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JAMS Refuses To Uphold Class Action Bans

If you use JAMS as a third-party arbitrator and thought that you had a provision in your contract that disallowed class actions, guess again.

According to JAMS, the arbitrators have decided (pre-judged?) that they will not enforce those contracts. In their press release, the arbitrators stated: "JAMS unequivocally takes the position that it is inappropriate for a company to restrict the right of a consumer to be a member of a class action arbitration or to initiate a class action arbitration. The implementation of this policy means that JAMS will not enforce these clauses in class action arbitrations and will require that they be waived in individual cases."

Wow.

I don't know if they've read all the possible clauses out there, but that's a pretty broad statement. JAMS is largely made up of retired judges along with some attorneys, and I have the utmost amount of respect for their ability to settle cases. But it seems to me that such a hard and fast (let alone universal) position isn't conducive to engendering a thoughtful review of the relative merits of everyone's position.

JAMS does clarify its "ruling" with these policies, essentially saying that if the company refuses waive application of the bar on class actions, it will not take the case.

A similar issue is pending before the California Supreme Court in a case entitled: Discover Bank v. Superior Court of Los Angeles County, Docket No. S113725. The issue, however, has already been addressed by the United States Supreme Court in Green Tree Financial v. Bazzle that seemingly upheld such bans, but also appeared to allow arbitrators to decide how to handle them.

Maybe that's what JAMS has done. In one fell swoop.

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Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Monday, November 15, 2004 at 20:12 Comments Closed (0) |
 
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