Is it possible to have a class action if customers have agreed to a arbitration clause forbidding class action? Is their a way around the arbitration agreement? Does the arbitration agreement cover illegal or deceptive business practices intentionally set up to defraud unknowing customers? Lastly if someone has discovered a despicable business practice intentionally meant to mislead its customers resulting in millions of unearned income, is their a way for that person to get a portion of the settlement that doesn’t include being a plantiff in the class action. Similar to a finders fee for a lawyer bringing a case to a larger more capable firm but for a nonlawyer, so a legally viable alternative or options within the the extent of law.

1 Answer 1


The answer is unclear, but only minimally. There is a trio of cases now being considered by SCOTUS, pertaining to the Federal Arbitration Act and its interaction with the National Labor Relations Act. Since the federal government doesn't get to totally write the law for everything, the FAA applies only to transactions covered by the Commerce Clause. As a result of Allied-Bruce Terminix Cos. v. Dobson, that would include a state-internal suit against a local exterminator.

In general, the FAA states that an award can be vacated in US courts if the arbitration itself is corrupt (e.d. fraudulent), but not if the subject matter if the dispute is about fraud. Federal law preempts state law (Southland Corp. v. Keating, 465 U.S. 1), so mandatory arbitration clauses are enforceable (unless the contract itself is invalid, e.g. duress, unconscionability). A state may not, however, declare that mandatory arbitration clauses render a contract unconscionable (AT&T Mobility v. Concepcion, 563 U.S. 333), as California had done in Discover Bank. Laster v. AT&T Mobility LLC, 584 F. 3d 849.

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