November 21, 2011 Articles

Employment Law and Class-Action Waivers

Despite the flood of new pro-arbitration decisions, courts have declined to extend Concepcion in some contexts, and the decision's lasting impact is unclear.

By David A. Prahl

Prior to the U.S. Supreme Court’s recent decision in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), the validity of arbitration agreements containing class-action-waiver provisions—which provide that disputes subject to arbitration agreements may only be arbitrated on an individual basis, not on a class-wide basis—varied widely by jurisdiction. Under California law, for example, class-action waivers were prohibited in most employment law contexts prior to Concepcion. New York and Texas law, however, appeared to allow for the enforcement of class-action waivers.

Concepcion has the potential to settle much of the uncertainty regarding the validity of class-action waivers in arbitration agreements. In striking down California’s rule prohibiting class-action waivers in most consumer contracts, the Supreme Court in Concepcion used broad, forceful language that could extend the impact of its decision well beyond the consumer law context. This continued the Court’s trend of upholding arbitration agreements and emphasizing, above all else, the agreement of the parties. Indeed, the Court decided Concepcion only a year after deciding Stolt-Neilsen S.A. v. Animalfeeds International, Corp., 130 S. Ct. 1758 (2010), in which it restricted the imposition of class-wide arbitration where a valid arbitration agreement is silent on the issue.

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