Arbitration

Authorized by a ninety-plus-year-old federal law, arbitration is a procedure used to resolve common disputes and avoid costly and time-consuming litigation. In arbitration, an independent third party, the arbitrator, reviews the facts and circumstances of the dispute, applies the appropriate legal standard, and issues a ruling to resolve the conflict. For nearly a century, arbitration has reduced the cost of lawsuits for businesses and consumers alike. But now arbitration is under attack by plaintiffs’ lawyers, who see it as a barrier to the expansion of lucrative class action lawsuits.

Class action lawsuits are the bread and butter of plaintiffs' lawyers. The lawyers often pocket millions of dollars in fees, while the class members they represent get little in the final settlements. read more...

For many, arbitration is the better way to go. Arbitration produces faster resolutions – typically in a matter of months as opposed to years. Arbitration eases the burden on the overcrowded court system. And arbitration reduces the costs of legal fees for both parties.

Little wonder, then, that plaintiffs' lawyers want to eliminate arbitration. Their aim is to maximize litigation and legal fees by bundling claims that would have gone to arbitration into lucrative class action lawsuits.

Eliminating arbitration may help plaintiffs' lawyers' bottom line, but it would hurt those seeking redress through our legal system. Eliminating arbitration would lengthen the legal process and channel more money into the hands of trial lawyers rather than individuals seeking compensation. Moreover, the vast majority of claims resolved through arbitration would be ineligible for class actions. Many cannot be bundled into a class action because the facts are not in common. Eliminating arbitration would leave these individuals without legal recourse. And even for those cases that are eligible, many disputes now settled through arbitration are small-dollar claims that typically cost more to litigate than they are worth. They usually will not be taken on a contingency fee basis by plaintiffs' lawyers.

In other words, if plaintiffs' lawyers succeed in eliminating arbitration, it will drive up the cost of litigation, increase the workload of courts and leave millions of Americans with very limited opportunities for restitution.

Preserving Arbitration

Legislative measures to limit the use of arbitration have largely been unsuccessful. For example, multiple bills and amendments that would have banned arbitration have been proposed and blocked since the early-2000s. These include the Arbitration Fairness Act (prohibiting arbitration in all consumer and employment agreements) and the Consumer Mobile Fairness Act (prohibiting arbitration in cell phone contracts).

With little success in Congress, arbitration opponents have also attempted to curtail the practice in the courts. However, the U.S. Supreme Court, in the recent cases of AT&T Mobility v. Concepcion (2011) and American Express Co. v. Italian Colors Restaurant (2013), has upheld the legal enforceability of arbitration under the Federal Arbitration Act.

At the same time, the Consumer Financial Protection Bureau released its anti-arbitration study in March 2015, as mandated by the Dodd-Frank Act, and is now preparing a rulemaking. The agency’s findings could determine whether arbitration clauses will be upheld in consumer financial agreements. In addition, the 2010 Dodd-Frank Act authorizes the SEC to prohibit or restrict arbitration requirements for both broker-dealers and investment advisers, but the agency has yet to take action on the issue.

Due to the clear advantages of arbitration over litigation in any number of situations, and the need to preserve this important dispute resolution process, ILR has established the Coalition to Preserve Arbitration. The Coalition's membership is varied and broad. AT&T is one member of the Coalition and has provided legal and technical support on an in-kind basis in connection with our arbitration-related activities. This disclosure is being made to comply with the requirements of the Lobbying Disclosure Act of 1995, as amended by the Honest Leadership and Open Government Act of 2007.

Research

The Trial Lawyer Underground: Covertly Lobbying the Executive Branch

September 30, 2015 | This report highlights examples of the quiet and effective influence the American Association for Justice, the organization that lobbies on behalf of the plaintiffs' bar, exerts within the Executive Branch.

All Results for Arbitration

Will Trump Remove CFPB Director Immediately After Taking Office?

November 29, 2016 | News and Blog

Does President-elect Donald Trump -- who campaigned on the promise to 'dismantle' Dodd-Frank, which created the Consumer Financial Protection Bureau -- have the power to remove CFPB Director Richard Cordray immediately after taking office? Read More »

Hong Kong's Call for Litigation Funding Disclosure Leads the Way for Global Reforms

November 23, 2016 | News and Blog

Last month, the Hong Kong Law Reform Commission (LRC) released a Report on Third Party Funding for Arbitration which calls for "light touch" regulation and disclosure of third party funding in arbitration. While this is an important first step and may lead the way to global recognition of the need for meaningful oversight in the litigation funding industry, "light touch" regulation will not suffice. Read More »

In the News Today - November 14, 2016

November 14, 2016 | News and Blog

ILR's recent election night survey was quoted in Florida Business Daily, Palmetto Business Daily and Illinois Business Daily, quoting state legal reform allies in each state. The survey results showed that most voters "don't want Congress to pass laws making it easier for attorneys to file lawsuits." Read More »

ILR President Lisa Rickard Predicts More Action in Congress by Business Community to Advance Legal Reforms

November 11, 2016 | News and Blog

The National Law Journal writes on the "cautious optimism" of tort reform groups when it comes to the future legislative and regulatory efforts of president-elect Trump and Congress. Read More »

Federal Gov't Ban On Nursing Home Arbitration Blocked

November 08, 2016 | News and Blog

U.S. District Judge Michael P. Mills of Mississippi temporarily blocked enforcement of the federal government's pending ban on arbitration in cases involving nursing homes, signaling serious doubts about the government's authority. Read More »

Centers for Medicare & Medicaid Services Sued Over Rule Banning Arbitration by Nursing Homes

October 18, 2016 | News and Blog

The American Health Care Association (AHCA) filed a lawsuit this week against the Centers for Medicare & Medicaid Services (CMS), alleging the government agency "overstepped its authority in banning arbitration in a final rule issued last month," reports Senior Housing News. Read More »

In the News Today - October 4, 2016

October 04, 2016 | News and Blog

In light of the Centers for Medicare and Medicaid Services' (CMS) new rule prohibiting arbitration by long-term care facilities, the ABA Journal highlights an article from last month about whether litigation is about improving care, or simply a generating money for the plaintiffs' bar. Read More »

Ninth Circuit Upholds Uber's Arbitration Claims

September 30, 2016 | News and Blog

Ride-share company Uber got some "good news" this month, as the U.S. Court of Appeals for the Ninth Circuit "upheld a provision in Uber's standard driver's contract requiring that disputes be arbitrated," writes Jack Greiner, attorney with Graydon Head, in the Cincinnati Enquirer. Read More »

In the News Today -- September 30, 2016

September 30, 2016 | News and Blog

SCOTUS: Can Plaintiff Lawyers Include Cities Among 'Victims' of Home Foreclosures? Among the business cases being heard by the U.S. Supreme Court in the session beginning next Monday is a "test of whether plaintiff lawyers can include entire cities among the supposed victims of home foreclosures." Read More »

In the News Today - September 29, 2016

September 29, 2016 | News and Blog

Last week, Rep. Marsha Blackburn, Vice Chairman of the House Energy and Commerce Committee, asked panelists at a subcommittee hearing on modernizing the Telephone Consumer Protection Act (TCPA) to submit suggestions for reforming the outdated TCPA. Read More »

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