Do New Massachusetts Supreme Court Decisions on Class-Action Waivers in Arbitration Agreements Foreshadow the U.S. Supreme Court's Anticipated Amex Decision?
Two recent decisions by the Massachusetts Supreme Judicial Court (“SJC”) illustrate the application of the concept, adopted by some courts, that arbitration agreements with class action waivers can be invalidated “where the plaintiff can demonstrate that he or she lacks the ability to pursue a claim against the defendant in individual arbitration,” without violating the principles set forth by the U.S. Supreme Court in AT&T Mobility LLC v. Concepcion. The SJC’s reasoning and conclusions are similar to and an extension of the Second Circuit’s opinion in In re American Express Merchants’ Litigation, currently on appeal before the United States Supreme Court in American Express Co. v. Italian Colors Restaurant (Amex).
In Feeney v. Dell Inc., the SJC invalidated an arbitration agreement containing a class action waiver because it found the plaintiffs had demonstrated they could not pursue their state law claims individually, given the complexity of the case, costs to pursue it, and small damages that each individual plaintiff could recover. Like the Second Circuit in Amex, the SJC relied on the U.S. Supreme Court’s statement in Green Tree Financial Corp. v. Randolph “that the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights in the arbitral forum.” Based on Randolph, which the SJC concluded had not been overruled by Concepcion, the SJC minimized the significance of the U.S. Supreme Court’s rejection of the argument, in Concepcion, that “small-dollar claims” might slip through the legal system if class proceedings are unavailable. Concepcion addressed that argument, stating, “[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.”
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