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Third Circuit rejects preemption, choice of law in arbitration case.

Publication: Trial
Publication Date: 01-MAY-09
Format: Online
Delivery: Immediate Online Access

Article Excerpt
A class arbitration ban embedded in a credit card agreement is unconscionable, the Third Circuit has held. The court rejected the credit card company's argument that the Federal Arbitration Act (FAA) preempted consideration of state consumer protection law and held that the agreement's choice-of-law provision applying Utah law is invalid. (Homa v. Am. Express Co., 2009 WL 440912 (3d Cir. Feb. 24, 2009).)

More companies are using class action bans in arbitration clauses, said Gary Graifman of Montvale, New Jersey, who represents plaintiff G.R. Homa. "They are designed to prevent people from asserting their rights by making it impossible to find legal counsel" willing to take a $200 or $300 case, he said, calling the approach "remedy stripping."

Homa brought a class action against American Express Co. for misrepresenting...

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