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3rd Circuit Deals Blow To Class-Arbitration Waivers

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Good news for credit-card users. Bad news for the credit-card industry. The 3rd Circuit Court of Appeals held that arbitration clauses may be struck down — as unconscionable — when they prevent the use of class actions in cases where a large group of consumers have claims that would normally yield small sums of money for individuals litigating on their own. From The National Law Journal:The unanimous three-judge panel concluded that state courts as well as federal courts applying state law are free to declare that such class-arbitration waivers are unconscionable — even if the contract included a choice-of-law provision that called for applying the law of a state that is decidedly amenable to such pro-business provisions.The ruling is a victory for attorney F. Paul Bland Jr. of Public Justice in Washington, D.C., and Gary S. Graifman of Kantrowitz Goldhamer & Graifman in Montvale, N.J.Bland hailed the ruling as a major victory for consumers and said it clarified an important area of 3rd Circuit law by underscoring the power of state courts to reject arbitration and anti-class action provisions they deem unconscionable.In the suit, a proposed class of New Jersey consumers claim that American Express cheated them by falsely promising rebates of up to 5 percent of purchases made with the Blue Cash Card, and that, in reality, the rebates proved to be much smaller than originally promised.The 3rd Circuit remanded the case. On remand, the district court judge will have to decide whether New Jersey state courts would deem such a class-arbitration waiver provision unconscionable. ‘We hold that, if the claims at issue are of such a low value as effectively to preclude relief if decided individually, then … the application of Utah law to the class-arbitration waiver is invalid and the class-arbitration waiver is unconscionable,’ U.S. Circuit Judge Franklin S. Van Antwerpen wrote. Given that most of these credit-card disputes involve relatively low-dollar amounts, not worth a single individual’s time, money, or effort, I’m hopeful that the district court judge will find these class-arbitration waivers unconscionable. You can read the rest of the story here link.

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3rd Circuit Deals Blow To Class-Arbitration Waivers

Array

Good news for credit-card users. Bad news for the credit-card industry. The 3rd Circuit Court of Appeals held that arbitration clauses may be struck down — as unconscionable — when they prevent the use of class actions in cases where a large group of consumers have claims that would normally yield small sums of money for individuals litigating on their own. From The National Law Journal:The unanimous three-judge panel concluded that state courts as well as federal courts applying state law are free to declare that such class-arbitration waivers are unconscionable — even if the contract included a choice-of-law provision that called for applying the law of a state that is decidedly amenable to such pro-business provisions.The ruling is a victory for attorney F. Paul Bland Jr. of Public Justice in Washington, D.C., and Gary S. Graifman of Kantrowitz Goldhamer & Graifman in Montvale, N.J.Bland hailed the ruling as a major victory for consumers and said it clarified an important area of 3rd Circuit law by underscoring the power of state courts to reject arbitration and anti-class action provisions they deem unconscionable.In the suit, a proposed class of New Jersey consumers claim that American Express cheated them by falsely promising rebates of up to 5 percent of purchases made with the Blue Cash Card, and that, in reality, the rebates proved to be much smaller than originally promised.The 3rd Circuit remanded the case. On remand, the district court judge will have to decide whether New Jersey state courts would deem such a class-arbitration waiver provision unconscionable. ‘We hold that, if the claims at issue are of such a low value as effectively to preclude relief if decided individually, then … the application of Utah law to the class-arbitration waiver is invalid and the class-arbitration waiver is unconscionable,’ U.S. Circuit Judge Franklin S. Van Antwerpen wrote. Given that most of these credit-card disputes involve relatively low-dollar amounts, not worth a single individual’s time, money, or effort, I’m hopeful that the district court judge will find these class-arbitration waivers unconscionable. You can read the rest of the story here link.

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