Arbitration Agreements With Class Action Waivers

The Fifth Circuit recently upheld the invalidity of an arbitration clause on the grounds that the clause was illusory, thus allowing a class action lawsuit in court. The company wishing to impose arbitration had reserved the right to modify the contract, including the arbitration clause, at any time. The Court of First Instance considered that this provision implied a retroactive amendment of the contract, since there was no explicit restriction on the company`s right to modify. Therefore, the Fifth Circle concluded that the arbitration clause was applicable only by one party and was therefore illusory. The court ruled that Concepcion did not regulate illusory contracts. Carey v. 24 Hour Fitness, USA, Inc., 669 F.3d 202 (5th Cir. . . .