v. Cingular Wireless, LLC, No. A105518, 2005 Cal. App. Unpub. LEXIS 9021
(Cal. Ct. App., 1st App. Dist., Div. 5 (Oct. 3, 2005) (follows Discover Bank v. Superior
Court, in unpublished opinion), cert. denied in U.S. Supreme Court
Meoli v. AT&T Wireless Services, Inc., Nos. A106061, A106340 and A106341, 2005
Cal. App. Unpub LEXIS 8994 (Calif. Ct. App., 1st App. Dist, Div. 5 Sept. 30, 2005)
(follows Discover Bank v. Superior Court in unpublished opinion), cert. denied in U.S.
Supreme Court
Bucy v. AT&T Wireless Services, Inc., A105910, 2005 Cal. App. Unpub. LEXIS 8993
(Calif. Ct. App., 1st App. Dist, Div. 5 Sept. 30, 2005) (follows Discover Bank v. Superior
Court in unpublished opinion), cert. denied in U.S. Supreme Court
Wing v. Cingular Wireless, LLC, No. A105906, 2005 Cal. App. Unpub. LEXIS 9005
(Calif. Ct. App., 1st App. Dist, Div. 5 Oct. 3, 2005) (follows Discover Bank v. Superior
Court in unpublished opinion), cert. denied in U.S. Supreme Court
Independent Association of Mailbox Center Owners, Inc. v. Superior Court, 133 Cal.
App. 4th
396, 34 Cal. Rptr. 3d 659 (Calif. Ct. App., 4th
App. Dist, Div. 1 2005) (follows
Discover Bank v. Superior Court)
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Patton v. Cingular Wireless, No. A108816, 2006 WL 1413537 (Cal. Ct. App., 1st Dist.,
Div. 1 May 23, 2006) (in this unpublished opinion, court follows California Supreme
Court opinion in Discover Bank v. Superior Court, 36 Cal. 4th
148, 30 Cal. Rptr. 3d 76,
113 P.3d 1106 (2005) and holds that class action waiver is unconscionable under
California law)
Szetela v. Discover Bank, 97 Cal. App. 4th
1094, 118 Cal. Rptr. 2d 862 (4th
Dist. Div.
Three 2002), cert. denied, 123 S. Ct. 1258 (2003) (class action waiver is unconscionable
under California law); Mandel v. Household Bank (Nevada), N.A., 105 Cal App. 4th
75
(4th
Dist. Div. 3 2003) (same)
Lee v. AT&T Wireless Services, Inc., No. B186240, 2006 WL 1452936 (Cal. Ct. App.
2nd
Dist. Div. 5 May 26, 2006) (in this unpublished opinion, court follows California
Supreme Court opinion in Discover Bank v. Superior Court, 36 Cal. 4th
148, 30 Cal. Rptr.
3d 76, 113 P.3d 1106 (2005) and holds that class action waiver is unconscionable under
California law)
America Online, Inc. v. Superior Court, 108 Cal. Rptr. 2d 699, 90 Cal. App. 4th
(2001)
(invalidated Virginia forum selection clause in connection with putative class action filed
under California Consumer Legal Remedies Act because that Act contains non-waivable
right to maintain a class action)
Aral v. Earthlink, Inc., 134 Cal. App. 4th
544, 36 Cal. Rptr. 3d 229 (Calif. Ct. App.,
Second Dist., Div. 4 2005) (invalidated Georgia forum selection clause and class action
waiver after refusing to enforce Georgia choice-of-law clause because the class action
was just a California statewide class action asserting a claim under California Business &
Professions Code §17200)
Klussman v. Cross Country Bank, 134 Cal. App. 4th
1283, 36 Cal. Rptr. 3d 728 (Cal. Ct.
App., 1st Dist., Div. One 2005) (in clause where class action waiver was not express but
covered by implication because of the incorporation by reference of the NAF’s rules and
where there are California claims in a California-only statewide class action, the court
refuses to apply the Delaware choice-of-law clause)
Cohen v. DirecTV, Inc., 142 Cal. App. 4th
1442, 48 Cal. Rptr. 3d 813 (Cal. Ct. App., 2nd
Dist., Div. Eight 2006) (applies Discover Bank v. Superior Court in a case involving an
individual claim of $1,000)
Merritt v. Cingular Wireless, LLC, No. B 178947, 2006 WL 2744357 (Cal. Ct. App., 2nd
Dist., Div. 1 Sept. 27, 2006) (in this unpublished opinion, court follows California
Supreme Court opinion in Discover Bank v. Superior Court, 36 Cal. 4th
148, 30 Cal. Rptr.
