Recent Second Circuit Decision Calls Into Question the Enforceability of Class-Action Waiver Clauses

23 March 2011
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When drafting arbitration clauses, parties often include provisions that require claimants to file claims solely in an individual capacity and expressly prohibit class actions and class arbitrations. This client update discusses a recent decision by the U.S. Court of Appeals for the Second Circuit invalidating such a class-action waiver based on the court's finding that the cost of bringing the antitrust claim at issue in the case would exceed any individual plaintiff's potential recovery. In light of a recent Supreme Court decision limiting the ability of courts to impose class arbitration, this decision presents new issues for parties who want to opt for arbitration and thereby eliminate their exposure to class action litigation.