Striking Down Class-Action Waivers in Arbitration: Freedom of Contract vs. Fairness of Contract

Determining the enforceability of mandatory class-action waiver provisions in arbitration clauses is not merely an academic exercise for those sheltered within ivory tower walls. Indeed, a number of important legal and public policy implications underlie such a determination.

In a recent decision, In re American Express Merchants Litigation, the 2nd U.S. Circuit Court of Appeals rendered a class-action waiver provision in the mandatory arbitration clause of a commercial contract between a charge card carrier and its merchants unenforceable.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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