3d 76, 113 P.3d 1106 (2005) and holds that class action waiver is unconscionable under
California law)
Firchow v. Citibank (South Dakota), N.A., No. B187081 2007 WL 64763 (Cal. Ct. App.,
Second Dist., Div 7 Jan. 10, 2007) (Court affirms denial of motion to compel arbitration
after holding that class action waiver: (1) is substantively unconscionable under the
California Supreme Court’s opinion in Discover Bank v. Superior Court; (2) is
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procedurally unconscionable because it would not renew a credit card issued to a person
opting out of the arbitration provision, thus making the opt-out right illusory; (3) is
contrary to a fundamental public policy of California which has a materially greater
interest than South Dakota - the state where Citibank is located and designated in the
choice-of-law provision in the cardholder agreement. The Court also found no FAA
preemption)7
In re Cingular Cases, No. D047603, 2007 WL 93229 (Cal. Ct. App., Fourth Dist, Div. 1
Jan. 16, 2007) (Court affirms denial of motion to compel arbitration after holding that
class action waiver and arbitration agreement: (1) is procedurally unconscionable because
the arbitration provision was “at the end of three pages of single-spaced extremely small
print that is, at best, difficult to read” and was sent to one of the plaintiffs “as a filler, in
his billing”; (2) is substantively unconscionable based on the California Supreme Court’s
opinion in Discover Bank v. Superior Court despite the fact that the amount in
controversy is between $1,000 - $2,000. The Court also found no FAA preemption)
Gatton v. T-Mobile USA, Inc., 152 Cal. App. 4th
571, 61 Cal. Rptr. 3d 344 (Cal. Ct. App.
2007) (Class action waiver is unconscionable), cert. denied, 128 S. Ct. 2501 (2008)
Gentry v. Superior Court, 42 Cal. 4th
443, 64 Cal. Rptr. 3d 773, 165 P.3d 556 (Cal. Aug.
30, 2007) (In some cases, class action waiver undermines the vindication of employees’
unwaivable statutory rights and would pose a serious obstacle to the enforcement of the
state’s overtime laws. The Supreme Court also holds that the existence of an opt-out
right did not, in and of itself, preclude a finding of procedural unconscionability in light
of two factors: (1) the employee handbook touted the benefits of arbitration while
omitting any mention of the remedial limitations and shortening of the statute of
limitations; and (2) the likelihood that employees felt at least some pressure not to opt out
of the arbitration agreement.), cert denied, 128 S. Ct. 1743 (2008)
Murphy v. Check ‘N Go of California, Inc., No. A11442, 156 Cal. App. 4th
138, 67 Cal.
Rptr. 3d 120 (Cal. Ct. App. Oct. 17, 2007) (Class action waiver is unconscionable under
California law.)
America Online, Inc. v. Superior Court of Alameda County (Mendoza), 108 Cal. Rptr. 2d
699 (Cal. Ct. App. 2001) (AOL's forum selection clause in unconscionable because the
clause violated California public policy on two grounds: (1) enforcement of the forum
selection clause violated California’s public policy that strongly favors consumer class
actions; and (2) enforcement of the forum selection clause violated the anti-waiver
provision of the Consumer Legal Remedies Act)
7 During the week of April 9, 2007, the California Supreme Court granted review of this
case, which had the effect of depublishing the opinion. The Court deferred briefing
pending decision in Gentry v. Superior Court, which was reversed on August 30, 2007.
The Supreme Court on November 28, 2007 dismissed review of Firchow in light of its
Gentry opinion.
DMEAST #16043515 v1 65
Sanchez v. Western Pizza Enterprises, Inc., No. B203961, 2009 WL 683701 (Cal. Ct.
App., 2nd
Dist., Div. 3 March 17, 2009) (follows Gentry v. Superior Court, 42 Cal. 4th
443, and holds that the class action waiver undermines the vindication of employees’
unwaivable statutory rights under the laws requiring employers to reimburse employees
for job expenses and to pay a minimum wage. The Court also held that the language in
the arbitration agreement saying that it “is not a mandatory condition of employment” did
not, in and of itself, preclude a finding of procedural unconscionability in light of two
factors: (1) the inequality in bargaining power between the low-wage employees and
their employer makes it likely that the employees felt at least some pressure to sign the
arbitration agreement; and (2) the agreement suggests that there are multiple arbitrators to
choose from and fails to mention that the designated arbitration provider includes only
one arbitrator.)
