Skip to Content

Get Your FREE Consultation

Blog

Supreme Court Deals Major Blow to Class Action and Consumers

June 17, 2010

In an opinion issued April 27, 2010, the United States Supreme Court held that arbitrators could not allow class arbitration where an arbitration clause is silent as to whether class arbitration is permitted. The decision in Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp. is a significant blow to consumers and class action plaintiffs.

The Supreme Court held that “imposing class arbitration on parties who have not agreed to authorize class arbitration is inconsistent with the Federal Arbitration Act.” The parties had agreed that the arbitration clause in their shipping agreement was silent on the question of whether class arbitration was permitted. The parties, thus, agreed to have their arbitration panel decide whether the arbitration clause permitted class proceedings. The arbitration panel construed the broad arbitration clause as permitting class arbitration. That decision was then appealed by the defendant shipping companies. The plaintiffs argued that the case was not ready for judicial review because the Federal Arbitration Act limits review of arbitral decisions to final “awards.” In this case, the panel had decided only a preliminary issue of contract interpretation, had not certified a class, and had not issued an award in anyone’s favor. Justice Ginsberg’s dissent in the 5-3 decision echoed those arguments. Writing for the majority, Justice Alito stated that the arbitration panel had “exceeded its powers” by adopting its own “policy choice” in favor of allowing class actions.

A number of consumer advocates have criticized the decision and have expressed concern that the court has taken a major step toward allowing class action bans in all contracts. Of note, the Stolt-Nielsen case involved large, sophisticated businesses. It remains to be seen whether the same result would follow in a case involving aggrieved consumers with small-dollar claims who would be unable to secure redress in the absence of a class action, either in civil court or an arbitral forum. In any event, the decision was a significant blow to plaintiffs and lawyers who desire to pursue class claims.

TALK TO US NOW
FOR FREE
No Win, No Fee

Review Us

Martin & Jones, PLLC logo

“Thank you for your concern of my well-being every time I spoke with you. It always meant so much. I hear nothing but awful stories of dealing with attorneys and their offices, but I have had nothing but positive experience. You have many special ways of working with people in need of help. Words can never express the way your support has been so helpful. I pray you will continue to help others. I wish you all the best.”

Contact Our North Carolina Personal Injury Law Firm

for a Consultation for Your Accident or Medical Malpractice Claim

Call us at 800-662-1234
TALK TO US NOW
FOR FREE
No Win, No Fee

The law firm you choose makes a difference. If you are the victim of an accident or an illness that someone else caused, the North Carolina personal injury law firm of Martin & Jones has the depth of experience, skills and sensitivity to make your road to recovery as smooth as possible. Whether you have experience with the legal system or have never hired a medical malpractice or personal injury lawyer before, our attorneys and staff will do our best to answer your questions, provide clear advice and prepare you and your family for what to expect. If you would like more information or to meet with one of our attorneys, please fill out the form below or call us at 800.662.1234.