FAA Does Not Permit Claswide Arbitration Unless Parties Agree

Well, the U.S. Supreme Court may have made employment arbitration agreements really popular, until Congress decides to ban them.

The court held in a non-employment case, STOLT-NIELSEN S. A. ET AL. v. ANIMALFEEDS INTERNATIONAL CORP., that parties cannot force the arbitration of class actions unless the arbitration agreement permits it.

What if the agreement is silent about class arbitration? The court said silence does not mean consent.

In California, though, it is illegal to prohibit class action arbitration. So, what if the agreement is silent? Does that now mean you're prohibiting class arbitration because of the silence? If you argue that, under the Federal Arbitration Act, a silent agreement essentially prohibits class arbitration, where does that leave the arbitration agreement under California law?

Will the Federal Arbitration Act trump the California Supreme Court's decision in Gentry v. Superior Court (opinion here; post here), in which the California high court held that classwide arbitration waivers are illegal / unconscionable?

I know, so many questions. My opinion is: I think so. But I have never really understood how California arbitration agreement law has escaped the FAA anyway.

The U.S. Supreme Court's decision is here. Stay tuned!

DGV