Employers Should Consider Waivers Of Class Claims In Light Of Supreme Court Decision


In AT&T Mobility LLC v. Concepcion, a 5-4 Supreme Court struck down this week California’s policy of prohibiting waivers of class claims in consumer arbitration agreements. The Court held that California’s so-called “Discover Bank rule” conflicted with the Federal Arbitration Act. The AT&T decision is yet another statement of the strong federal policy favoring arbitration of disputes and may provide support to employers who want to include class waivers in employment agreements.

The FAA was enacted in 1925 in response to a widespread judicial hostility to arbitration agreements. (Sound familiar?) The FAA demands that arbitration agreements be provided the same discretion and deference as other contracts. In other words, if the arbitration agreement at issue – often, but not always, executed as part of a consumer transaction agreement – contains a dispute resolution procedure, that procedure should usually be followed. The only limitations, according to several Supreme Court decisions – are defenses typically used in all other contract disputes – fraud, duress or unconscionability.

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