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Sunday, February 23, 2014

Dropbox Adds Arbitration Clause

California Mediation and Arbitration reports the clause has what are now pretty typical provisions for consumer agreements:

Arbitration will be administered by the AAA under the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes. 
  • Arbitration will be held in the US in the county where you live or work, San Francisco (where Dropbox is headquartered) or any other location the parties agree to.
  • Dropbox will pay arbitration fees for claims less than $75,000.  If you receive a more favorable award than what Dropbox offers to pay, you get a bonus of $1,000, in addition to the award.  Dropbox won’t seek fees and costs in arbitration – unless the arbitrator determines your claim is frivolous.
  • Exceptions to the arbitration requirement include small claims, or injunctive relief for certain claims.
  • There is a class action waiver:  “You may only resolve disputes with us on an individual basis, and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action.”

  • Pace University Law Professor Jill Gross writes at the consistently-strong ADR Prof Blog "I wonder whether Dropbox adopted the few consumer-friendly features of the clause simply to please its users, to forestall any finding of unconscionability based on the class action waiver, or to try to retain users who might object."

    Monday, February 17, 2014

    Arbitration as an Article of Constitutional Faith

    Michigan State Law Professor Jim Chen's book review of Georgia Law Professor Peter(Bo) Rutledge’s book, Arbitration and the Constitution (Cambridge, 2012).


    Scarcely any legal question arises in the United States that is not resolved, sooner or later, through arbitration. If Alexis de Tocqueville could survey contemporary American legal culture, he would rub his eyes with amazement at the privatization of adjudication across a wide swath of issues previously committed to judicial resolution. From trade disputes posing serious questions of economic diplomacy to consumer contracts adhering to cell phones and credit cards, mandatory arbitration has displaced conventional adjudication. In the country that de Tocqueville characterized as driven by its dedication to constitutional lawmaking through litigation, arbitration has become a dominant form of dispute resolution with little if any direct doctrinal influence by federal constitutional law. This is the overriding theme of Peter B. Rutledge’s book, Arbitration and the Constitution (Cambridge, 2012).

    Saturday, February 15, 2014

    Arbitration Articles in DePaul Symposium Issue


    Symposium. Commercial Arbitration: Advancing and Refining the ADR Process. 11 DePaul Bus. & Com. L.J. 441-543 (2013). [H][L][LA][W]

    Sklar, Stanley. Arbitration advocacy: its role in business and legal education, and new options for dispute resolution. 11 DePaul Bus. & Com. L.J. 441-453 (2013). [H][L][LA][W]

    Lurie, Paul M. Guided choice arbitration. 11 DePaul Bus. & Com. L.J. 455-469 (2013). [H][L][LA][W]

    Martin, Christopher. Costs of arbitration and the options for controlling those costs. 11 DePaul Bus. & Com. L.J. 471-481 (2013). [H][L][LA][W]

    Varallo, Gregory and John Mark Zeberkiewicz. Delaware private arbitration: an explanation of Delaware's Chancery arbitration program and its benefits. 11 DePaul Bus. & Com. L.J. 483-517 (2013). [H][L][LA][W]

    Delaware Private Arbitration: Its Practicality, Constitutionality, and Potential Influence on Other States. John Mark Zeberkiewicz, moderator; Christopher Martin, Hon. Clifford Meacham, Gregory Varallo, panelists. 11 DePaul Bus. & Com. L.J. 519-543 (2013). [H][L][LA][W]

    11th Circuit Holds New No-Arbitration Agreement Supersedes Earlier Arbitration Agreement


    Dasher v. RBC Bank (USA), __ F.3d __, 2014 WL 504704 (11th Cir. Feb. 10, 2014), is a class action part of the larger Checking Account Overdraft Multidistrict Litigation.  As the 11th Circuit explains, the original account agreement "contained an arbitration clause with terms broad enough to cover this overdraft fee dispute.” When the bank was acquired by another bank, it sent out to new account agreements with no arbitration clause.  In the 11th Circuit, the bank cited a labor arbitration case stating there is “a presumption of arbitrability in the sense that an order to arbitrate . . . should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650, 106 S. Ct. 1415, 1419 (1986) (internal quotation marks omitted).  The 11th Circuit rejected this argument by citing a labor arbitration case holding that this presumption of arbitrability applies when an “arbitration agreement is ambiguous about whether it covers the dispute at hand.” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, __, 130 S. Ct. 2847, 2858 (2010). The FAA’s presumption is inapplicable in this situation, as courts are to apply “the presumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand.” Granite Rock, 561 U.S. at __, 130 S. Ct. at 2858 (emphasis added).

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