Enforceability of Class Action Waiver Provisions in Commercial Contracts.

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Enforceability of Class Action Waiver Provisions in Commercial Contracts.

Originally published in The Banking Law Journal

In this article, the author reviews a U.S. Supreme Court decision enforcing a class action waiver provision under California law and another recent decision by the U.S. Court of Appeals for the Second Circuit that refused to enforce a class action waiver provision.

In an effort to avoid class action litigation, many financial institutions (and other businesses) include a waiver of class action claims in their contracts, limiting dispute resolution to arbitration of claims on an individual rather than class action or collective basis. This is consistent with Section 2 of the Federal Arbitration Act ("FAA"), which provides that an arbitration agreement "shall be valid, irrevocable, and enforceabl...

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