Missouri Supreme Court declares certain arbitration clauses, and class action waivers, unenforceable

The Missouri Supreme Court on Tuesday dealt a major blow to companies that include arbitration clauses, with class action waiver provisions, in their contracts with consumers.

By way of background, companies sometimes include in their contracts with consumers provisions that (a) require the consumer to arbitrate, rather than litigate in court, every dispute that may arise, and (b) require every consumer to waive his or her right to bring a class action against the company.  in 2011, the U.S. Supreme Court declared that in some circumstances these provisions are enforceable.  See AT&T Mobility, LLC v. Concepcion, 121 S.Ct. 1740 (2011).  Some scholars contended that this holding would effectively end consumer class actions, as more companies began including the provisions in their contracts.

After Concepcion, numerous courts issued rulings declaring Concepcion inapplicable to other arbitration and class action waiver clauses.  See here.  

The Missouri Supreme Court's decisions on Tuesday in Robinson v. Title Lenders, Inc., SC91728 (2012) and Brewer v. Missouri Title Loans, SC90647 (2012), followed this pattern.  In Brewer, the Court found that the Title Lenders' arbitration and class action waiver provision was "extremely one-sided" and unenforceable.  Unlike the provision in Concepcion (which allowed the consumer to recover attorney fees and a minimum of $7,500 in damages in arbitration), the Title Lenders' provision contained no such benefits to the consumer.  The Court noted both a disparity (between the consumer and company) in remedial options and bargaining power.