Opinion ID: 1835835
Heading Depth: 1
Heading Rank: 2

Heading: Sub-Classwide Arbitration

Text: The plaintiffs contend that they are entitled to class-wide arbitration because, they say, the actual damages recoverable by each individual are too small to justify the cost of commencing an arbitration proceeding, the plaintiffs would have no realistic, viable means of redress, and the defendants will be judicially permitted to profit from impunity from their wrongdoing. (Appellees' Consolidated Brief, pp. 65-66.) In addition, the plaintiffs argue that if class-wide arbitration is ordered, then only the class representatives, not each individual member, should be required to pay the minimum $500.00 filing fee to commence arbitration, [3] the arbitrator's fee, and associated costs. Among other cases, the plaintiffs rely on Rio Energy Int'l, Inc. v. Hilton Oil Transport, 776 F.Supp. 120 (S.D.N.Y.1991) (consolidated arbitration proceeding was proper where common questions of law and fact existed, as well as a danger of conflicting findings). The defendants contend, however, that most federal courts have rejected the use of class-wide arbitration, regardless of whether the proceedings involve common questions of law or fact, unless the language in the arbitration agreement specifically provides for class-wide arbitration. The defendants rely on, among other cases, Protective Life Ins. Corp. v. Lincoln Nat'l Life Ins. Corp., 873 F.2d 281 (11th Cir.1989), in which the United States Court of Appeals for the Eleventh Circuit held that the district court could not consolidate arbitration proceedings because in the arbitration agreements the parties had not provided for consolidation. This Court has not directly addressed the issue of class-wide arbitration, and the FAA is silent as to that issue. Caselaw from various federal circuit courts is persuasive authority in our state courts. See Wyser v. Ray Sumlin Constr. Co., 680 So.2d 235 (Ala. 1996). Although there are benefits to class-wide arbitration, such as efficient resolution of common claims and judicial economy, no persuasive authority permitting class-wide arbitration exists at this time. [4] See Champ v. Siegel Trading Co., 55 F.3d 269, 275 (7th Cir.1995) (For a federal court to read such a term [class-wide arbitration] into the parties' agreement would `disrupt[] the negotiated risk/benefit allocation and direct[] [the parties] to proceed with a different sort of arbitration,' quoting New England Energy, Inc. v. Keystone Shipping Co., 855 F.2d 1, 10 (1st Cir.1988) (Selya, J., dissenting)). Although the plaintiffs' contentions are practically appealing, after reviewing the authorities we conclude that to require class-wide arbitration would alter the agreements of the parties, whose arbitration agreements do not provide for class-wide arbitration. While we can understand and applaud the efforts of the trial court to seek a method that would allow those parties claiming small amounts of individual damages to obtain a remedy, we are persuaded by the federal authority on this issue and hold that class-wide arbitration should not be permitted in this case. We reverse the trial court's order that would have allowed arbitration to proceed on a class-wide basis. 1960214AFFIRMED. 1960215REVERSED AND REMANDED. 1960216AFFIRMED. 1960401AFFIRMED. 1960601AFFIRMED. 1960602AFFIRMED. 1960826AFFIRMED. SHORES, HOUSTON, and KENNEDY, JJ., concur. ALMON, J., concurs in Parts I(A), I(C), and II, and expresses no opinion as to Parts I(B) and III. LYONS, J., concurs as to Parts I(B) and III; concurs in the result as to Part II; and dissents as to Parts I(A) and I(C). HOOPER, C.J., and MADDOX and SEE, JJ., concur in the result as to Parts I(B), II, and III, and dissent as to Parts I(A) and I(C).