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Class Action Bans Found Improper By Massachusetts’ Highest Court But New Supreme Court Decision Under Cuts that Ruling

 

With the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion having left many judges and class action attorneys frustrated with the current state of class action lawsuits, a new decision by the Massachusetts Supreme Judicial Court has reawakened hope for plaintiffs to achieve justice in a court of law. According to the new decision by the Court, a class action ban, as part of an arbitration agreement, is only enforceable if the plaintiff cannot provide compelling evidence that the ban on class actions would prevent them from obtaining a remedy under state law.

The Court recently ruled in two cases where the plaintiffs tried to prove that the class action bans in the relevant arbitration agreements were unenforceable. In Feeney v. Dell Inc., the Court ruled in favor of the plaintiffs, having found that they provided sufficient evidence that the ban on class actions would prevent them from pursuing their claims. In another case, Machado v. Systems4 LLC, the Court upheld the class action ban present in the arbitration agreement, having found that the plaintiffs did not provide sufficient evidence that the ban prevented them from obtaining a remedy under state law.

In its decision in Feeney v. Dell Inc., the Court stated that the Supreme Court’s decision in Concepcion did not provide for a general public-policy-based prohibition on class-actions. Instead, the Court decided that the fact that arbitration procedures must not prevent plaintiffs from attaining justice in a court of law remains despite the Supreme Court’s decision in Concepcion.
The Court further denied that this interpretation applies only to federal statutory rights. Instead, it argued that the Federal Arbitration Act does not deny any remedies available under state law. As a result, a state court cannot prevent the Federal Arbitration Act from achieving its intended goals, simply by deciding that certain provisions of an arbitration agreement are unenforceable if those provisions prevent the assertion of claims provided by relevant state laws.

The court therefore decided that the enforceability of class action bans as part of arbitration agreements would be dependent upon “case-specific factual showings” that the ban would prevent plaintiffs from obtaining remedies which are granted to them by state law. In Feeney v. Dell Inc., a case involving small-dollar claims, the court determined that the class action ban would effectively prevent the plaintiffs from pursuing their claims, as individuals are unlikely to pursue lengthy and often costly litigation for insubstantial amounts. The case of Machado v. System4 LLC, on the other hand, consisted of significantly larger monetary claims, of the sort that individuals are likely to pursue in court, even without the added power of a class action. The court therefore determined that, in such a case, the class action ban present in the arbitration agreement remained valid.

The Massachusetts Supreme Judicial Court is not alone in this interpretation of the law. The Missouri Supreme Court and the Second Circuit have also recognized that circumstances exist in which a class action ban cannot be upheld in a court of law. However, the Second Circuit’s decision in Amex that a class action ban which prevents the attainment of rights granted by federal law is unenforceable was just reversed by the Supreme Court. The decision that the Supreme Court has reached in Amex undercuts the reasoning using by the Massachusetts Supreme Judicial Court and allows class action bans in arbitration agreements all over the nation to preclude class actions from proceeding, even if they are the only means of providing a means for protecting the rights at issue. The Supreme Court has provided businesses with a means of protecting themselves from expensive class action litigation.


Super Lawyers named Illinois business trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso-Lubin’s Illinois business trial lawyers have over a quarter of century of experience in litigating complex class action, consumer rights and business and commercial litigation disputes. We handle emergency business law suits involving injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud.

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DiTommaso-Lubin’s Schaumburg and Barrington litigation attorneys have more than two and half decades of experience helping business clients unravel the complexities of Illinois and out-of-state business laws. Our Chicago business, commercial, class-action and consumer litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Wheaton and Aurora, we serve clients throughout Illinois and the Midwest.

If you’re facing a business or class-action lawsuit, or the possibility of one, and you’d like to discuss how the experienced Illinois business dispute attorneys at DiTommaso-Lubin can help, we would like to hear from you. To set up a consultation with one of our Chicago class action attorneys and Chicago business trial lawyers, please call us toll-free at 1-877-990-4990 or contact us through the Internet.