Earlier this summer in June, the Massachusetts Supreme Court issued a detailed, well-reasoned decision dealing with the enforceability of class waivers in an arbitration clause. I had blogged about this case, Feeney v. Dell, when it came out earlier this summer. (Click here to see my prior blog post.) The case involved a class action challenging Dell’s collection of sales tax in Massachusetts although no Massachusetts authority had imposed any taxes. The Massachusetts Supreme Court found that a class waiver in the plaintiff’s arbitration agreement was not enforceable because the plaintiff had made a particular showing that he could not effectively vindicate his rights granted by state law. In invalidating the class waiver, the Court distinguished Concepcion on several grounds (complex tax claims vs. simple fraud claim in Concepcion; very minimal damages alleged in Feeney of just a few tens or hundreds of dollars; very consumer-friendly terms in Concepcion’s arbitration agreement).
The Feeney case was issued about one week before the US Supreme Court decided American Express v. Italian Colors Restaurant, where the US Supreme Court narrowly construed the vindication of rights doctrine. (Click here to see my post about American Express.)
Yesterday, the Massachusetts Supreme Court reversed its Feeney decision on the basis of the new American Express ruling. (Click here to see a copy of the decision.) Under American Express, the inability to pursue a claim because of the high cost of proving the claim is not a valid basis for invalidating an arbitration clause. In reversing its prior decision, the Massachusetts Supreme Court was critical of the US Supreme Court’s reading of the FAA: “Although we regard as untenable the Supreme Court’s view that ‘the FAA’s command to enforce arbitration agreements trumps any interest in ensuring the prosecution of low-value claims,’ we are bound to accept that view as a controlling statement of Federal law.” The Supreme Court has been butchering the FAA for decades. As explained in my new book, the FAA was not intended to cover small consumer claims like the claims at issue in Feeney.