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Tuesday, April 27, 2010


Mark Rouleau

I disagree. I believe that the holding does not apply to consumer adhesion contracts. Clearly State Courts have the power and authority to hold that "class action" waivers or bans in arbitration clauses are unconscionable.

If such clauses are "substantively unconscionable" then the class action must either proceed in court (thereby ignoring the Class Arbitration procedures) or they must proceed in Class Arbitration. See for Example Cooper v. QC Fin. Servs., 503 F. Supp. 2d 1266, 1279 (D. Ariz. Nov.22 2006); Kinkel v. Cingular Wireless LLC, 857 N.E.2d 250, 223 Ill.2d 1, 306 Ill.Dec. 157 (Ill., 2006); Harrington v. Pulte Home Corp., 119 P.3d 1044 (AZ, 2005).

In Stolt-Nielsen the court held, based upon the stipulation of the parties, that class-arbitration was not within the contemplation of the “sophisticated, multinational commercial parties” at the time they formed the agreements.
Much of the discussion of the court pointed to the fact that the Arbitrators did not base their decision on the maritime law (this was a maritime arbitration agreement), the FAA or State Law but rather to their own idea of public policy based upon other AAA Clause Construction decisions.

The majority stated: “The conclusion is inescapable that the panel simply imposed its own conception of sound policy."

The court went on to state: "An implicit agreement to authorize class-action arbitration, however, is not a term that the arbitrator may infer solely from the fact of the parties’ agreement to arbitrate.” (559 U. S. ____ (2010) Slip Opinion at 11-12.) This clearly leaves the door open to class arbitrations based upon a State law default position favoring class arbitrations where the contract is silent.

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