A significant recent decision by the Fourth Circuit confirms that arbitration agreements that contain class-action waiver provisions can be a powerful tool to defeat class certification.  In In re Marriott International, Inc., the Fourth Circuit observed that while “no court has had occasion to expressly hold as much,” the “consensus practice” of courts is to “resolve the import of waivers at the certification stage—before they certify a class, and usually as the first order of business.”  2023 WL 5313006, at *6 (4th Cir. Aug. 18, 2023).  The Fourth Circuit held that courts must address the implication of an arbitration clause containing a class-action waiver before, not after, a class is certified.  And because the district court in this case did not do so, the Fourth Circuit vacated the district court’s class certification ruling.  Id. at *1.

The operative complaint asserted claims under various states’ laws based on alleged harm from a disclosed data leak that resulted in unauthorized access to Marriott guests’ records.  The district court certified Rule 23(b)(3) classes against Marriott for monetary damages on the breach of contract and statutory consumer-protection claims.  Id. at *1.  Although the district court concluded that plaintiffs lacked a class-wide theory of injury for their negligence claims, the court nonetheless certified “issue” classes against Marriott and Accenture (a third-party provider of IT services) on the duty and breach elements of negligence under Rule 23(b)(4).  Id. at *4.  

Among other defenses to class certification, the defendants argued that the class representatives’ claims were not typical of the class because they were all members of Marriott’s “Starwood Preferred Guest Program” (“SPG”).  As SPG members, they had agreed to pursue claims individually in arbitration, rather than as class members.  Id. at *3.  The district court concluded that this raised “serious typicality concerns,” since Marriott intended to argue that the representatives—unlike some of the absent class members—could not pursue class litigation against Marriott.  Id.  To resolve this issue, the district court redefined the classes against Marriott to include only SPG members.  Id.  Based in part on the court’s certification of these damages classes, it concluded that the potential efficiency gains warranted certification of issue classes on the duty and breach elements of plaintiffs’ negligence claims.  Id. at *4.

As a result of the district court’s decision limiting the damages classes to SPG members, every member of the certified classes had agreed to a class action waiver.  The district court acknowledged this issue only in a passing footnote, noting that the enforceability of the class waiver could be resolved along with other affirmative defenses at the merits stage.  Id. at *3.

On appeal, the Fourth Circuit decided that the district court’s failure to properly consider the impact of the arbitration clause was fatal to the entire certification order.  The Fourth Circuit explained. “That error . . . affected the certification of [the] negligence issue classes . . .  because certification of the Marriott damages classes was the lynchpin of the district court’s Rule 23(b)(3) superiority analysis.”  Id. at 5. 

The Fourth Circuit reasoned that addressing class waivers before certification is “consistent with the nature of class actions and the logic of class waivers.”  Id.  Class certification is the “key moment in class action litigation,” and thus the essential purpose of a class waiver would be undermined if a class is certified despite plaintiffs’ contractual agreement to pursue litigation individually.  Id. at *6.  Thus, the enforceability of the class action waiver should have been resolved before certifying the class, rather than at the merits stage.

In re Marriott International, Inc. thus indicates that arbitration clauses are important tools in defeating class certification, and defendants should thus rigorously assert this defense at the pre-certification stages of litigation.

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Photo of Andrew Soukup Andrew Soukup

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which…

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which were defeated through dispositive pre-trial motions.
Andrew is co-chair of the firm’s Class Action Litigation practice group.

Andrew has helped his clients achieve successful outcomes at all stages of litigation, including through trial and appeal. He has helped his clients prevail in litigation against putative class representatives, government agencies, and commercial entities. Representative victories include:

  • Delivered wins in multiple nationwide class actions on behalf of large financial companies related to fees, disclosures, and other banking practices, including the successful defense of numerous lenders accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recent recognition as a “Class Action Group Of The Year.”
  • Successfully defending several of the nation’s leading financial institutions in a wide variety of litigation and arbitration proceedings involving alleged violations of RICO, FCRA, TILA, TCPA, FCBA, ECOA, EFTA, FACTA, and state consumer protection and unfair and deceptive acts or practices statutes, as well as claims involving breach of contract, fraud, unjust enrichment, and other torts.
  • Successfully defended several of the nation’s leading companies and brands from claims that they deceptively marketed their products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Obtained favorable outcomes for numerous clients in commercial disputes raising contract, fraud, and other business tort claims.

Because many of Andrew’s clients are subject to extensive federal regulation and oversight, Andrew has significant experience successfully invoking federal preemption to defeat litigation.

Andrew also advises clients on their arbitration agreements. He has successfully helped numerous clients avoid multi-district class-action litigation by successfully enforcing the institutions’ arbitration agreements.

Clients praise Andrew for his personal attention to their matters, his responsiveness, and his creative strategies. Based on his “big wins in his class action practice,” Law360 named Mr. Soukup a “Class Action Rising Star.

Prior to practicing law, Andrew worked as a journalist.