The United States District Court for the Western District of Virginia has issued an order striking the class allegations from a putative class action complaint on competing grounds—if named plaintiff signed the client agreement, then the arbitration clause barring class action litigation would be valid and enforceable; if she did not sign the agreement, her allegations failed to meet the commonality prong necessary to plead a class action under Federal Rule of Civil Procedure 23.
Significantly, in striking the class-wide allegations based on the issue of the client agreement, the opinion arguably imposes a higher level of specificity on the pleading of consumer class actions. Specifically, named plaintiffs (and their counsel) must take care to articulate a specific position as to any agreement that may or may not govern their relationships with defendants and plead their putative classes accordingly. If a named plaintiff concedes the existence of an operative agreement, his or her named class may be broader, as most consumers do execute such agreements in connection with financial services products, but his ability to engage in class action litigation may be forestalled by a binding arbitration clause. Alternatively, a plaintiff may deny the existence of a binding client agreement, but, in doing so, he runs the risk that his putative class may be smaller (or non-existent) due to a lack of commonality, as was the outcome in this case.