News & Insights

Recent Case of Interest where Third Circuit enforced right to arbitrate after lower court found it had been waived in a Class Action Case

Jun 10, 2026

In the case of Valli v. Avis Budget Group Inc., 162 F.4th 396 (3d Cir. 2025), a car rental customer filed a class action lawsuit against Avis Budget Group claiming that their policy of paying traffic fines on behalf of renters without prior notification and then charging administrative fees violated the New Jersey Consumer Fraud Act and constituted unjust enrichment. Avis sought to compel arbitration based on a clause added to their rental agreements in 2016, but the District Court for the District of New Jersey denied this motion, stating that Avis had waived its right to arbitration by engaging in litigation activities. Avis appealed this decision, arguing that it had not waived its arbitration rights and that any attempt to compel arbitration before class certification would have been futile. The Third Circuit Court of Appeals disagreed with the District Court, finding that Avis had not intentionally relinquished its right to arbitration and that its conduct did not show a preference for litigation over arbitration.

On January 7, 2026, the Third Circuit issued a mandate vacating the District Court’s order that denied Avis’s motion to compel arbitration. The appellate court remanded the case back to the District Court to address any properly presented challenges to the enforceability of the arbitration provisions. This decision emphasized that while Avis’s pre-certification conduct could be considered in the waiver analysis, the company had consistently indicated its intent to arbitrate and had acted promptly once it was no longer futile to do so. The Third Circuit’s ruling allows the District Court to now focus on whether the arbitration provisions themselves are enforceable, a question that was not previously addressed due to the focus on waiver.

This case is significant for litigants because it highlights the importance of understanding arbitration clauses in contracts. For clients, this means that arbitration provisions in agreements must be carefully reviewed and understood, as they could significantly impact the resolution of disputes. The case also emphasizes the need for businesses to clearly communicate their desire to arbitrate and to act promptly when seeking to enforce such provisions, ensuring that their rights are preserved throughout the legal process.

No information in this communication is intended to constitute specific legal advice. For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at phuttenbach@craincaton.com.

Thanks,

Pat

Valli v Avis Budget Group Inc.