How can corporations avoid consumer class actions?
Corporations often use arbitration clauses in consumer sales agreements in order to limit the types of dispute resolution available should difficulties arise. These clauses require the parties to the agreement to resolve any disputes through arbitration. Arbitration involves the competitive presentation of evidence to a neutral decision-maker. The arbitrator makes a binding win/lose decision that usually cannot be appealed. The Florida Arbitration Code governs the arbitration of commercial disputes in Florida, including disputes among partners or joint ventures. The Federal Arbitration Act may also cover commercial disputes, if the commercial transactions involve interstate or foreign commerce. While arbitration has the advantages of expedience and relatively low cost, an arbitration clause precludes parties from taking disputes covered by the arbitration clause to court. Because a class action lawsuit involves direct judicial oversight, arbitration clauses prevent the development of a