Franco v. Athens Disposal Company, Inc., 171 Cal. App. 4th 1277, 90 Cal. Rptr.3d 539
(Cal. Ct. App., 2nd
App. Dist. 2009) (follows Gentry v. Superior Court, 42 Cal. 4th
443,
and holds that class action waiver is unconscionable with respect to the alleged violations
of the meal and rest period laws given the modest size of the potential individual
recovery ($10,250), the potential for retaliation against members of the class and the fact
that absent class members of the class may be ill-informed about their rights; in addition,
because the arbitration agreement prevents plaintiff from acting as a private attorney
general, it conflicts with the Labor Code Private Attorneys General Act of 2004 – an act
that furthers Gentry’s goal of comprehensively enforcing state labor laws through
statutory sanction.)
Olvera v. El Pollo Loco, Inc., No. 3205343, 2009 WL 1110828 (Cal. Ct. App. 2nd
App.
Dist. Div. Three April 27, 2009) (follows Gentry v. Superior Court, 42 Cal. 4th
443, and
holds that class action waiver is unconscionable (i) procedurally unconscionable because
of the inequality in bargaining power between the low-wage employees and their
employer makes it likely that the employees felt at least some pressure to sign the
acknowledgement and agree to the new dispute resolution policy and the explanatory
materials describing the policy were misleading; and (ii) substantively unconscionable
because a class action is the only effective way for the employees (many of whom are
low-wage earners with limited English language skills who are likely ill-informed of their
statutory rights) to vindicate their rights.)
Duran v. Discover Bank, 2009 WL 1873651 (Cal. App. 2d Dist. June 19, 2009)
(unpublished) (court held class action waiver invalid despite existence of opt-out
provision and Delaware choice-of-law provision)
Vu v. Superior Court, No. B213988, 2009 WL 3823383 (Cal. Ct. App., 2nd
App. Dist.,
Div. 7 Nov. 17, 2009) (Because the employer’s arbitration agreement contains multiple
defects, including a class action waiver, the Court grants the petition for writ of mandate
of trial court order granting petition to compel arbitration)
Fisher v. DCH Temecula Imports, LLC, No. E047802, 2010 WL 3192912 (Cal. Fourth
Dist., Div. Two Aug. 13, 2010) (Court affirms judgment of lower court denying motion
to compel individual arbitration based on the non-waivable right to bring a class action
DMEAST #16043515 v1 66
under the Consumer Legal Remedies Act (the “CLRA”); court refuses to follow the
Ninth Circuit opinion in Ting v. AT&T, 319 F.3d 1126 (2003) which had held that the
FAA preempts the CLRA)
Mahmud v. Ralph’s Grocery Company, No. B219688, 2011 WL 17851 (Cal. Ct. App,
Second Dist. (Jan. 5, 2011) (follows Gentry v. Superior Court, 42 Cal. 4th
443, and holds
that a class action waiver in employee’s arbitration agreement is invalid).
Brown v. Ralph’s Grocery Company, B222689, 2011 WL 2685959 (Calif. Ct. App., 2nd
Dist. July 12, 2011) (Court holds that Concepcion does not apply to representative
actions under the California Private Attorney General Act of 2004 (“PAGA”) and affirms
order of trial court that waiver of right to pursue a representative action under PAGA was
not enforceable; case remanded to determine whether such waiver should be severed.)
Florida8
Bellsouth Mobility LLC v. Christopher, 819 So. 2d 171 (Fla. Ct. App. 2002) (in clause
burdened by numerous other unfair features, court holds that class action waiver is
substantively unconscionable), rehearing denied (June 27, 2002)
Powertel, Inc. v. Bexley, 743 So 2d 570 (Fla. App., 1st Dist. 1999) (in clause burdened by
numerous other unfair features, court also holds that class action waiver is
unconscionable), review denied, 763 So. 2d 1044 (2000)
America Online, Inc. v. Paseika, 870 So. 2d 170 (Fla. Dist. Ct. App. 2004) (invalidated
Virginia forum selection clause in putative class action brought under Florida Deceptive
and Unfair Trade Practices Act), review denied, 880 So. 2d 1209 (2004)
8 See Pendergast v. Sprint Nextel Corporation, No. 09-10612, 2010 WL6745 (11
th Cir. Jan.
4, 2010) Court certifies the following questions to the Florida Supreme Court:
(1) Must Florida courts evaluate both procedural and substantive
unconscionability simultaneously in a balancing or sliding scale approach, or
may courts consider either procedural or substantive unconscionability
independently and conclude their analysis if either one is lacking?
(2) Is the class action waiver provision in plaintiff’s contract with Sprint
procedurally unconscionable under Florida law?
(3) Is the class action waiver in plaintiff’s contract with Sprint substantively
unconscionable under Florida law?
(4) Is the class action waiver provision in plaintiff’s contract with Sprint void
under Florida law for any other reason?
