Massachusetts Supreme Judicial Court strikes down no-class-action arbitration clause: Feeney v. Dell, Inc.

In Feeney v. Dell, Inc., ___ N.E.2d ___ (Jul. 2, 2009), the Supreme Judicial Court of Massachusetts struck down a no-class-action arbitration clause as contrary to public policy:

We decide in this case whether a statutory right to participate in class action lawsuits can permissibly be foreclosed by a provision in a consumer contract compelling individual arbitration. The plaintiffs, John A. Feeney and Dedham Health and Athletic Complex (Dedham Health), appeal from an order of a judge in the Superior Court compelling arbitration of their claims--brought as a putative class action--alleging that Dell improperly collected Massachusetts sales tax on the purchase of optional service contracts sold in connection with the purchase of Dell computers when (according to the plaintiffs) no such tax was due, and that the collection of such tax violated the Massachusetts consumer protection act, G.L. c. 93A. We conclude that the provision compelling individual arbitration in the plaintiffs' consumer contracts is not enforceable because it is contrary to the fundamental public policy of the Commonwealth favoring consumer class actions under G.L. c. 93A.

....

We decline to enforce a prohibition on class actions in a consumer contract where to do so would in effect sanction a waiver of the right to proceed in a class action under G.L. c. 93A. Allowing companies that do business in Massachusetts, with its strong commitment to consumer protection legislation, to insulate themselves from small value consumer claims creates the potential for countless customers to be without an effective method to vindicate their statutory rights, a result clearly at odds with our public policy.

[Hat tip: The Oregon Class Action Blog (via The Complex Litigator).]