Originally from Dispute Resolution Journal

CONSUMER

Class Action Waiver Enforceable

The 8th Circuit held that an arbitration agreement containing a class arbitration waiver and a cost-sharing provision was saved from being held unenforceable by an exception allowing judicial resolution of small claims in small claims court, and the absence of any limitations on the credit card issuer’s liability or the credit cardholder’s remedies.

Virginia Cicle, a Chase credit cardholder, complained to Chase that it had raised the interest rate on unpaid balances from 7.9% to over 24% without notice to her and that it had cost her about $80 in finance fees. Chase later sent her an amended arbitration agreement. Like the prior agreement, it contained a class arbitration waiver. It provided that Chase would reimburse up to $500 of the initial filing fee and would pay the first two days of hearing costs. Other arbitration costs would be allocated by the arbitrator. The agreement also contained an exception to arbitration for claims within the jurisdiction of small claims court. Finally, it contained a severability clause.

The new agreement gave Cicle 30 days to write a letter rejecting it, which would result in Chase closing her account. But Cicle continued to use the card.

A few years later, Cicle filed a class action lawsuit in state court in Missouri, claiming that Chase imposed illegal penalties and engaged in illegal merchandising practices under the state merchandising law. After removing the case to federal court, Chase filed a motion to compel arbitration and stay the lawsuit.