MVA Litigation

The U.S. Supreme Court issued two 5-4 decisions in as many months regarding class procedures. Lamp Plus, Inc. v. Varela, 587 U. S. ____ (2019) was favorable to corporate defendants by limiting the availability of class arbitration when the arbitration agreement is ambiguous, while Home Depot U.S.A., Inc. v. Jackson, 587 U. S. ____ (2019) favored consumer plaintiffs by preventing third-party counterclaim defendants from removing class actions from state court to federal court under the Class Action Fairness Act (CAFA). Interestingly, Justice Thomas joined the conservative ...

The viability of class waivers in employment agreements has been a closely watched battle in the courts since the National Labor Relations Board (NLRB) ruled in D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764, 357 NLRB No. 184 (2012) that class waivers in individual employment agreements violate the National Labor Relations Act (NLRA) by preventing employees from engaging in concerted action related to their employment. Faced with an Executive Branch that was “speaki[ng] from both sides of its mouth” on this issue and a Congress that recently overturned another ...

This year important questions regarding the viability of class action waivers in arbitration agreements have moved close to resolution. In July, the Consumer Financial Protection Bureau (CFPB) issued a long-awaited final rule that prohibited class waivers in arbitration agreements related to a broad range of financial products. And employees and the National Labor Relations Board (NLRB) have continued to push against the enforceability of class waivers in the context of individual employment agreements, driving the issue to the U.S. Supreme Court for review. On November 1 ...

U.S. businesses have the good fortune to be on the receiving end of a favorable U.S. Senate vote nullifying the hotly-contested Consumer Financial Protection Bureau (CFPB) rule banning class action waivers in certain consumer finance arbitration agreements. The rule, issued by the agency in July 2017, took several years to finalize and was criticized for being based on a flawed data, the result of the agency overreaching, and more beneficial to class action plaintiffs’ attorneys than the consumers it was supposed to protect. Our previous posts discuss in detail ...

The Consumer Financial Protection Bureau (CFPB) recently announced the release of its final rule prohibiting the use of class action waivers in certain consumer finance arbitration agreements. The rule has been several years in the making, and has been widely followed and hotly contested. The final rule was announced on July 10, 2017 and published in the Federal Register on July 19, 2017. Accordingly, it is set to take effect on September 18, 2017 (60 days following publication) and to apply to contracts entered into on or after March 19, 2018 (180 days after the effective date ...

The Consumer Financial Protection Bureau (CFPB) recently announced the release of its final rule that prohibits the use of class action waivers in certain consumer finance arbitration agreements. This rule banning class waivers has been several years in the making, and has been widely followed and hotly contested. The CFPB reports that it received more than 110,000 comments on its proposed rule during the comment period, which raised concerns regarding “whether the effects of arbitration agreements are salient to consumers, whether arbitration has proved to be a fair and ...

In the years following the U.S. Supreme Court’s AT&T Mobility v. Concepcion decision, more and more courts enforced class waivers in arbitration agreements based on the commands of the Federal Arbitration Act (FAA). The National Labor Relations Board (NLRB) parted with the post-Concepcion trend to enforce class waivers in D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764, 357 NLRB No. 184 (Jan. 3, 2012), however, and held that such waivers in individual employment agreements violate the National Labor Relations Act (NLRA) by prohibiting employees from acting in ...

On May 24, 2016, the Consumer Financial Protection Bureau’s (CFPB) long-anticipated Proposed Rule prohibiting the use of class action waivers in consumer finance arbitration agreements was published in the Federal Register and opened for public comment. The Proposed Rule has been expected following the CFPB’s previous study and statements regarding the impact that arbitration agreement class action waivers have on consumers. The CFPB took 370+ pages to explain and justify its proposal, which boils down to consumers of financial products do not typically pursue redress ...

The Consumer Financial Protection Bureau (“CFPB”) made clear this week that, in its view, class action waivers should be on the chopping block in the agency’s upcoming rulemaking aimed at regulating the use of arbitration clauses in consumer financial agreements.  In an October 7, 2015 release, CFPB Director Cordray expressed the agency’s critical stance on companies’ use of arbitration agreements that prohibit consumers from participating in class actions, calling such clauses a “free pass to sidestep the courts and avoid accountability for wrongdoing,” while ...

