The Class Action Fairness Act Does Not Supersede The Federal Arbitration Act

Published date20 June 2022
Subject MatterLitigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Class Actions
Law FirmWinston & Strawn LLP
AuthorGayle I. Jenkins, DaWanna L. McCray and Nathan R. Gilbert

KEY TAKEAWAYS:

  • The Sixth Circuit became the first Circuit Court to hold that the Federal Arbitration Act ("FAA") and the Class Action Fairness Act ("CAFA") do not conflict.
  • As a result, plaintiffs within this jurisdiction can no longer argue that class action waiver provisions in consumer contracts should be overridden because the CAFA gives exclusive jurisdiction to the federal courts for class actions.

On March 19, 2018, Plaintiff Lorraine Adell filed a class action complaint in Ohio federal court against Verizon Wireless, seeking damages arising from Verizon's imposition of certain administrative charges. The district court kicked Plaintiff's case out of federal court and compelled the parties to arbitrate because there was no dispute that Plaintiff signed a Customer Agreement with Verizon Wireless: 1) requiring that disputes arising under the Customer Agreement be resolved by arbitration; and 2) requiring the bilateral, rather than class, arbitration of disputes'effectively limiting Plaintiff to individual relief.

After losing before the arbitration panel, Plaintiff's case reached the Sixth Circuit. In Adell v. Cellco Partnership, No. 21-3570, 2022 WL 1487765 (6th Cir. May 11, 2022), Plaintiff complained that the district court erred in compelling her to arbitrate her breach of contract case, because there is an "inherent conflict" between the CAFA and the FAA, and her claims fell squarely within a federal court's diversity jurisdiction through the CAFA.

For background, the FAA provides that an arbitration clause in a "transaction involving commerce... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. ' 2 (2003). Courts have routinely held that the FAA evinces "a liberal federal policy favoring arbitration agreements." The CAFA, on the...

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