DMEAST #16043515 v1 67
SDS Autos, Inc. v. Chrzanowski, Case no. 1D06-4293, 2007 WL 4145222 (Fla Ct. App.,
1st Dist. Nov. 26, 2007) (Invalidates class action waiver for holders of small claims under
Florida Deceptive and Unfair Trade Practices Act whose attorney’s fees are limited by
the amount of their actual damages)
McKenzie v. Betts, Nos. 4D08-493 and 4D08-494 (Fla. Ct. App., 4th
Dist. Feb. 2, 2011)
(Court affirms denial of motion to compel arbitration of the named-plaintiffs’ claims
under the Florida Deceptive and Unfair Trade Practices Act and other Florida remedial
statutes after holding that the class action waiver violates public policy when the trial
court is persuaded by evidence that such a waiver prevents consumers from obtaining
competent counsel even though the Florida statutes contain fee-shifting features; Court
distinguishes earlier Fourth District Court of Appeals opinion in Fonte v. AT&T Wireless
Services, Inc., 903 So 2d 1136 (2005), based on fact that the plaintiff in Fonte presented
no evidence regarding an inability to retain competent counsel and the fact that the
AT&T arbitration provision, unlike the McKenzie arbitration provision, did not preclude
the consumer from being part of a class action prosecuted by a government agency; Court
certifies issue to Florida Supreme Court; Florida Supreme Court grants review, No. SC-
11-514 (Mar. 28, 2011).
Illinois
Kinkel v. Cingular Wireless, LLC, 357 Ill. App. 3d 556, 828 N.E. 2d 812, 293 Ill. Dec.
502 (Ct. App., Fifth District 2005) (class action waiver is invalid, finding procedural
unconscionability because waiver was in extremely small print in the middle of a long
paragraph and substantive unconscionability because the waiver left consumers with
small claims without an effective remedy in that the clause (1) did not contain a provision
under which the company would pay arbitration costs, (2) did not provide for recovery of
attorney’s fees if permitted by applicable law and (3) put limitations on awarding
punitive damages.
Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1, 857 N.E. 2d 250 (Ill. Sup. Ct. 2006)
(Court affirmed the judgment of the Illinois Court of Appeals and held that a class action
waiver in a cellular telephone service burdened by numerous other unfair features is
unconscionable “because it is contained in a contract of adhesion that fails to inform the
customer of the cost of her arbitration, and that does not provide a cost-effective
mechanism for individual customers to obtain a remedy for the specific injury alleged in
either a judicial or arbitral forum”; in doing so, however, the Court cautioned that it was
not adopting a rule that class action waivers are per se unconscionable: “It is not
unconscionable or even unethical for a business to attempt to limit its exposure to class
arbitration in litigation, but to prefer to resolve the claims of clients individually. Indeed,
it has been suggested as a matter of economic theory consumers may benefit from
reduced costs if companies are allowed to engage in this strategy.”)
Wigginton v. Dell, Inc., 382 Ill. App. 3d 1189, 890 N.E. 2d 541, 321 Ill. Dec. 819 (Ill.
App. Ct., Fifth Dist. 2008) (class action waiver in computer contract with Texas choice-
of-law clause is invalidated after court concludes that waiver violates a fundamental
public policy of Illinois.
DMEAST #16043515 v1 68
Peach v. CIM Ins. Corp., 352 Ill. App. 3d 691, 816 N.E. 2d 668 (5th
Dist. 2004), appeal
den., 212 Ill. 2d 536, 824 N.E. 2d 285 (2004) (class action waiver in arbitration provision
unconscionable)
Keefe v. Allied Home Mortgage Corporation, No. 04-L-502, 2009 WL 2027244 (Ill.
App. Ct., 5th
Dist. July 10, 2009) (class action waiver unconscionable even though the
borrower was given the option to decline signing the stand-alone arbitration agreement
and still obtain the loan)
Kentucky
Schnuerle v. Insight Communications Company L.P., Nos. 2008-SC-00789-DG, 2009-
SC-000390-DG, 2010 WL 5129850 (Ky. Supreme Court Dec. 16, 2010) (class action
waiver unenforceable in case where individual average claim is only $40 and where
arbitration provision lacks any consumer-friendly features). Petition for rehearing is
pending.
