Legal wrangling about class arbitration, and waivers thereof, continues apace in the courts of the Second Circuit of Appeal. Rame, LLP v. Popovich concerned an arbitrator’s clause construction award, which ruled that collective proceedings would be allowed in arbitration even though the arbitration agreement was “silent” on the question. A New York federal district court declined to vacate the award, emphasizing the limited grounds available under the FAA for vacating arbitrators’ awards, and the “considerable burden” that must be met. The court’s decision is another reminder that contracting parties are well-advised to make their intent regarding class arbitration explicit in their arbitration agreements.
In Fromer v. Comcast Corp., a federal district judge in Connecticut applied the Second Circuit’s controversial American Express III decision to deny a motion to compel arbitration on grounds the class arbitration waiver precluded the plaintiff from pursuing federal statutory remedies. The court found that the cost to plaintiff of pursuing his federal antitrust claims in an individual arbitration proceeding were prohibitive, and thus the class arbitration waiver was void because if it was enforced he could not pursue those claims. The case was allowed to proceed as a putative class action in federal court.
American Express III distinguished the US Supreme Court’s opinion in AT&T Mobility LLC v. Concepcion as involving the FAA’s preemptive effect on a state common law rule that deemed most class arbitration waivers unconscionable, rather than the validity of such waivers when they impair the ability to vindicate federal statutory rights. That distinction, and the American Express III opinion, may receive Supreme Court review, because following the Second Circuit’s denial of rehearing en banc (with five judges dissenting, including a vigorous written dissent by Chief Judge Jacobs), the American Express defendants filed a petition for a writ of certiorari.