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Posted in Consumer & Class Action Blog

Fiser v. Dell; Another Arbitration Clause is Struck Down for Prohibiting Class Actions

July 1st, 2008 by John Campbell

The newest decision to strike down an arbitration clause that prohibits class actions was issued by the New Mexico Supreme Court on June 27, 2008, in the case of Fiser v. Dell Inc. Plaintiff Robert Fiser filed a class action against Dell arguing that Dell misrepresented the memory capacity of its computers.  Fiser alleged that the machines were worth $10 to $20 less than people actually paid.  Dell sought to compel individual arbitration, relying upon an arbitration clause it included its contracts.

The New Mexico Supreme Court, in a unanimous and straightforward opinion, noted that New Mexico public policy requires that consumers have a remedy for a variety of wrongs, including ones that produce small damages.  The Court noted that class actions are often the only way to bring small damage claims, because, if class actions are not allowed, it would take a “lunatic” to sue for $10 to $20.  The Court held that Dell’s class action wavier would essentially immunize Dell from valid claims. (To read the decision, click here.)

The Court held the entire arbitration clause unconscionable, reasoning that the class action waiver was an essential part of the clause, thereby preventing severability, and permitted the class action claims to proceed in court.  This decision is the latest in a string of cases around the country holding that companies cannot attempt to write-away liability by crafting an arbitration clause that would have the real-world impact of eliminating all claims.

Congratulations to the attorneys who worked on the case, including Paul Bland and Amy Radon of Public Justice.  Public Justice filed an amicus curiae brief in the case that eloquently laid out the plethora of reasons that class action waivers are disfavored and should not be enforced. (To read the brief click here.) 

As the Missouri State Coordinator for Public Justice I find it permissible to brag on the organization.  Public Justice, via Paul Bland and others, has been involved in a number of critical arbitration decisions, including decisions by the California, New Jersey and Washington Supreme Courts.  Public Justice is funded by donors, and with that money, it wages battle against entities that would take away fundamental constitutional rights. (To read more about Public Justice click here.)  If you would like to support Public Justice, whether you are a lawyer or not, please email me by clicking here.

At Simon Passanante, it has been our privilege to join in the effort to fight unconscionable arbitration clauses and other doctrines and ideals that would strip citizens of their rights under the law.  We currently have a case regarding arbitration clauses before the Missouri Court of Appeals, Eastern District, in which the trial court held that a prohibition eliminating the class mechanism was unconscionable.  We also recently learned that the Missouri Supreme Court will hear one our cases regarding whether or not companies should be able to keep money illegally obtained from customers if the customers failed to notice the fraudulent charge on their bills until after they paid.  The case may also determine whether a doctrine called the “voluntary payment doctrine” can apply to claims brought under the Missouri Merchandising Practices Act. 

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