Page 10 - Alternative Dispute Resolution

S10 | MONDAY, MARCH 28, 2016 | Alternative Dispute Resolution
| NYLJ.COM

BY LEWIS WIENER,
KYMBERLY KOCHIS
AND FRANK NOLAN
A
Class Waiver Provisions:
rbitration clauses and class action waiv-
ers have become nearly ubiquitous in
consumer contracts. This comes as no
surprise since the U.S. Supreme Court has
issued a string of opinions over the last sev-
Where We’ve Been
eral terms upholding the use of these provi-
sions. With the law on the validity of con-
sumer contract waiver provisions seemingly
all but settled (or is it?), this article will pro-
And Where We’re Heading
vide an overview of the advantages of using
these waivers, a summary of the relevant law,
including recent Supreme Court decisions,
and some thoughts on the continued viabil-

ity of blanket arbitration clauses and class
action waivers.

Advantages

As any class action practitioner or class
action defendant can attest, class action
litigation can quickly become prohibitively
expensive. When a class is certiied, even

defendants with strong merits arguments feel
pressure to settle rather than risk the pos-
sibility of an adverse liability determination.
Discovery is typically burdensome and expen-
sive. Furthermore, consumer class actions are
typically driven by plaintiffs’ lawyers, who
are the true beneiciaries of successful class
action litigation. Indeed, a successful class
representative will likely not recover more

in litigation than he or she would through
arbitration.
There are several beneits, actual and per-
ceived, to arbitration. Some believe arbitra-
tion has fulilled its promise of better, faster,
cheaper. To some, the advantage of arbitra-
tion lies in the fact that the parties choose
their arbitrators, who are paid for their time

and handle fewer cases than judges. For oth-
ers, the overwhelming beneit of arbitration
is that the proceedings and judgment may be
kept conidential. Still others ind the principal
beneit in being able to compel individual
arbitration and avoid class proceedings. Some
disfavor arbitration because of the lack of
generally available appellate rights, but this
can be remedied by including contractually

agreed-upon appellate rights in the parties’
arbitration provision.
The use of arbitration provisions that com-
pel individual arbitration (to the exclusion
of class proceedings) has been criticized by
consumer advocates, plaintiffs’ class action
lawyers, and some media outlets, but the
Supreme Court has given its unequivocal
blessing to the use of these provisions in

a number of recent opinions, based on the
preemptive effect of the Federal Arbitration
Act (FAA).

The Federal Arbitration Act

Passed in 1925, the FAA ensures that arbi-
tration provisions in contracts are “valid,

LEWIS WIENER is a partner at Sutherland Asbill &
Brennan in Washington, D.C. KYMBERLY KOCHIS is CK
a partner and FRANK NOLAN is an associate in the STO
firm’s New York office.
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