Justices Weigh Class-Action Limits in Arbitration Contract

The situation was bad enough in court, he said, but at least appeals are available. Arbitration, meant to be speedy, informal and final, was a different matter, he said. “Class litigation in arbitration is a hundred times worse,” he said, “because of the very limited standard of review at the other end.”

Chief Justice John G. Roberts Jr. seemed sympathetic to that argument, saying that class arbitration is “a poison pill” that is “fundamentally inconsistent with arbitration.”

Justice Stephen G. Breyer said that overstated things, as the rules of the American Arbitration Association contemplated class actions in at least some situations. “The arbitration association has rules governing class arbitration, so they must not see class arbitration as a poison pill,” he said. “They must think that class arbitration has a place at least in some cases.”

Justice Ruth Bader Ginsburg suggested that the court’s ruling in the case would not be particularly consequential, as companies could simply add clauses to their contracts that barred class actions in so many words.

“All the parties who want to arbitrate bilaterally will simply put in their contract that a class action is waived,” she said. The case before the court, she said, seemed to involve an oversight by “lawyers that are less than the best.”

Justice Neil M. Gorsuch said elaborate litigation over what may be arbitrated undermined the point of arbitration. “It seems like a lot of collateral expense and difficulty that seems kind of a little inconsistent with the idea of getting to arbitration quickly,” he said.

Michele M. Vercoski, a lawyer for Frank Varela, the employee seeking to represent a class of workers in the case, said courts can resolve questions about arbitration procedures quickly and efficiently. “I don’t think it’s a long, extensive proceeding,” she said.

Justice Gorsuch responded with a quizzical look, suggesting that a case that had made it to the Supreme Court was not the ideal setting in which to make that assertion. “Well,” he said to laughter, “here we are.”

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