Kang Haggerty News
You have probably heard of class actions…but class arbitrations?
Class Arbitration Confusion
You have probably heard of class actions…but class arbitrations?
Class arbitration and its suitability as a vehicle for litigation is in flux as courts nationwide struggle to find common ground in the law.
A 2009 New Jersey matter involving a number of plaintiffs who had accused Fidelity National Financial Inc. and at least six other title insurers of charging exorbitant closing fees highlights this issue. In Chassen v. Fidelity National Financial Inc., plaintiffs sought a refund of the excess costs they allege were improperly charged at closing. Fidelity sought referral of the cases to arbitration, and the plaintiffs requested that, in lieu of numerous individual arbitration matters, they be heard as a class in the arbitration forum.
Class arbitration is often sought when a number of individuals intend to file a claim against one or more entities as a group and where plaintiffs may not obtain a large enough benefit in prosecuting their claims individually, but where filing together increases the per person benefit due to the money and time saved in filing together. And, resolving a matter through class arbitration may avoid court involvement.
But, herein lies the problem: historical cases hardly set a clear guideline as to whether or not matters can be resolved via class arbitration, without court involvement. The Fidelity case, while pending, has been complicated by the recent rulings of the U.S. Supreme Court. In April, 2011, the U.S. Supreme Court’s ruling in AT&T Mobility v. Concepcion (131 S. Ct. 1740) shifted courts towards a more favorable view of enforcement of arbitration clauses in consumer class actions. Then, in June of 2013, in Sutter v. Oxford Health Plans (133 S. Ct. 2046), the high Court stated that, based on the Federal Arbitration Act, that arbitration can proceed without interference (or, with very limited interference) by the judiciary, but did not decide whether the decision on class arbitrability is to be made by the arbitrator or judge.
In an opinion issued on January 17th in the Fidelity matter, U.S. District Judge Peter Sheridan noted that the development of the law on class arbitrations had caused the parties’ filing to “resemble a ping pong match.” The Fidelity court ultimately ruled that there had to be consent among all parties involved in order to enforce class arbitration, and that questions of arbitrability are “gateway” issues for the courts, while indicating the Supreme Court’s position that arbitration is ineffective in class matters. As such, the Fidelity court ordered an evidentiary hearing to determine whether the parties had consented to class treatment.