Feeney v. Dell Inc.
993 N.E.2d 329
Mass.2013Background
- After Concepcion, Massachusetts in Feeney II invalidated a class-action waiver in an arbitration agreement where plaintiffs showed the waiver made individual arbitration effectively impossible.
- Eight days after Feeney II, the U.S. Supreme Court decided American Express Co. v. Italian Colors Restaurant, addressing a similar challenge to a class-action waiver.
- In Amex the Supreme Court held class waivers are enforceable under the FAA even if combined arbitration terms make vindication of federal statutory rights impracticable.
- Massachusetts judges stayed Feeney II’s rescript and invited supplemental briefing on whether Amex abrogated Feeney II.
- The Massachusetts court concluded Amex repudiates Feeney II’s reading of Concepcion and that Feeney II’s ground for invalidating the waiver (that it effectively denied a remedy) is no longer tenable under controlling Supreme Court precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a class-action waiver can be invalidated if it effectively prevents an individual from pursuing a claim in arbitration | Feeney: waiver can be invalidated when agreement terms make individual arbitration practically impossible | Defendants/Amex: FAA requires enforcement of arbitration agreements and class waivers even if individual arbitration is cost-prohibitive | Held: Following Amex, waiver may not be invalidated on that ground; Feeney II reversed |
| Whether Concepcion allows a court-created exception when arbitration terms make individual relief unrealistic | Feeney: Concepcion permits invalidation when waiver denies any practical remedy | Defendants/Amex: Concepcion enforces arbitration terms; it does not create such an exception | Held: Amex rejects Feeney’s reading of Concepcion; no such exception under Concepcion as interpreted by Amex |
| Whether the FAA analysis differs for federal statutory claims versus state-law claims | Plaintiffs contended distinction could matter for vindication of federal rights | Defendants argued Concepcion/Amex principles apply regardless of federal or state origin | Held: Amex makes clear the FAA analysis applies without regard to whether claim is federal or state |
| Whether other potential grounds to deny confirmation (raised by plaintiffs) were decided | Plaintiffs raised alternative grounds in response to rehearing petition | Defendants moved to confirm arbitration dismissal | Held: Court limited its decision to the Amex/Feeney issue and did not decide other grounds; case remanded for further proceedings |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (U.S. 2011) (FAA preempts state rule invalidating class-waiver provisions in arbitration agreements)
- American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (U.S. 2013) (class-action waivers enforceable even if combined terms make individual statutory vindication impracticable)
- Feeney v. Dell Inc., 465 Mass. 470 (Mass. 2013) (Mass. court invalidated class waiver where arbitration terms effectively denied a plaintiff any practical means to pursue a claim)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitral forum must permit effective vindication of statutory rights)
- Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (U.S. 2000) (large arbitration costs could preclude effective vindication of federal statutory rights)
- In re American Express Merchants’ Litig., 634 F.3d 187 (2d Cir. 2011) (Second Circuit decision addressing cost-prohibitive arbitration economics underlying Amex)