Close Menu

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Corporations frequently rely on arbitration clauses in contracts to expediently resolve disputes, cut down litigation costs, preserve relationships with business partners and customers, and keep proprietary information private. However, despite their prevalence in other types of contracts, companies rarely use arbitration clauses in class action settlement agreements in California. For many companies, that may be a missed opportunity.

The absence of arbitration clauses in class settlements may stem from a myopic view of arbitration. When most individuals hear the term “arbitration clause,” they think about clauses in adhesion contracts that compel waiver of the contracting parties’ right to initiate or join class actions. Likewise, when people think about class actions, their minds limit these types of cases to litigation in courts. Thus, the common misconception is that arbitration and class actions are inherently at odds. As a result, companies fail to contemplate arbitration as an option once a class action has been filed in court.

Arbitration is actually a much broader form of dispute resolution. It has long been permissible for parties in California to resolve their disputes in class arbitration. At least since 1982, the California Supreme Court has allowed such proceedings. This article examines whether the parties in a class action before a court can agree to use it to resolve future disputes arising from the class settlement. It concentrates on California because, though federal courts seem to commonly enforce arbitration clauses in class settlement agreements, there is a dearth of California case law on the enforceability of such clauses.

Anecdotal evidence suggests that California trial courts may have a perception that arbitration clauses in class settlement agreements conflict with their duty to retain jurisdiction to enforce class settlements. The state trial courts may also believe that special considerations for absent class members—those who are not the named plaintiffs—are irreconcilable with arbitration proceedings. Because of these misunderstandings, California courts have been reluctant to enforce arbitration clauses in class settlement agreements even though California has a strong public policy in favor of arbitration, and any doubt should be resolved in favor of effectuating the parties’ intention to arbitrate. Case law relating to the Federal Arbitration Act and the California Arbitration Act intimate that this aversion to enforce arbitration of disputes arising from class settlements may be unlawful.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

More From ALM

Premium Subscription

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now

Team Accounts

Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now

Bundle Subscriptions

Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now

Legalweek(year) 2021

February 02, 2021 - July 14, 2021

Legalweek(year) will bring together thousands of legal professionals for a series of 5 innovative virtual legal events.


General Counsel Conference Midwest: SuperConference 2021

July 26, 2021 - July 27, 2021
Chicago, IL

GCC Midwest addresses today's legal issues facing companies by providing general counsel with insight and best practices.


General Counsel Summit (GCS) 2021

September 07, 2021 - September 08, 2021

General Counsel Summit is the premier event for in-house counsel, hosting esteemed legal minds from all sectors of the economy.



Boston, Massachusetts, United States

Premier research university seeks 7+ year attorney with strong background drafting and negotiating complex contracts to partner with busines...

Apply Now ›


Boston, Massachusetts, United States

NASDAQ life science technology leader seeks 8+ year attorney for broad-based senior corporate and compliance role. Responsibilities include ...

Apply Now ›


Boston, Massachusetts, United States

Prominent Boston firm seeks partners with moderate billings for a variety of practice groups. Outstanding opportunity to join a collegial fi...

Apply Now ›



Please to announce...

View Announcement ›




View Announcement ›


DR Web

Notice of Re-Appointment Judge of Juvenile Court

View Announcement ›

Subscribe to Corporate Counsel

Don't miss the crucial news and insights you need to make informed legal decisions. Join Corporate Counsel now!

Unlimited access to Corporate Counsel
Access to additional free ALM publications
1 free article* across the ALM subscription network every 30 days
Exclusive discounts on ALM events and publications
Join Corporate Counsel

Already have an account? Sign In