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Supreme Court Hands Arbitrators the Keys to the Class Action

By Merrick T. Rossein
December 01, 2003

A plurality of the U.S. Supreme Court ruled that an arbitrator must decide whether class action arbitration in a consumer action is authorized. Green Tree Financial Corp. v. Bazzle, 123 S.Ct. 2402, (June 23, 2003). Four Justices concluded that whether or not the contracts forbid class arbitration is a disputed issue of contract interpretation and that such a dispute must be decided by an arbitrator. Justice Stevens concurred in the judgment. This decision is likely to directly impact the arbitration of statutory discrimination claims as well as other employment arbitrations. The question is in what ways and to what effect.

The Decision

At issue in Bazzle were contracts between a commercial lender and its customers, each of which contained a clause providing for arbitration of all contract-related disputes. The arbitration clauses were silent as to whether arbitration might take the form of class arbitration.

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