Class actions permit a large number of people to join together in one lawsuit in order to recover small amounts of damages suffered by each of them. If not for class actions, those people likely would not file separate lawsuits, as the cost would be prohibitive. As a result, some businesses now include provisions in their contracts in an effort to prevent class actions, and they have had some success.
New Jersey courts previously held that a person can waive the ability to pursue a class action by entering into an agreement to arbitrate disputes. That is, if a person’s contract with a business contains a mandatory arbitration provision, that person likely cannot start a class action lawsuit to recover damages against the business. However, while the court agreed with businesses when there was an arbitration agreement, the court recently disagreed where the contract contained only a class action waiver.
In its May 18th decision in Pace v. Hamilton Cove, the Appellate Division held that courts will not enforce a class action waiver, unless the contract also contains a mandatory arbitration provision. The court recognized the strong public policy and benefits favoring class actions, including economic efficiency, judicial economy, and avoiding inconsistent results. Therefore, even if a contract states that you waived your ability to participate in a class action, that waiver may not be enforceable. If you suffered damages, you should contact Audra DePaolo to see whether class action relief remains available.