Class Action Waiver

A class action waiver is a promise, usually buried in terms of service or an employment agreement, that you will not sue or arbitrate as part of a class, collective, or representative action. It is typically paired with an arbitration clause, so any dispute must go to individual arbitration. The effect is that each person must pursue their own claim, which for small-dollar harms often means no one pursues it at all.

The Supreme Court has repeatedly upheld these waivers when they appear in arbitration agreements. In AT&T Mobility v. Concepcion (2011), it ruled that the Federal Arbitration Act preempts state rules treating consumer class waivers as unconscionable. In Epic Systems Corp. v. Lewis, decided May 21, 2018, the Court held that arbitration agreements requiring individualized proceedings must be enforced in employment cases too, rejecting the argument that federal labor law gave workers a right to proceed collectively. In American Express v. Italian Colors (2013), it enforced a waiver even though individual claims cost more to prove than they were worth.

Waivers are not bulletproof. They may be unenforceable if the contract was never validly formed, if the waiver sits outside an arbitration clause in a state that restricts them, or if a statute provides otherwise. Some state laws, such as California's Private Attorneys General Act for employees, allow certain representative claims to continue. Waivers also do not stop government enforcement or public injunctive relief in some states.

When a waiver blocks a class action, plaintiffs' firms often file many individual arbitrations at once. See class action versus individual lawsuit, whether you can be bound by a settlement, and the arbitration clause entry.