The U.S. Supreme Court has granted certiorari to decide “whether the Federal Arbitration Act [FAA] permits courts, invoking the ‘federal substantive law of arbitrability,’ to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim.” The case involves a credit card company’s adoption of an arbitration requirement compelling merchants that want to accept the card to waive their right to pursue antitrust claims on a class-wide basis.
The Second Circuit held that the defendant could not preclude class litigation through its arbitration clause because it would be financially infeasible for the merchants to pursue their claims on an individual basis.
The Supreme Court has previously held that (1) the FAA preempts state laws prohibiting class action waivers decision and (2) FAA prohibits imposing class arbitration on parties that have not agreed to it. A decision should be reached within the next six months.