August 16, 2011
A United States District Court recently allowed title companies to require the arbitration of antitrust claims. The decision was based on a recent U.S. Supreme Court decision applying arbitration to class actions. The plaintiffs claimed that title companies unfairly fixed prices. The court allowed the title companies to compel arbitration based on the arbitration clause in the title policies, which was silent as to whether class-action arbitration was permissible, and even thought the companies failed to request arbitration earlier in the case.
The court decided that prior to the Supreme Court decision the law in California would have precluded the arbitration in class actions, but now the title companies could assert their right to require arbitration since the California law had been preempted by federal law. The court also addressed a change in arbitration administration since the National Arbitration Forum no longer arbitrates consumer disputes. The Court designated the American Arbitration Association as the arbitrator, as originally contemplated by the parties. The case is In re California Title Ins. Antitrust Litig., CIV. 08-1341-JWA, 2011 WL 2566449 (N.D. Cal. June 27, 2011).