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A non-signatory to an arbitration agreement who brings a class action is not required to arbitrate simply because other members of the class are parties to an arbitration agreement, a federal court in New York held.
In Lustberg v. Blockbuster, Inc., No. 05-CV-1581 FB JO, 2006 WL 3314639 (E.D.N.Y. Nov. 14, 2006), Lustberg brought a class action lawsuit against Blockbuster, alleging fraud and other claims arising out of Blockbuster’s “End of Late Fees” marketing campaign.
Blockbuster argued that the class would have to individually arbitrate their claims because Blockbuster’s Membership Agreement contained an arbitration clause with a class-action waiver. However, Lustberg signed his membership agreement before the arbitration clause was added to the agreement.
Therefore, the Court held that Blockbuster could not compel Lustberg to arbitrate his claims and rejected Blockbuster’s argument that Lustberg, a non-signatory, should have to arbitrate because other class members may be bound by the arbitration agreement.
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