Arbitration Poison Pill Spells Doom for AT&T’s Arbitration Hopes
- California Supreme Court recently held that an arbitration agreement that waives the right to seek public injunctive relief regardless of forum is (1) contrary to public policy and (2) not preempted by the Federal Arbitration Act.
- District Court for the Northern District of California granted a motion to reconsider its earlier order compelling arbitration of putative class action because the arbitration agreement at issue waived consumers’ right to seek public injunctive relief and was, by its terms, not severable from the remainder of the arbitration agreement.
- Parties may agree to arbitrate claims for public injunctive relief, but they cannot agree to waive consumers’ right to assert those claims at all.
- Drafters of arbitration agreements should reconsider poison-pill provisions that invalidate the entirety of the arbitration agreement if only the portion addressing injunctive relief is unenforceable.