It looks like Massachusetts joins New Jersy and California in rejecting form contracts that ban consumer class actions. I haven’t seen the opinion, and the linked Wall Street Journal article doesn’t cite it by name, so this analysis is second hand.
According the the WSJ report, the Massachusetts court rejected only the class action ban and not the mandatory arbitration provision. This is a middle-ground approach that allows businesses to refer consumer claims to arbitration, so long as consumers remain free to pursue their claims as class actions in arbitration.
As a consumer-side lawyer, I remain concerned about mandatory arbitration clauses. After all, most of us didn’t mean to surrender our rights to trial by jury when applying for a credit card, subscribing to cell service, or buying a computer.
Consumers are often left with no choice in the matter, as mandatory arbitration clauses are often adopted across industries. It’s on toward impossible to get a credit card without one or cell service.
The problem with mandatory arbitration clauses is that they are often packed with all sorts of other features that turn consumer claims into a you-can’t-win-this-case proposition. So this mid-ground position represents something of a compromise that is workable for consumers. A mandatory arbitration that simply requires consumers to arbitrate in a fair setting is a lot less offensive when consumers don’t give up other rights.
It looks like this emerging trend may re-write the rules of arbitration clauses. If all state courts demand fair procedures in arbitration, I’m betting that mandatory arbitration clauses will become a thing of the past.
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