Tuesday, June 16, 2009

Supremes to Decide If Arbitration Agreement Includes Class Actions

I shudder at the thought of a class action in arbitration, and really cannot imagine who would push for such an outcome, but at least one party to an arbitration is doing so.

In Stolt-Nielsen S.A., et al. v. AnimalFeeds International Corp. the US Supreme Court is going to rule on the plaintiff's request that a class action go to arbitration. The question presented in the case is "[w]hether imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq."

Can you imagine FINRA trying to administer a class action arbitration? It would be a nightmare. Fortunately, we don't have to worry about that, since FINRA's rules, which are part of the agreement to arbitrate, prohibit class actions.

Those go to court.
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