In a recent case involving a challenge to an arbitration clause in a Shuttle Express franchise agreement, the Fourth Circuit held that the arbitration clause was enforceable even though it included (1) a class action waiver, (2) a fee-splitting clause, and (3) a one-year limitation on any suit, arbitration, or action relating to the agreement.
The validity of the class action waiver may be of special interest to franchisors. Disagreeing with the district court, the Fourth Circuit ruled that the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion prohibited finding an arbitration agreement unconscionable simply because it included a class action waiver. The fee-splitting clause was upheld because there was not enough evidence that the cost was prohibitive, and the court declined to rule on the merits of the one-year limitation because it was not part of the arbitration agreement itself.
Muriithi v. Shuttle Express, Inc., 712 F.3d 173 (4th Cir. 2013).
