The U.S. Supreme Court today reversed the Ninth Circuit Court of Appeals and held that the Federal Arbitration Act (FAA) preempts a state law prohibiting class action waivers in consumer arbitration agreements. Many consumer loan contracts, other than mortgages, include an arbitration agreement with a class action waiver.

Alan S. Kaplinsky, Chair of Ballard Spahr’s nationally recognized Consumer Financial Services practice and a pioneer in the use of consumer arbitration agreements with class action waivers, commented: “I fully expected this result but I have to say I am thrilled. It is important to note that this opinion doesn’t mean that federal law will save an arbitration agreement that is unfair to consumers.”

Mr. Kaplinsky and his partners submitted an amicus curiae brief in this case in favor of AT&T Mobility on behalf of the American Bankers Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable, and California Bankers Association.

Mr. Kaplinsky and his colleagues are available to discuss the decision and how existing arbitration programs should be modified to address it. Mr. Kaplinsky can be reached at 215.864.8544 or by e-mail at kaplinsky@ballardspahr.com.