Louisiana
Sutton’s Steel & Supply, Inc. v. Bellsouth Mobility, Inc., 776 So. 2d 589 (La. Ct. App. 3d
Cir. 2000), writ den., 787 So. 2d 316 (La. 2001) (class action waiver unenforceable)
Maine
Public Law, Chapter 248 LD 1343, item 1, 124th
Maine State Legislature (titled “An Act
to Promote Consumer Fairness in Tax Refund Anticipation Loans”) adds 9-A MRSA
§ 10-310 2.E. (7), which prohibits a facilitator of refund anticipation loans or refund
anticipation checks from including a class action waiver in a refund anticipation loan
application or agreement
Massachusetts
Feeney v. Dell Inc., No. SJC-10259, 908 N.E.2d 753, 454 Mass., 192 Mass Sup. Jud. Ct.
July 2, 2009) (language in arbitration provision saying that the arbitration “will be limited
solely to the dispute or controversy between customer and Dell” is contrary to
fundamental public policy of state favoring class actions under G.L.C. 93A and refused to
apply Texas choice-of-law clause; complaint, however, dismissed for failure to state a
claim under 93A)
Minnesota
Minnesota Statutes, § 270 C.445, Subdivision 3(18)(vii), prohibits a tax preparer from
including a class action waiver in any document provided or signed in connection with
the provision of tax preparation services.
Minnesota Statutes, Chapter 68, S.F. No. 806, adds § 47.601, Subdivision 2, to prohibit a
person making a consumer short-term loan from including a class action waiver in loan
documents
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Missouri
Brewer v. Missouri Title Loans, No. SC90647, 2012 Mo. LEXIS 62 (Mo. March 6, 2012)
(finding class action waiver not unconscionable under Concepcion but finding arbitration
agreement as a whole unconscionable because it lacked mutuality and because the
evidence established that individual arbitration was financially impossible).
Whitney v. Alltel Communications, Inc., 173 S.W. 3d 300 (Mo. App. W.D. 2005) (in
clause burdened by other certain features, including a provision which prohibited an
award of any incidental, consequential, punitive or exemplary damages as well as
attorneys’ fee and which required the customer to bear the costs of arbitration, court
invalidates clause containing class action waiver)
Woods v. QC Financial Services, Inc., No. ED 90949, 2008 WL 5454124 (Mo. App.,
Eastern Dist, Div. Three Dec. 23, 2008) (court invalidates class action waiver, severs it
and affirms trial court’s decision ordering class-wide arbitration)
Ruhl v. Lee’s Summit Honda, No. WD 70189, 2009 WL 2571309 (Mo. App. Western
Dist. Nov. 3, 2009) (court invalidates class action waiver, severs it and orders arbitration;
the court follows Whitney and Woods and completely ignores the Eighth Circuit opinions
enforcing class action waivers under Missouri law)
Brewer v. Missouri Title Loans, Inc., No. ED 92569, 2009 WL 4639899 (Missouri App.
Eastern Dist., Div. 3 Dec. 8, 2009) (Based on Woods v. QC Financial Services, Inc.
opinion, court affirms order invalidating class action waiver and then orders classwide
arbitration)
Shaffer v. Royal Gate Dodge, Inc. No. ED 92839, 2009 WL 4638850 (Missouri App.
Eastern Dist., Div. 2 Dec. 8, 2009) (Court affirms trial court order denying motion to
compel arbitration after invalidating class action waiver in lawsuit alleging violation of
Missouri Merchandising Practices Act which contains non-waivable right to bring class
action lawsuits)
Brewer v. Missouri Title Loans, Inc., No. SC90647, 2010 WL 3430411 (Mo. S.W. 3d,
Aug. 31, 2010) (Court affirms Court of Appeals opinion invalidating class action waiver,
refuses to sever class action waiver, and invalidates the arbitration agreement) On
May 2, 2011, the U.S. Supreme Court granted the petition for a writ of certiorari, vacated
the Missouri Supreme Court opinion, and remanded the case to the Missouri Supreme
Court for further consideration in light of the Supreme Court’s opinion in AT&T
Mobility LLC v. Concepcion, No. 09-893, 2011 U.S. LEXIS 3367 (April 27, 2011)
Ruhl v. Lee’s Summit Honda, No. SC90601 (Missouri Supreme Court Aug. 31, 2010)
(Court affirms Court of Appeals opinion invalidating class action waiver, refuses to sever
class action waiver, and invalidates the arbitration agreement)
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Nevada
Picardi v. The Eighth Judicial District Court of the State of Nevada, in and for the County
of Clark, No. 53126, 2011 WL 1205284 (Mar. 31, 2011) (Nevada Supreme Court grants
petition for a writ of mandamus and holds that a class action waiver in a consumer
contract violates Nevada public policy and is unenforceable; court does not consider FAA
preemption)
New Jersey
Muhammad v. County Bank of Rehoboth Beach, Delaware, 912 A.2d 88 (N.J. 2006)
(invalidates class action waiver in context of low-value consumer claim in adhesive
contract; court does not consider choice-of-law argument or FAA preemption argument)
New Mexico
Fiser v. Dell Computer Corporation, 144 N.M. 464, 188 P.3d 1215 (2008) (invalidates
arbitration agreement in small dollar ($10 - $20) consumer claim after refusing to enforce
Texas choice-of-law provision and holding that class action waiver is contrary to New
Mexico’s fundamental public policy of encouraging the resolution of small consumer
claims)
Sections 44-7A-1(b)(4)(f) and 44-7A-5 of New Mexico Stat. Ann. Provides in Revised
Uniform Arbitration Act that a class action waiver in an adhesion consumer arbitration
agreement is unenforceable. This should be preempted by the FAA.
