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In Woullard v. State Farm Fire and Casualty Co., No. 1:06cv1057 LTS-RHW, 2007 WL 208519 (S.D. Miss. Jan. 26, 2007), Woullard asked the court to certify a class of State Farm policyholders who suffered damages as a result of Hurricane Katrina and to approve a settlement agreement between the parties.
However, the Court refused to certify the class or approve the proposed settlement agreement. Both the proposed class and the proposed settlement agreement contained many terms that the Court deemed unfair to potential class members, including a clause relating to arbitration.
The proposed settlement agreement provided that a class member who is dissatisfied with State Farm's offer must take the dispute the binding arbitration. This arbitration was limited to two hours, with no right of appeal, and allowed an arbitrator to award less than State Farm's offer. In combination with the proposed agreement's complicated opt-out procedures, this arbitration policy could result in class members unknowingly waiving their rights to a jury trial.
Although the Court pointed out that "binding arbitration in some form may provide an acceptable alternative to litigation," it refused to approve a settlement agreement that could result in a large number of policyholders being sent to arbitration, despite none of them having agreed to arbitrate.
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