Public Citizen’s Unfair Attack on Arbitration

The National Review discusses with Ted Frank how class action suits benefit the lawyers rather than the class member.

In reality, as Ted Frank of the Center for Class Action Fairness points out, both AT&T and American Express Co. had exceedingly narrow outcomes — these cases weren’t an instance of the mythical “pro-business court” that liberals like to hyperventilate about. In AT&T, the Supreme Court upheld an arbitration clause that was especially generous toward consumers, so much so that “the District Court concluded that the Concepcions [plaintiffs] were better off under their arbitration agreement with AT&T than they would have been as participants in a class action.” Certainly that couldn’t be the fulfillment of a radical business agenda — arbitration contracts that are less consumer friendly may still be invalidated. And in American Express, despite the dissent’s hand-waving that vindicating small claims are now more difficult, the American Express majority relies upon AmEx’s concession that plaintiffs had cost-effective ways to vindicate their rights, besides class action lawsuits. This could hardly be a devastating blow to consumer rights — consumers could still pursue their claims against AmEx through other means.

While trial lawyers would benefit from strictly limiting arbitration, consumers would suffer. As Ted Frank explains, class action lawsuits last an average of 3 years from start to completion, while arbitrations last slightly under 7 months. What’s more, while consumer claims go on the backburner to trial attorney fees in class action litigation, consumers can actually be successful in arbitration, and prefer arbitration to the alternatives. “[T]he Searle Civil Justice Institute found that ‘consumer claimants won some relief in 53.3 percent’ of arbitrations and ‘were awarded 52.1 percent of the amount they sought.’” In fact, one survey found that “most measures—raw win rates, comparative win rates, comparative recoveries, and comparative recoveries relative to amounts claimed—do not support the claim that consumers and employees achieve inferior results in arbitration compared to litigation.” Even consumers, when polled, prefer arbitration, as a survey found that two-thirds of previous arbitration participants “reported themselves likely to arbitrate again, including one-third of those who had lost their claims.”

Read the full article at the National Review.