Legal information only, not legal advice. For advice on your situation, talk to a licensed attorney in your state.
Home Warranty Class Actions We Could Source
Faught v. American Home Shield (Eleventh Circuit, 2011)
The Eleventh Circuit approved a settlement of a nationwide class action over alleged wrongful claim denials. The opinion notes two class actions arose from the allegations, one in California state court and one filed in Alabama, and that the California court rejected a proposed settlement before the parties settled the Alabama case. The settlement let class members resubmit denied claims to a Review Desk run by American Home Shield and required business practice changes, including removing incentives in technician contracts that encouraged finding problems that supported denying claims. Class counsel's fees were set at $2.5 million.
Kernahan case against Choice Home Warranty (New Jersey)
According to Bloomberg Law, New Jersey's Supreme Court let a consumer keep class claims in court against Choice Home Warranty and a related administrator, finding the contract's arbitration terms confusing. It shows that a court can refuse to enforce an arbitration clause that is unclear, which is a different outcome from the usual one below.
Not a class action: the Arizona Attorney General's case
Arizona's $11.8 million settlement with Choice Home Warranty resolved a state consumer fraud lawsuit, not a class action. See our summary and the other state actions we could cite.
We did not find a certified class settlement against Choice Home Warranty. Pending cases change quickly, so check court dockets or the company's notices rather than relying on this page for current status.
Why Arbitration Clauses Limit Class Actions
Many consumer contracts pair a mandatory arbitration clause with a class action waiver, which requires every dispute to be arbitrated individually. The Supreme Court held in AT&T Mobility v. Concepcion (2011) that the Federal Arbitration Act generally overrides state rules that would invalidate such waivers, and in American Express v. Italian Colors (2013) it enforced a class waiver even where individual arbitration could cost more than the claim was worth.
Commentary we reviewed says current American Home Shield contracts require individual arbitration. That is a secondary source, so read the clause in your own contract. We cover the clause itself on the arbitration clause page.
When a Case Can Still Proceed
- A court finds the arbitration terms unclear or otherwise unenforceable, as the New Jersey ruling above shows.
- A state attorney general sues in its own name. The state is not a party to your arbitration agreement.
If a Class Settlement Covers You
Class notice
If you are in a certified class, you are entitled to notice, usually by mail or email from a settlement administrator. Read it; it states what you can claim and by when.
Claim deadline
Notices set a deadline to file a claim. Missing it can forfeit your recovery.
Release of claims
Accepting a payment usually releases your claims over the covered conduct, and opting out preserves your right to bring an individual claim. The notice says which applies.
Your Options When a Class Action Is Blocked
Individual arbitration
If your contract has an arbitration clause, this is usually the forum. Read the clause for who pays the filing fees, which provider runs the case and where it is held; those terms differ between contracts.
Regulator complaint
A complaint to the state agency named for your state in the state laws table creates an official record and can lead to a reversal, but it does not award you money by itself.
Attorney general complaint
Attorneys general can sue in their own name, and they are not parties to your arbitration agreement. Several sourced examples are on our state actions page.
Small claims court
Some arbitration clauses carve out small claims. If yours does, filing there can be cheaper than arbitration for a smaller dispute. Check the clause and your court's dollar limit.
Whichever route you choose, document the claim first. The steps are in how to fight a denial, and a lawyer's role is covered in when to hire a lawyer.