Introduction
In part I of a two-part post (here), we summarized the Supreme Judicial Court of Massachusetts’ decision in Feeney v. Dell Inc., ___ Mass. ___, slip op. (July 2, 2009). The Court there refused to enforce an arbitration agreement in a consumer contract because it contained a class action waiver that the Court found violative of Massachusetts public policy favoring class actions under G.L., c. 93A, and which the Court found not to be severable from the remainder of the arbitration agreement. The Court also refused to enforce on public policy grounds a choice-of-law clause providing that Texas law — which apparently permits class action waivers — would govern the parties’ agreement. In this part II we discuss whether the decision comports with the Federal Arbitration Act.
The critical issue in Feeney was whether a state public policy against class action waivers was preempted by the Federal Arbitration Act, the preeminent purpose of which is to enforce according to their terms arbitration agreements falling within its scope. With all due respect to the SJC, we think Feeney was a tough case and that the preemption issue was a close call. The Court obviously worked hard to justify the outcome and drilled down on the preemption issue, but at the end of the day its arguments simply proved too much. Continue Reading »