New York
Gomez et al v. Brill Securities, Inc., -- N.Y.S. 2d --, No. 652113/10, 2012 N.Y. App. Div.
LEXIS 1854, 2012 WL 851644 (N.Y. App. Div. 1st Dept. March 15, 2012) (affirming
denial of motion to compel arbitration of class action because arbitration agreement
incorporated the Financial Industry Regulatory Authority (“FINRA”) which prohibits
arbitration of class action claims or enforcement of any arbitration agreement against a
member of a putative class action with respect to any claim that is subject of the class
action and finding Concepcion not dispositive on this issue because FINRA was not a
state law antithetical to the goals of the FAA).
Section 32 of the Tax Code, as amended by Section 2 of part VV of chapter 59 of the
laws of 2009 prohibits a facilitator of a tax refund anticipation loan from including a class
action waiver in any documents provided or signed to obtain a refund anticipation loan or
refund anticipation check.
In the Matter of Mark Frankel v. Citicorp Insurance Services, Inc., 2010 WL 4909624
(Supreme Court, App. Div. Nov. 30, 2010) (Court vacates order of lower court
compelling individual arbitration and remands case to lower court for a hearing to resolve
whether class action waiver in credit card arbitration provision is unconscionable as a
matter of South Dakota law)
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North Carolina
Torrence v. Nationwide Budget Finance, No. 05-447, 2012 WL 335947 (N.C. Sup. Ct.
(trial court) Jan. 25, 2012) (denying motion to compel individual arbitration of claims
under North Carolina’s Consumer Finance Act, Check Cashing laws and unfair trade
practices laws and finding arbitration agreement in payday lending contract
unconscionable because, inter alia, the class action waiver was exculpatory and one-
sided and finding Concepcion did not overrule the “effectively vindicate rights” standard
of Tillman and, therefore, does not apply when an arbitration agreement effectively
prohibits a plaintiff from vindicating her rights).
Tillman v. Commercial Credit Loans, Inc., 362 N.C. 93 655 S.E.2d 362 (2008) (Court
holds that class action waiver is unconscionable when coupled with a cost-shifting (“loser
pays”) provision for arbitration proceedings exceeding eight hours, the cost-shifting
provision for de novo appeal from the initial arbitration, the $15,000 cap on the value of
claims that can be pursued outside of arbitration, and the exclusion of foreclosure claims
from arbitration)
Ohio
Eagle v. Fred Martin Motor Co., 157 Ohio App. 3d 150, 809 N.E. 2d 1161 (2004) (court
in dictum states that inability to prosecute class action is violative of Ohio Consumer
Sales Practices Act; court invalidates arbitration clause burdened by several unfair
features)
Schwartz v. Alltel Corp., No. 86810, 2006 WL 2243649 (Ohio App. 8th
Dist. June 29,
2006) (Court holds that class action waiver in a cellular phone contract runs afoul of the
state’s public policy regarding consumer protection and is thus substantively
unconscionable when combined with a provision prohibiting an award of attorneys’ fees
that are statutorily authorized)
Oklahoma
12 Okla. Stat. Ann. §1880 (added by Laws, 2005, c. 364, §30 effective Jan. 1, 2006).
Provides in Revised Uniform Arbitration Act that class action waivers, among other
features of an arbitration agreement in a standard form adhesion contract, “shall be
closely reviewed for unconscionability based on unreasonable one-sidedness and
understandable or unnoticeable language or lack of meaningful choice and for balance
and fairness in accordance with reasonable standards of fair dealing.” This should be
preempted by the FAA.
Bilbrey v. Cingular Wireless, L.L.C., No. 102973, 164 P.3d 131 (Okla. June 26, 2007)
(Class action waiver is unconscionable when applied retroactively to dismiss an already
pending class action pertaining to an earlier contract which did not contain an arbitration
provision.)
