Supreme Court To Clarify Key Issues Regarding The Permissibility Of Class Arbitration

In the last several years, the enforcement of agreements to arbitrate disputes, whether between businesses or between businesses and their employees, has become a hotly contested issue in the courts. The U.S. Supreme Court issued two significant pronouncements in this area in the past few years. In 2010, in Stolt-Nielsen S.A. v. Animalfeeds International Corp., 130 S.Ct. 1758 (2010), the Court held that where an agreement to arbitrate is silent on the question of whether a plaintiff can arbitrate her claims on behalf of a proposed class of similarly situated individuals (similar to a class action lawsuit), class arbitration is not permissible. Last year, in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), the Court held that (1) under the Federal Arbitration Act (“FAA”), arbitration agreements are to be enforced “according to their terms”; and (2) state law rules prohibiting the use of “class-action waiver” provisions, in which a party waives his or her right to arbitrate claims on a class basis, are preempted by the FAA. Together, these cases stand for the fundamental proposition that the parties to arbitration agreements should be bound by the clear terms of such agreements, especially with respect to class arbitration issues.  Read More