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2d Circuit Charges Against Arbitration Class Action Waivers

Circuit courts are always polite when disagreeing with their bosses on the Supreme Court.

Indicating a discomfort with some arbitration clauses, on February 1 the Second Circuit issued a third ruling in the long-running American Express merchant fee litigation.

AmEx I was remanded by the US Supreme Court in light of Stolt-Nielsen, but the 2d Circuit stuck to its position and said that Stolt was not applicable to AmEx. That remand decision became known as AmEx II.

Then the Supreme Court ruled in AT&T v. Concepcion, and the 2d Circuit has just released AmEx III.

Once again, the 2d Circuit has allowed the merchants to pursue their case as a class action despite a contractual clause to the contrary:

It is tempting to give both Concepcion and Stolt-Nielsen such a facile reading, and find that the cases render class action arbitration waivers per se enforceable. But a careful reading of the cases demonstrates that neither one addresses the issue presented here: whether a class-action arbitration waiver clause is enforceable even if the plaintiffs are able to demonstrate that the practical effect of enforcement would be to preclude their ability to vindicate their federal statutory rights

Ostensibly the appellate court distinguishes the case at bar from Stolt-Nielsen and Concepcion, but observers are left to wonder if there are rumblings of mutiny in the ranks.

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Corbin is the online pen name of a contracts aficionado who needs to get a better hobby.

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