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Oregon
Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or. App. 553, 152 P. 3d 940 (2007)
(Court affirms denial of motion to compel arbitration after concluding that class action
waiver is unconscionable in an individual action where (i) the plaintiffs did not speak
English, the language used in the contract, (ii) the defendant misrepresented to the
plaintiffs that they could “go to court after submitting to arbitration,” and (iii) the
arbitration agreement saddled the plaintiffs with arbitration fees they could not afford)
Sprague v. Quality Restaurants Northwest, Inc., No. 050504650, A131182 (Or. Ct. App.
June 27, 2007) (Arbitration clause is not unconscionable because of silence with respect
to availability of class-wide arbitration since court held that incorporation of AAA rules
authorizes class-wide arbitration.)
Pennsylvania
Lytle v. Citifinancial Services, Inc., 2002 Pa. Super. 327, 810 A.2d 643 (2002) (remands
to trial court for determination of whether class action waiver is unconscionable)9
Dickler v. Shearson Lehman Hutton, 408 Pa. Super 286, 596 A.2d 850 (1991) (Court
held that class action arbitration should be held in the face of an arbitration agreement
that was silent with respect to the issue.)
McNulty v. H&R Block, 2004 Pa. Super 45, 843 A.2d 1267 (2004) (While not dealing
directly with the validity of a class action waiver, the Court, in the context of a putative
class action invalidated an arbitration agreement based on the fact that the arbitration fee
of $50 to obtain at most $30 precluded the individual presentation of claims.)
Thibodeau v. Comcast Corporation, 2006 Pa. Super 346, 912 A.2d 874 (2006) (Court
affirms denial of motion to compel arbitration after holding that class action waiver in
Comcast’s customer agreement is unconscionable; Court largely adopts opinion of trial
court issued on January 27, 2006 in the Philadelphia Court of Common Pleas, March
Term 2004, No. 4526, 2006 WL 416863; Court refuses to do a choice-of-law analysis
even though the plaintiff resides in Massachusetts since it concluded that Massachusetts
law is the same as Pennsylvania law.)7
9 The recent Pennsylvania Supreme Court opinion in Salley v. Option One Mortgage
Corp., No. 50 EAP 2005, 592 Pa 323, 925 A.2d 115 (Pa. May 31, 2007) casts serious
doubt on the continued viability of these two opinions. Furthermore, the even more
recent Third Circuit opinion in Gay v. CreditInform, 511 F.3d 369 (3d Cir. Dec. 19,
2007) holds that the law created by these opinions is preempted by the FAA. Another
later panel of the Third Circuit has stated that the discussion of FAA preemption in Gay
is probably dicta.
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South Carolina
Herron v. Century BMW, Opinion No. 26805, 2010 S.C. LEXIS 118 (S.C. April 19,
2010) (class action waiver is against public policy expressed in the South Carolina
Regulation of Manufacturers, Distributors and Dealers Act which expressly provided
plaintiffs with the right to bring class action lawsuits for violations of such Act – a
holding which is flatly contrary to the FAA; court further concludes that there is no
procedural unconscionability and does not deal with substantive unconscionability). On
May 2, 2011, the U.S. Supreme Court granted the petition for a writ of certiorari, vacated
the South Carolina Supreme Court opinion, and remanded the case to the South Carolina
Supreme Court for further consideration in light of the Supreme Court’s opinion in
AT&T Mobility LLC v. Concepcion, No. 09-893, 2011 U.S. LEXIS 3367 (April 27,
2011). The South Carolina Supreme Court subsequently determined that the FAA
preemption issue had not been preserved.
Washington
Scott v. Cingular Wireless, 160 Wash. 2d 843, 161 P.3d 1000 (2007) (Class action waiver
is unconscionable on the ground that it undermines the public policy of the Washington
Consumer Protection Act by “dramatically decreasing” the possibility that Cingular
customers would be able to act as private attorneys general and bring meritorious suits on
minor claims and because it effectively exculpated Cingular from liability for those
claims allegedly too small to warrant arbitration on an individual basis.)
Dix v. ICT Group, Inc., 160 Wash. 2d 826, 161 P.3d 1016 ( 2007) (Because forum
selection clause calls for filing lawsuit in Virginia and Virginia state courts do not permit
class actions, such clause is invalid in a small-value claim brought under the Washington
Consumer Protection Act.)
Dix v. ICT Group, Inc., 125 Wash. App. 929, 106 P.3d 841 (Wash. Ct. App. 2005)
(invalidated Virginia forum selection clause in putative class action brought under
Washington Consumer Protection Act because Virginia does not permit class actions),
reconsideration denied (Apr. 14, 2005).
