January Arbitration Update: Effective Vindication, Class Arbitration, and FAA Preemption
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Lots of interesting arbitration law has been made already in 2016, so here is a roundup from the first four weeks of the year. As a teaser, courts have breathed life into the effective vindication doctrine, found arbitrators cannot determine the availability of class actions, and found state laws not preempted. More surprisingly, state courts are following SCOTUS’s interpretations of the FAA.
Effective Vindication Lives On
Although I thought Italian Colors was an “effective elimination” of the effective vindication doctrine, the Tenth Circuit affirmed its use as a defense to a motion to compel arbitration this month in Nesbitt v. FCNH, Inc., 2016 WL 53816 (10th Cir. Jan. 5, 2016). [Side note to WestLaw: can there really have been 53,816 cases by January 5th of the year?? Or do I misunderstand the numbering system?] In that case, class action plaintiffs in a Fair Labor Standards Act case defeated a motion to compel individual arbitrations by asserting that under the AAA Commercial Rules, each plaintiff would have to pay between $2,300 and $12,500 in arbitrator fees and could not recover attorneys’ fees. The appellate court affirmed.
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