Federal Arbitration Act Requires the Arbitration of Massachusetts Consumer Protection Claims

Massachusetts has a powerful consumer protection statute commonly known as Chapter 93A.  General Law Chapter 93A affords a private right of action on behalf of consumers (§ 9) and businesses (§ 11) for unfair or deceptive acts and practices.  Where a violation is shown, a party may recover reasonable attorney’s fees and potentially treble damages (upon proof of a willful violation).  Chapter 93A is routinely pled in business contract and tort actions in Massachusetts. 

In 1982, the Massachusetts Supreme Judicial Court (“SJC”) “held that, even where a consumer executed a valid contract agreeing to arbitrate all disputes, a plaintiff may not be compelled to arbitrate a claim alleging unfair or deceptive trade practice in violation of G.L. c. 93A, § 9.” Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 826-827, 434 N.E.2d 611 (1982).  Thus, absent agreement at the time the dispute has ripened, a party could keep Chapter 93A claims (and perhaps the entire dispute if the facts are intertwined with each other) out of arbitration despite an otherwise enforceable agreement to arbitrate.

On August 12, 2013, the SJC held that even Chapter 93A claims “must be referred to arbitration where the contract involves interstate commerce and the agreement to arbitrate is enforceable under the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq. (2006) (FAA).”  McInnesv. LPL Financial, LLC, 466 Mass. 256, -- N.E.2d – (2013).  The Court acknowledged that the Hannon decision “made no reference to the FAA” and, although not expressly stating it, found Hannon was wrongly reasoned for matters that implicate interstate commerce by disregarding the FAA which would have superseded any state prohibition of arbitration under the supremacy clause.  In so ruling, the Court reversed and remanded two separate lower court rulings denying a motion to compel arbitration because of the existence of the consumer protection claims.