McKee v. AT&T Corporation, No. 81006-1, 2008 WL 3932188 (Wa. Sup. Ct. Aug. 28,
2008) (court refuses to apply New York law, applies Scott supra and invalidates class
action waiver based on small dollar amount of claim)
Olson v. The Bon, Inc., 183 P.3d 359 (Wash. Ct. App. Div. 3 2008) (class action waiver
unconscionable in case involving less than a couple of hundred dollars)
Townsend v. The Quadrant Corporation, No. 62700-7-1, 2009 WL 3337228 (Wash. Ct.
App. Div. 1 Oct. 19, 2009) (court compels arbitration of putative class action and
distinguishes Scott and Dix opinions based on the fact that the arbitration provisions in
those cases, unlike this case, contained class action waivers)
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West Virginia
State of West Virginia ex. rel. James Dunlap v. Berger, 567 S.E. 2d 265 (W.Va. 2002) (in
clause burdened by other unfair features, court also determined that inability to prosecute
a class action was unconscionable), cert. denied, Friedman’s Inc. v. West Virginia ex rel.
Dunlap, 537 U.S. 1087, 123 S. Ct. 695, 154 L. Ed. 2d 631 (2002)10
Wisconsin
Eastman v. Conseco Finance Servicing Corp., No. 01-1743, 2002 WL 1061856 (Wis. Ct.
App. May 29, 2002) (in certifying case for immediate review by Wisconsin Supreme
Court, court suggests that an arbitration clause with several unfair features, including
class action waiver, may be unconscionable)
Wisconsin Auto Title Loans v. Jones, 714 N.W. 2d 155, 2006 WI 53 (2006) (“[A]lthough
the arbitration provision is silent on class actions, the parties assume the borrower must
pursue his claims individually in arbitration and not as the representative of a class. Even
if it were possible to pursue class claims in arbitration, and we do not address this issue,
the relief available to the putative class appears to be substantially broader in circuit court
than in arbitration. Under the Wisconsin Consumer Act, a class action may be
maintained for injunctive relief. No such injunctive relief is available in arbitration. The
arbitration provision, therefore, limits the meaningful remedies available to the
borrower.”)
Coady v. Cross Country Bank, 299 Wisc. 2d 420, 729 N.W. 2d 732 (WI Court of Appeals
2007) (Court affirms denial of motion to compel arbitration after concluding that
arbitration provision is unconscionable because (1) the standard choice-of-law clause in
the cardholder agreement calling for the application of Delaware and Federal law have
the effect of precluding the plaintiffs from asserting claims or remedies under the
Wisconsin Consumer Act either in court or arbitration; (2) the class action waiver is
substantively unconscionable; and (3) it was in small type, the Bank did not explain to the
unsophisticated plaintiffs the meaning or effect of the arbitration provision, the credit
10 Several federal district courts in West Virginia and the Fourth Circuit have held that this
opinion is preempted by the FAA. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Coe,
313 F. Supp. 2d 603, 615 (S.D. W.Va. 2004); Schultz v. AT&T Wireless Services, Inc.,
376 F. Supp. 2d 685 (N.D. W.VA. 2005); Miller v. Equifirst Corporation of West
Virginia, Civil Action No. 2:00-0335, 2006 WL 2571634 (S.D. W. Va. Sept. 5, 2006);
Strawn v. AT&T Mobility, Inc., Civil Action No. 2:06-0988 (S.D. W.Va. Jan. 20, 2009);
Wince v. Easterbrooke Cellular Corporation, 681 F. Supp. 2d 679 (N.D. W. Va. 2010);
Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83 (4th
Cir. 2005). Moreover this
opinion has recently been distinguished by the West Virginia Supreme Court itself in
State of West Virginia, ex rel AT&T Mobility, LLC et al v. Honorable Ronald E. Wilson,
Judge of the Circuit Court of Brooke County and Charlene A. Shorts, September 2010
Term, No. 35537 (Oct. 28, 2010).
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cards were adhesion contracts opened in response to a solicitation from the Bank, the
plaintiffs did not read and were not otherwise aware of the arbitration provision, the
credit card agreements were not provided to the plaintiffs at the time they signed up for
the credit cards, and the Bank did not demonstrate that the plaintiffs could have obtained
other credit cards without arbitration provisions)
Cottonwood Financial, LTD v. Estes, Appeal No. 2009 AP 760, 2010 WL 2036963 (WI
Court of Appeals May 25, 2010) (court follows the Wisconsin Auto Title Loans and
Coady Opinions in holding that the class action waiver is substantively unconscionable
because it violates the Wisconsin Consumer Act but remands the case to the lower court
so that it can determine whether the arbitration agreement is procedurally
unconscionable)