Consumers won a major victory when a federal appeals court held that arbitration clauses may be struck down — under state law — as unconscionable if they prohibit the use of the class action vehicle in cases where a large number of consumers have claims that would individually yield only small sums. The 3rd U.S. Circuit Court of Appeals revived a suit against American Express after finding that a lower court improperly dismissed the suit on the grounds that the consumers were barred from suing in court or as a class and instead were required to bring individual claims before arbitrators. This is a major victory for consumers. The decision clarified an important area of 3rd Circuit law by underscoring the power of state courts to reject arbitration and anti-class action provisions they deem unconscionable. Hopefully, this is the beginning of more good judicial decisions dealing with arbitration.
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