Supreme Court's April 27, 2010 Decision Represents the
Latest Word, But Congress May Have the Final Say
Why have so many companies opted to include arbitration clauses
in their standard form agreements? One reason is an "open
secret." Many of them had the understanding and expectation
— which was reasonable at the time — that an
arbitration clause would insulate them from class actions. That
objective was especially important for franchisors and
manufacturers seeking to avoid class action suits by independent
franchisees, dealers, and distributors.
The Supreme Court's decision in Green Tree Financial
Corp. v. Bazzle, 539 U.S. 444 (2003) (Bazzle),
however, raised a new prospect. This prospect was, for many
companies, the worst of both worlds. Following Bazzle,
class actions could be conducted under arbitration rules that were
new and uncertain —with little or no meaningful judicial
review. To make matters worse, the Supreme Court's 2003
decision in Bazzle raised as