As it stands, the National Labor Relations Board (“NLRB”) has taken the position that class action waivers in individual employee/employer arbitration agreements are illegal and the agency continues to invalidate these agreements even though the Fifth Circuit Court of Appeals has held that they are enforceable.  In D.R. Horton (2012), the NLRB invalidated class action waivers in individual employment agreements on the grounds that such waivers interfere with an employee’s rights to collective action provided by the National Labor Relations Act (“NLRA”).  The Fifth ...

Last week, a National Labor Relations Board (“NLRB”) Administrative Law Judge reiterated the agency’s position that employers who require the arbitration of grievances by employees on an individual basis violate the National Labor Relations Act (“NLRA”) by precluding protected concerted activity of the class and collective action mechanisms.  We have seen the NLRB strike down explicit class action waivers in employment contracts in its decisions since D.R. Horton (2012) and Murphy Oil (2014), contrary to the U.S. Supreme Court’s Concepcion line of cases that ...

The practice of restricting plaintiff access to class procedures through binding arbitration agreements has garnered significant attention over the last five years on the heels of several U.S. Supreme Court decisions validating companies’ use of class waivers.  One of the open questions remains, “who has the authority to determine whether class arbitration is available when the arbitration clause is silent – courts or arbitrators?”  The U.S. Supreme Court has not addressed whether the availability of class arbitration is a substantive “gateway” issue for the ...

On Tuesday, the Consumer Financial Protection Bureau ("CFPB") released its long-awaited "Arbitration Study: Report to Congress, pursuant to Dodd–Frank Wall Street Reform and Consumer Protection Act § 1028(a)", which presents the results of the agency’s study of the use of arbitration agreements in the context of consumer finance agreements for credit cards, checking accounts, payday and other small dollar loans, general purpose reloadable prepaid cards, private student loans, auto purchase loans, and mobile wireless agreements.  The 728-page study is extensive, to ...

In the wake of several favorable U.S. Supreme Court decisions, companies increasingly are using arbitration agreements to control their exposure to class action liability.  Although recent cases have reinforced the power of arbitration agreements, companies must tread carefully when crafting their arbitration contracts and related class waivers.  In conjunction with giving force to arbitration agreements, the Federal Arbitration Act (“FAA”) limits the federal courts’ ability to review and reverse arbitrator decisions construing those agreements.  The Supreme ...

The North Carolina Court of Appeals recently declared the enforceability of class arbitration waivers despite the North Carolina Supreme Court’s previous decision in Tillman v. Commercial Credit Loans, Inc., 362 N.C. 93, 655 S.E.2d 362 (2008), which invalidated an arbitration agreement based, in part, on a class arbitration waiver.  In companion cases, Torrence v. Nationwide Budget Finance, et. al., No. 05- CVS 447 (N.C. Ct. App. Feb. 4, 2014) and Knox v. First Southern Cash Advance, et.al., No. 05-CVS-445 (N.C. Ct. App. Feb. 4, 2014)**, plaintiffs had secured class ...

            The Fifth Circuit Court of Appeals recently rendered its long-awaited decision in D.R. Horton, Inc. v. NLRB, No. 12-60031 (5^th Cir.  Dec. 3, 2013), revised December 4, 2013, which reversed the National Labor Relations Board (“NLRB”) ruling that held a class arbitration waiver contained in an arbitration provisions of individual employment contracts violated the rights of employees under the National Labor Relations Act (“NLRA”) to engage in concerted activities.  The NLRB issued its decision in D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764, 357 NLRB No. 184 ...

            The Supreme Court’s October 2012 Term could rightly be named “The Year of the Class Action.”  The High Court received many petitions for review and ultimately issued more than five decisions that tackled issues impacting the landscape of class action practice from questions regarding federal jurisdiction under the Class Action Fairness Act of 2005 to class certification requirements in fraud-on-the-market securities class actions.  Two of the Court’s final class action decisions addressed the impact of arbitration agreements on class actions and class arbitration ...

            The U.S. Supreme Court has issued several decisions over the past few years which have reinforced the federal policy favoring arbitration and have prevented class actions from proceeding against corporate defendants.  Among those decisions was Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010), in which the Supreme Court took steps to preclude class arbitrations by prohibiting arbitrators from ordering the class arbitration of federal antitrust claims where (1) the arbitration agreement was silent on the class issue and (2) the parties stipulated that ...