Tide Turning a Bit on Mandatory Arbitration Through Recognition that Process Suppresses Claims?

ADR Prof Blog by Andrea Schneider, Michael Moffitt, Sarah Cole,Art Hinshaw, Jill Gross and Cynthia Alkon.

FOI and semi-regular guest blogger Jean Sternlight (UNLV) shares with us her latest thoughts about mandatory arbitration.

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These have been very bleak times for those, like me, who abhor mandatory arbitration because they think it disserves consumers, employees, and others. In case after case such as AT&T Mobility v. Concepcion (2011) and American Express v. Italian Colors Restaurant (2013) the Supreme Court has given companies free rein to use arbitration to eviscerate class actions and to protect these clauses from challenge. Meanwhile, the efforts of some to convince Congress to stop the horror by passing the Arbitration Fairness Act (S. 878) have not yet succeeded.

However, the new year may bring some new cause for optimism. As Paul Kirgis noted in his recent post the Consumer Financial Protection Board has just issued a preliminary report providing lots of new empirical information regarding aspects of consumer arbitration.

The CFPB report shows, as some of us have suspected for years, that while millions and millions of consumers are forced to arbitrate rather than litigate claims they may have against companies, only a miniscule number of consumers actually bring arbitration claims. While litigation is admittedly no nirvana it offers far more justice to consumers, especially through class actions and group claims, than does arbitration. The CFPB has not yet taken any regulatory steps and will issue more findings before it does, but the new preliminary report shows that CFPB “gets” that mandatory arbitration is about claim suppression.

Second, the Senate Judiciary Committee will hold a hearing on Tuesday December 17 entitled “The Federal Arbitration Act and Access to Justice: Will Recent Supreme Court Decisions Undermine the Rights of Consumers, Workers, and Small Businesses?” Those testifying include Professors Myriam Gilles (Cardozo) and Peter (Bo) Rutledge (Georgia). Others of us are submitting written testimony. My own written testimony emphasizes that in both the consumer and employment setting the imposition of mandatory arbitration suppresses claims and effectively “disarms” claimants by making it more difficult to obtain legal representation.

Third, an upcoming symposium to be held at U.C. Berkeley’s Boalt School of Law on February 27, 2014 will include a number of papers by folks like David Lipsky and Alex Colvin presenting new empirical information on the realities of employment arbitration.

Fourth, an organization called Take Justice Back is mounting a petition effort to convince the CFPB to bar mandatory arbitration in the consumer financial settings.

Perhaps, together, all these actions will begin to recharge efforts to rein in companies’ use of mandatory arbitration to deprive consumers and employees of access to justice?

                        author

Art Hinshaw

Art Hinshaw’s research and teaching interests lie in the field of alternative dispute resolution (ADR), primarily mediation and negotiation. His research bridges ADR theory and practice, and his teaching responsibilities include the Lodestar Mediation Clinic and Negotiation among other ADR courses. Professor Hinshaw is active in the ADR community having… MORE >

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