Arbitration

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            The Supreme Court recently declined to review the Sixth Circuit’s decision in Sevier County Schools Federal Credit Union v. Branch Banking & Trust Co., 990 F.3d 470 (6th Cir. 2021), which presents a potential challenge to enforcing arbitration clauses added to standard account agreements.  The cert denial serves as a reminder that companies introducing arbitration agreements should take care to follow all contractual change-of-term requirements and create a record of affirmative customer assent whenever possible.…

Continue Reading A Closer Look: Arbitration Clauses Added to Account Agreements Face Risks After Supreme Court Declines Review of Sixth Circuit’s BB&T Decision

On May 23, 2022, the Supreme Court unanimously held that a party opposing arbitration is not required to demonstrate prejudice to show that the other party has waived its contractual arbitration rights. 

Before today’s decision, nine federal courts of appeals had adopted the rule that a “party can waive its arbitration right by litigating only when its conduct has prejudiced the other side.”  Morgan v. Sundance, 596 U.S. __ (2022).  Two other circuits had held no showing of prejudice was required.…

Continue Reading Supreme Court Decision Makes It Easier to Waive Right to Arbitration

A recent Fifth Circuit decision continues the trend of courts rejecting putative class and collective actions where absent class members are subject to arbitration agreements.

Exotic dancers sued A&D Interests, Inc. (doing business as the “Heartbreakers Gentlemen’s Club”) in a putative Fair Labor Standards Act collective action for allegedly misclassifying the club’s dancers as independent…

Companies that include arbitration agreements in online terms and conditions may want to take note of a recent Ninth Circuit opinion that refused to enforce an arbitration agreement on lack-of-consent grounds even though the arbitration agreement contained an opt-out provision.

In Berman v. Freedom Financial Network, LLC, the Ninth Circuit affirmed the district court’s…

A new law signed by President Biden brings significant changes to employers’ ability to require arbitration of certain disputes with employees and could lead to an increase in sexual assault and sexual harassment claims against employers in court.  On March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”).  The Act amends the Federal Arbitration Act (“FAA”) to provide that predispute arbitration agreements and predispute joint-action waivers relating to sexual assault and sexual harassment disputes are unenforceable at the election of the person or class representative alleging the conduct.  The Act took effect immediately upon signing.…

Continue Reading A Closer Look: New Law Ends Mandatory Arbitration for Sexual Assault and Sexual Harassment Claims

Arbitration agreements have become a fixture of American contracts, and companies have turned to them as a strategy for reducing class action exposure.  In recent years, plaintiffs have responded by initiating “mass arbitrations” – individual arbitrations filed on behalf of hundreds or thousands of customers or employees, which may immediately threaten companies with millions of dollars in arbitration-initiating fees alone.  Many companies, however, have been slow to react to the risks posed by mass arbitration.  This post discusses some of those risks, the difficulties companies have encountered in trying to address this issue, and potential strategies for mitigating the threat posed by mass arbitration.…

Continue Reading A Closer Look: Avoiding a “Mass”-ive Arbitration Problem

The Ninth Circuit has continued to chip away at California’s McGill rule, which bars the enforcement of arbitration provisions that waive a plaintiff’s right to seek public injunctive relief in any forum. In Cottrell v. AT&T Inc., 2021 WL 4963246 (9th Cir. Oct. 26, 2021), the court extended its earlier decision in Hodges v.

The Supreme Court has agreed to hear a case that may make it easier for companies to be found to have waived arbitration requirements in their contracts. Morgan v. Sundance, Inc. gives the Court an opportunity to resolve a circuit split over whether a party can be deemed to have waived its right to compel…

A company facing a putative class action from a plaintiff who has opted out of an arbitration agreement may still file an early motion to defeat class certification if the company can prove that most of the class has agreed to arbitration. In Lawson v. Grubhub, Inc., 2021 WL 4258826 (9th Cir. 2021), the…

Arbitration agreements often delegate to the arbitrator threshold questions of arbitrability, including whether the agreement itself is valid and enforceable. The Second, Third, and Fourth Circuits have invalidated entire arbitration agreements as prospective waivers—unenforceable waivers of a party’s right to pursue federal statutory remedies—without separately analyzing or enforcing the delegation clauses in those agreements.

The…