since Concepcion, judges had cited the decision at least 76 times as a reason to prevent potential class-action lawsuits from moving ahead. In some of those cases, the judges made clear that they were ruling against the plaintiffs through gritted teeth, explaining that Concepcion basically made it impossible to come to any other decision.The article summarized the views of Taylor Lincoln, a co-author of the Public Citizen study:
Many well-known arbitration companies have a pro-business bias, he said, because corporations pay the arbiters. But the real agenda of Concepcion’s champions, he added, is to block collective legal action — the kind that gets a company’s attention by affecting the bottom line. Justice Stephen Breyer echoed that notion in his dissent in the Concepcion case — it split the Supreme Court 5 to 4 — when he quoted from a 2004 decision written by Judge Richard Posner of the United States Court of Appeals for the Seventh Circuit: “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30."That corporations force arbitration on consumers in order to block collective legal action is unmasked by a recent study that reveals that
Fortune 1,000 corporations are significantly less likely to arbitrate contract disputes today than they were in 1997. In the 1997 study, 85% of companies reported using arbitration in commercial contract disputes at least once during the prior three years. In 2011, however, only 60 percent of companies so reported.
The most common reasons given by survey respondents… for not using arbitration included: the difficulty of appeal, the perception that arbitrators tend to compromise, the concern that arbitrators may not follow the law, a lack of confidence in neutrals, and high costs of arbitration.Thus, while corporations force arbitration on consumers, with the blessing of the Supreme Court’s pro-business majority, they are increasingly hesitant to use arbitration to resolve their disputes with other corporations.
Of course, the concerns about commercial arbitration are all serious concerns for consumer arbitration as well – particularly, the impartiality of arbiters that corporations repeatedly appear before, the higher costs of arbitration, minimal access to evidence, closed-door proceedings, and narrow grounds for judicial review. AFJ explored many of these problems in our report, Arbitration Activism (.pdf download).
As awareness grows of the harm to consumers forced into arbitration, the federal government has begun to take action. The Consumer Financial Protection Bureau recently issued a Request for Information to assist it in conducting a study of pre-dispute arbitration agreements, as mandated by the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010. The period for public comment ends June 23, 2012.
