Arbitration and Class Action Waiver Agreements have grown in popularity as consumer lawyers continue their assault of the perceived deep pockets of auto dealers. These agreements help to reduce the costs associated with resolving customer disputes by streamlining the legal process. Resolving a case through arbitration can generally reduce legal fees as the cases are decided faster and more efficiently through the use of simplified rules of evidence and procedure. Class Action Waivers help to eliminate the threat of a case exploding into a class action nightmare.
The key to the successful use of this alternative to litigation is drafting a properly constructed arbitration agreement. An arbitration agreement should include:
- Clear and conspicuous terms which appear in bold type, capital letters and surrounded by a box. The box should also include a line for the customer to voluntarily agree to the terms of the arbitration agreement;
- Terms which are fair and provide equal rights and obligations for the dealer and the consumer;
- Provisions which do not impose unreasonable fees on the customer for utilizing the process. Agreements where the dealer picks up most if not all of the fees are much more likely to be enforceable;
- Specific terms as to how and when arbitration can be commenced; and
- A Class Action Waiver.
Class Action Waivers were deemed enforceable by the United States Supreme Court in 2011. Class Action Waivers are provisions where parties agree in advance that they will not participate in a class action should a dispute arise. Use of this waiver can ensure that you are defending yourself only against the the complaint of one customer as opposed to a case where you are potentially defending yourself against hundreds or thousands of customers. This can be especially helpful if a customer seeks to sue the dealership over a fee that was charged to or a service performed with multiple customers.
Most form providers have sample arbitration agreements for you to use. Before using such an agreement make sure you have counsel review to ensure its compliance with current laws and regulations.
If you are already using an arbitration agreement which designates the American Arbitration Association as the resolution service be advised that new AAA rules now require you to register the arbitration agreement. As of September 1, 2014, AAA will not arbitrate claims under an arbitration agreement until that agreement is reviewed and registered with AAA. A fee of $650 will be charged for the review and registration of the agreement in 2014.
For more information on arbitration agreements and class action waivers please contact the LaBonte Law Group at 516-280-8580.
