Without even knowing it, just about everyone has agreed to settle disputes through arbitration and has waived any rights to proceed on a class-wide basis. While many consumers do not read the fine print in the agreements they sign, a variety of companies, from cell phone providers to car dealers, have consumers agree in sales contracts to arbitrate any claims and to waive the ability to proceed with a class action claim. This was the scenario in the case of Litman v. Cellco Partnership, in which a New Jersey federal district court held that the plaintiff cell phone customers could not use a state-law unconscionability defense to invalidate an agreement to arbitrate and a class action waiver, as the state law was preempted by federal legislation. Unfortunately, this holding misinterpreted state and federal law, as evidenced by prior precedent and cases decided after the fact. The holding also set an unfortunate precedent for consumers, stripping them of the only adequate remedy provided by law and subjecting them to a process that rarely rules in their favor.
David C. Winters,
Third Circuit Buyers Beware: District Court in Litman Holds Unconscionability Defense Contravened by Federal Arbitration Act,
2010 J. Disp. Resol.
Available at: https://scholarship.law.missouri.edu/jdr/vol2010/iss1/12