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Class Action Blog

As society becomes increasingly litigious, and as plaintiff attorneys market their services more aggressively, class action litigation is posing a rapidly growing threat to businesses in all sectors.

Class Action Blog
June 17, 2019

Supreme Court Nixes Class Wide Arbitration

Lamps Plus employee, Varela, sued the company after the disclosure of the private tax information of more than 1,000 company employees. Because of an arbitration clause in his employment agreement, the company moved to send the case to arbitration. The district court sent the case to arbitration, but for the issues to be arbitrated classwide rather than individually. The United States Court of Appeals, Ninth Circuit affirmed that ruling. The United States Supreme Court found that class arbitration is significantly different than individual arbitration.

Class Action Blog
November 4, 2018

Employment Agreement Class Action Waivers in Arbitration Provisions are Enforceable Notwithstanding the National Labor Relations Act

Justice Gorsuch held that employment agreement class or collective action waivers in arbitration clauses are enforceable notwithstanding the National Labor Relations Act (NLRA). He stated the issues were: “Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?” After acknowledging that the issues “are surely debatable,” he held that the conclusion was clear “as a matter of law.” The Federal Arbitration Act (FAA) requires federal courts “to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” In reaching that conclusion, Justice Gorsuch specifically held that the NLRA did not render these specific class and collective action waivers “illegal” and thus unenforceable. He interpreted the FAA as “a congressional command requiring us to enforce, not override, the terms of the arbitration agreements before us.”

Class Action Blog
October 14, 2018

Bankruptcy Court Properly Denied Class-wide Arbitration

Summary: Credit One Bank (Credit One) issued a credit card to Anderson who failed to make timely payments. The debt was charged off, then sold to a third party, and reported to the major credit reporting agencies. Thereafter, Anderson filed Chapter 7 bankruptcy and was discharged, but Credit One failed to honor Anderson’s request to correct his credit report. After the Bankruptcy Court permitted Anderson to reopen the bankruptcy proceeding, he filed a putative class action complaint against Credit One. Credit One moved to stay the proceedings and initiate arbitration, which the Bankruptcy Court refused to do “because it was a core bankruptcy proceeding that went to the heart of the ‘fresh start’ guaranty to debtors under the Bankruptcy Code.” The District Court affirmed the Bankruptcy Court as did the 2nd Circuit. The issue before each Court was how to reconcile the Federal Arbitration Act’s public policy favoring arbitration with the Bankruptcy Code’s strong public policy to ensure that discharged debtors receive a “fresh start.” That was the key issue the 2nd Circuit resolved against arbitration and in favor of a fresh start.