Propriety of Class Action Waivers in Illinois/Chicago Residential Leases

There is no prohibition against class action waivers in residential leases under Illinois state law or Chicago city ordinances.  The Illinois Supreme Court holds that class action waivers are not per se unconscionable or unethical.

Class action waivers are evaluated on a case by case basis, under a totality of the circumstances, to determine whether they are unconscionable.  A finding of unconscionability may be based on either procedural or substantive unconscionability, or a combination of both.

Procedural unconscionability is where a contract provision is so difficult to find, read, or understand that the plaintiff cannot fairly be said to have been aware he was agreeing to it.  This analysis also takes into account disparity of bargaining power.  Factors to be considered include (1) whether each party had a reasonable opportunity to understand the terms of the contract, and (2) whether important terms were hidden in a maze of fine print.

Substantive unconscionability concerns the actual provision of the contract, and examines the relative fairness of the obligations assumed.  “Indicative of substantive unconscionability are contract terms so one-sided as to oppress or unfairly surprise an innocent party, an overall imbalance in the obligations and rights imposed by the bargain, and significant cost-price disparity.”  Therefore, in a landlord-tenant context, the claim being brought has significant repercussions to any court’s analysis.

In Kinkel, which was a consumer cell phone case, the court focused on the “cost-price disparity” and said if a customer was forced to bring a $150 claim individually, and that claim cost her $125 to assert plus attorneys’ fees, she obviously would have no chance of being made whole, rendering that provision substantively unconscionable.

Remember: you should always consult an attorney when you are faced with a potential legal issue or you need legal advice.  The facts of your specific situation can drastically affect and change any legal analysis.

  1. Kinkel v. Cingular Wireless LLC, 857 N.E.2d 250, 278 (Ill. 2006).
  2. Id. at 264.
  3. Razor v. Hyundai Motor Am., 854 N.E.2d 607, 621 (Ill. 2006).
  4. Kinkel, 857 N.E.2d at 264.
  5. Id.
  6. Id. at 267.
  7. Id.