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Consumer Class Actions: 16.13.6 Court Supervision of Claims Process

Typically, courts retain continuing jurisdiction over the administration, consummation, and enforcement of the settlement agreement.75 However, the court’s order approving settlement must include a provision for the court to retain continuing jurisdiction.76 Under the guidelines of the Federal Judicial Center’s Manual for Complex Litigation,77 courts are encouraged to retain continuing jurisdiction to resolve, on a discretionary basi

Consumer Class Actions: 5.6 Pleading Class Prerequisites

Because the complaint will serve as the basis for class certification, it must carefully address each of the specific requirements set forth under Rule 23. Given that, at least in federal court, the allegations in the complaint will not be presumed to be true for the purposes of class certification, it is important to provide sufficient factual bases for establishing Rule 23 elements. As discussed above, these issues usually fit naturally in the “Class Action Allegations” section of the complaint.

1. Class Definition

Consumer Class Actions: 6.2 Timing and Procedure

Timing and procedure are always critical in litigation. This is especially true in class actions because the problems and issues inherent to complex litigation are amplified. “The aggregation of a large number of claims and the ability to bind people who are not individual litigants tend to magnify [those] problems and issues, increase the stakes for the named parties, and create potential risks of prejudice or unfairness for absent class members.”4

Consumer Warranty Law: 2.7.8.4 Determining the Amount of Attorney Fees

Issues as to how to compute attorney fees are detailed in other NCLC treatises.863 Courts in Magnuson-Moss cases are likely to follow the lodestar analysis developed under other federal fee-shifting statutes.864 The unique Magnuson-Moss statutory language restricting fees to “actual time expended” does not preclude an award in excess of the amount that the consumer is obligated to pay their attorney under the retainer agreement, as long as the amount was “reasonably incurred.”

Consumer Class Actions: 16.13.1 The Distribution Plan

The distribution plan should be formulated based upon the specific settlement agreement terms. Where a defendant is returning monies directly to class members, the distribution plan is straightforward. Similarly, as state-wide or local class action may pose significantly less planning and execution compared to a nationwide distribution of payments.

Consumer Arbitration Agreements: 7.1.1 This Chapter’s Scope

The Federal Arbitration Act (FAA) finds arbitration agreements valid except upon such grounds as exist at law or in equity for the revocation of any contract.1 The FAA itself excludes certain transactions from this provision: transactions not in interstate commerce and “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”2

In addition, federal law limits the FAA in four different ways:

Collection Actions: 7.1 Overview

The Servicemembers Civil Relief Act (SCRA)1 was established to temporarily suspend judicial and administrative proceedings and transactions that affect servicemembers, thereby allowing them to focus on the national defense.2 The provisions of the SCRA apply to all judicial or administrative proceedings commenced in any court or agency.3 The Act primarily limits judicial collection tactics and enforcement of claims against active duty military

Home Foreclosures: 5.15.1 Overview

The Servicemembers Civil Relief Act (SCRA)617 provides special protections for military service personnel on active duty and their dependents. The SCRA was signed into law on December 19, 2003, and is a complete revision of the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) of 1940.618 The Act preserves or expands many of the protections available under the original law and restates or clarifies certain key issues.

Consumer Arbitration Agreements: 7.6.2 History of the Old Rule, Now Rescinded

Despite a rather tortured history, the Department’s first rule limiting the use of arbitration was in effect until July 1, 2020. Even though no longer effective after July 1, 2020, schools will have difficulty enforcing arbitration requirements for students who are no longer enrolled in the school at that time.

Consumer Arbitration Agreements: 7.6.3 Substance of the Old Rule

The 2016 rule indicated that limits on arbitration are part of the agreement between the Department and the school to participate in the federal Direct Loan program. The rule’s limits on mandatory arbitration and class action waivers apply to agreements with students who have obtained federal Direct Loans or benefited from Direct Parent PLUS Loans, and applies to claims regarding the making of the federal Direct Loan or the provision of educational services for which the loan was obtained.

Consumer Arbitration Agreements: 7.8 The FTC Act

The Federal Trade Commission Act prohibits unfair and deceptive practices in trade or commerce.155 The Federal Trade Commission (FTC) has used this authority to prohibit various unfair contract terms by rule, and in individual actions.156 Consequently, the FTC could by rule or in an individual enforcement action prohibit certain unfair arbitration agreements.

Consumer Arbitration Agreements: 7.9.1.1 General

The federal Magnuson-Moss Warranty Act (MMWA)158 provides that warrantors can require that consumers resort to informal dispute resolution mechanisms to resolve their claims arising under the written warranty, but specifies that these mechanisms must be nonbinding, and that consumers retain the right later to go to court to assert their claims.159 The text of the Act thus, while not specifically naming arbitration, prohibits binding informal dispute settlement mechanisms and instead

Consumer Arbitration Agreements: 7.9.1.2 The Text and Structure of the Magnuson-Moss Warranty Act

The Fifth Circuit declined to extend deference under Chevron’s “step one” to the FTC’s Magnuson-Moss Warranty Act interpretations because it concluded that “[t]he clear congressional intent in favor of enforcing valid arbitration agreements controls in this case.”168 By contrast, the Eleventh Circuit concluded that “the intent of Congress is unclear” with respect to the issue but that the FTC was not entitled to deference because its interpretation of the Act was unreasonable.169

Consumer Arbitration Agreements: 7.9.1.3 The Act’s Legislative History

The legislative history of the Magnuson-Moss Warranty Act provides further support for the argument that Congress intended to ban the use of binding arbitration clauses in written warranties. Congressman Moss, the named sponsor of the Act, explained in floor remarks that these provisions allow an opportunity for private dispute resolution, without limiting a warranty claimant’s ultimate right to a judicial resolution:

Consumer Arbitration Agreements: 7.9.1.4 The FTC Interpretations

The Magnuson-Moss Warranty Act contains an express delegation of authority to the FTC to make rules governing informal proceedings to resolve written warranty disputes,173 and the FTC has promulgated such regulations and interpretations.174 The FTC rules and interpretations are entitled to considerable judicial deference.175

Consumer Arbitration Agreements: 7.9.3 Limits on the Designation of an Arbitration Service Provider

The Magnuson-Moss Warranty Act states that the warrantor cannot “condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name.”212 Congress was concerned that warrantors would diminish the “free” aspect of a warranty by conditioning its coverage on the consumer’s use of a designated product or service, whose price would be