Alternative Dispute Resolution

N.M. Supreme Court Is Fifth to Strike Down Class Action Waiver

State supreme courts are increasingly striking down mandatory arbitration agreements that bar class action lawsuits.

The latest state court to act is New Mexico’s, the Wall Street Journal reports (sub. req.). It ruled last week that a class action ban was unconscionable because it “essentially foreclosed” relief in a case where individual damages amounted to only $10 or $20.

The court ruled in a suit by plaintiff Robert Fiser of Albuquerque, N.M., who claims Dell Inc. misrepresented the memory size of its computers. Dell had sought to compel arbitration.

Since 2006, four other state supreme courts have also struck down class action bans in consumer contracts, the story says. They are in Illinois, New Jersey, North Carolina and Washington. But many federal courts have upheld such bans.

Law professor Jean Sternlight of the University of Nevada, Las Vegas, told the newspaper she expects federal courts to begin to strike down class action bans since judges usually apply state law when deciding the matter.

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