Guest Column: Arbitration Three Years After Concepcion

, The Litigation Daily

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Three years after he persuaded the U.S. Supreme Court to reject a major challenge to mandatory arbitration agreements, Mayer Brown's Andy Pincus says arbitration's foes have been forced to shift their attention to Capitol Hill.

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  • Brian Dupré

    Forced arbitration is used by large corporations to kick their customers out of court and funnel them into a dispute mill that is rigged, secretive, and final without any ability to appeal. The goal is not to provide efficient dispute resolution for consumers. The goal is to insulate the corporation imposing the clause from being held accountable by consumers in a court of law when the corporation cheats them or breaks the law.

    Andrew Pincus‘s assertions about class actions are belied by the facts. It is precisely because consumer class actions have held his clients accountable for defrauding and cheating customers that Mr. Pincus is so eager to get rid of them through the use of forced arbitration clauses with class action waivers.

    As the CFPB found in the Preliminary Results of its study on mandatory arbitration, the result of just eight consumer class action litigations against financial institutions was financial relief for more than 13 million people. The Bureau wrote: “More than 13 million class members made claims or received payments under [class action] settlements. Total payments or debt relief to the classes are in excess of $350 million, exclusive of attorneys’ fees and the value of injunctive relief.” Section 4.8.2 “Class disputes.”

    Class actions stopped abusive practices by banks in the ordering of overdraft charges, stopped North Carolina payday lenders from charging illegal interest rates, and forced auto lenders to stop charging African American and Latino car buyers more.

    Mr. Pincus‘s assertion that "Arbitration offers a cheaper, quicker option to resolve disputes that are too small to attract a lawyer and too individualized for a class action" is also without support. Small dollar claims are not vindicated in arbitration, The CFPB looked at consumer-filed arbitrations over a three year period, and found, “From 2010 through 2012, almost no AAA arbitration filings ... had under $1,000 at issue.”

    Mr. Pincus demands, "Rather than fighting arbitration, give it a chance." If corporations really just wanted consumers to give arbitration "a chance" they would allow consumers to choose whether to proceed in arbitration or the civil justice system after a dispute arises. That they must force arbitration on consumers, denying them a choice, shows that their only goal is to avoid accountability.

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