The U.S. Supreme Court has held unanimously in Smith v. Spizzirri that when a district court finds that a lawsuit involves an arbitrable dispute and a party has requested a stay of the court proceedings pending arbitration, Section 3 of the Federal Arbitration Act (FAA) compels the court to issue a stay of the suit; the court lacks jurisdiction to dismiss the suit on the basis that all of the claims are subject to arbitration. … Continue Reading

In connection with the petition to ban pre-dispute consumer arbitration agreements pending before the Consumer Financial Protection Bureau (CFPB) and a recent Senate Judiciary Committee hearing on “forced arbitration,” Congressman Andy Barr (R-Ky.) and Senator Thom Tillis (R-N.C.) and the American Financial Services Association (AFSA) have voiced their strong opposition to further regulation of consumer arbitration. … Continue Reading

Recently, 93 members of Congress (all Democrats) signed a letter in support of the pending Petition for Rulemaking filed by consumer advocacy groups in September that would prohibit pre-dispute consumer arbitration clauses and permit only post-dispute clauses.  The letter argues that the proposed rulemaking is “much-needed” to protect consumers from “forced arbitration clauses in the fine print, take-it-or-leave-it terms accompanying many financial products and services.”… Continue Reading

Recently, Professor Sovern replied to our blog post that commented on the letter that he and 160 other law academicians submitted to the CFPB in support of the pending Petition for Rulemaking that would prohibit pre-dispute consumer arbitration clauses and permit only post-dispute clauses. 

In response, we would like to acknowledge that two of Professor Sovern’s statements are accurate. … Continue Reading

As we reported, the CFPB just released its Fall 2023 rulemaking agenda as part of the Fall 2023 Unified Agenda of Federal Regulatory and Deregulatory Actions.  

I have been contacted by many clients who have asked me whether we should read any significance into the fact that the anti-arbitration Petition for Rulemaking submitted to the CFPB by a consortium of consumer advocacy groups on September 13 is not mentioned in the new rulemaking agenda. … Continue Reading

We previously reported and released a podcast episode on comments that we and Professor David Sherwyn of Cornell University submitted in opposition to the Petition for Rulemaking filed by a number of consumer advocacy groups urging the CFPB to prohibit pre-dispute consumer arbitration clauses and allow only post-dispute clauses.  Among other things, we argued that the  rule proposed by the Petitioners would be prohibited by the Congressional Review Act (CRA) because it is substantially the same as the Final Arbitration Rule promulgated by the CFPB in July 2017 that Congress overrode in November 2017. … Continue Reading

We previously blogged about an Illinois federal district court order requiring Samsung to pay about $4 million in arbitration fees in connection with 35,000 individual arbitration demands filed as part of a “mass arbitration.”  By way of update, Samsung is pursuing an appeal to the Seventh Circuit, which recently granted Samsung’s motion for a stay of the district court’s order pending appeal. … Continue Reading

Our special guest is David Sherwyn, Professor of Law at Cornell University’s School of Hotel Administration.  In September 2023, a group of consumer advocate organizations filed a Petition for Rulemaking with the CFPB that would prohibit the use of pre-dispute arbitration clauses in consumer contracts in favor of arbitration clauses that would permit consumers to choose between arbitration and litigation only after a dispute has arisen. … Continue Reading

Ballard Spahr Senior Counsel Alan S. Kaplinsky and Mark J. Levin, and David Sherwyn, Professor of Law at Cornell University’s School of Hotel Administration, today submitted lengthy comments to the Consumer Financial Protection Bureau opposing the recent petition filed by consumer advocates urging the CFPB to undertake rulemaking that would prohibit the use of pre-dispute arbitration clauses in consumer contracts in favor of arbitration clauses that would permit consumers to choose between arbitration and litigation only after a dispute has arisen.… Continue Reading

Currently, California trial court proceedings are automatically stayed when a party appeals an order denying a motion to compel arbitration.  However, on October 10, 2023, Governor Newsom signed California Senate Bill No. 365 (SB365) into law.  

Effective January 1, 2024, SB365 will amend California Code of Civil Procedure Section 1294 to state that “the perfecting of such an appeal [of an order denying a motion to compel arbitration] shall not automatically stay any proceedings in the trial court during the pendency of the appeal.”… Continue Reading