Alternative Dispute Resolution (ADR)/Arbitration

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Alternative Dispute Resolution (ADR) refers to methods and processes of resolving claims without litigation, such as arbitration, mediation, and small claims procedures. ADR can be formal or informal and provides a method to avoid the expense and inefficiency of litigation.

ADR is widely used in the U.S., where empirical studies demonstrate that it is cheaper, faster, and often offers more compensation for the consumer. There are also well-established ADR procedures in many of the EU member states and in other countries around the world.

Arbitration

Arbitration, a form of ADR, is formally authorized by a ninety-plus-year-old U.S. federal law, the Federal Arbitration Act. Arbitration is a procedure used to resolve common disputes and avoid costly and time-consuming courtroom 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 Holy Grail for plaintiffs' lawyers, who often pocket millions of dollars in fees, while the class members they represent get little or nothing of 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 class actions, which often last years. Arbitration reduces backlogs in our courts and reduces the costs of legal fees for both sides in a dispute.

Given the lucrative nature of litigating class actions, it is not surprising that plaintiffs' lawyers want to eliminate arbitration with an aim towards maximizing litigation and their legal fees. Eliminating arbitration may help plaintiffs' lawyers' bottom line, but it would hurt those seeking timely, efficient, and fair redress through our civil justice system. Eliminating arbitration would lengthen the legal resolution 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 are not even eligible for class action consideration. The facts in these cases are very individualized and rarely have enough in common to meet class certification standards. Eliminating arbitration would effectively leave consumers with these types of claims without legal recourse, since most of these disputes are over a relatively low dollar amount and would typically cost more to litigate than they are worth. Furthermore, plaintiffs’ lawyers rarely take such small dollar claims.

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 worked to curtail the practice through the courts and federal regulatory agencies. Fortunately, 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. Furthermore, the Trump Administration and Congress have either eliminated or diminished the administrative efforts to limit the availability of arbitration in multiple contexts such as the Consumer Financial Protection Bureau (CFPB), the Department of Labor, the Department of Health & Human Services and the Department of Education.

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.

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All Results for Alternative Dispute Resolution (ADR)/Arbitration

  1. NLRB Shrugs Off Court Rulings in Samsung Arbitration Decision

    February 17, 2016 | News and Blog

    Here we go again. The National Labor Relations Board (NLRB) has once more unabashedly ignored judicial precedent in ruling against arbitration agreements in employment contracts.... Read More

  2. In the News Today - February 10, 2016

    February 10, 2016 | News and Blog

    Lawsuit Lending Regulation Bills Moving in Indiana: "Two bills once again are moving through the Statehouse that would regulate third-party financing of lawsuits. While such measures died in previous sessions, the current bills are getting a better reception because the consumer legal funding industry is learning what can happen when it does not compromise." (The Indiana Lawyer)... Read More

  3. International Court Rules In Favor of Chevron, Against Ecuador

    January 25, 2016 | News and Blog

    The District Court of The Hague ruled in favor of Chevron by rejecting Ecuador's attempts to "nullify arbitral rulings handed down against the country in connection" with a $9.5 billion judgement against Chevron.... Read More

  4. The New York Times Doesn't Like Arbitration, But It Really Likes Plaintiffs' Lawyers

    January 07, 2016 | News and Blog

    The New York Times launched another attack on arbitration just before the holidays. Like the other installments, this piece uses selected anecdotes to support a preconceived story line: reflexive hostility to arbitration and blind faith in the benefits of class actions and the plaintiffs' lawyers who bring them. (We are not alone in criticizing the Times for reporting-by-anecdote: former Obama press secretary Jay Carney explained how the Times constructed a false picture of Amazon's workplace; a USA Today columnist documented another example; as did a former Times reporter-and former Washington Post publisher Donald Graham.)... Read More

  5. In the News Today - January 6, 2016

    January 06, 2016 | News and Blog

    ‘The Judge Who Shoots Down Merger Lawsuits': The Wall Street Journal profiles Delaware Chancery Vice Chancellor J. Travis Laster, a "notoriously tough judge who has shown thinning patience" with disclosure-only merger lawsuits, which are thus being filed in decreasing numbers in the state. (Wall Street Journal)... Read More

  6. WSJ: SCOTUS Ruling in DirecTV Case a "Policy Victory Against Trial Lawyers"

    December 15, 2015 | News and Blog

    The U.S. Supreme Court yesterday ruled in favor of DirectTV in DirectTV Inc. v. Imburgia, "backing the satellite television provider's efforts to enforce arbitration agreements signed by its customers in California," reports Reuters.... Read More

  7. Judge Rules More California Drivers Can Join Class Action Against Uber

    December 10, 2015 | News and Blog

    A federal judge has ruled that additional Uber drivers in California can join the class action against the company even if they didn't opt out of an arbitration clause in their contracts. Uber said it will appeal the ruling.... Read More

  8. Report Shows Benefits of Arbitration in Long-Term Health Care Industry

    November 23, 2015 | News and Blog

    Claims against long-term health care facilities "resolved under arbitration agreements have a 7% lower cost and are finalized three months earlier than claims resolved without arbitration."... Read More

  9. Rickard Hits NY Times' "One Sided View of Arbitration and Class Action Lawsuits"

    November 16, 2015 | News and Blog

    In a New York Times letter to the editor, ILR President Lisa A. Rickard writes that the paper's recent three-part anti-arbitration report was "a one-sided view of arbitration and class-action lawsuits that parrots the plaintiffs' lawyers' talking points."... Read More

  10. In the News Today - November 11, 2015

    November 11, 2015 | News and Blog

    Editorial Rips Schneiderman's Exxon ‘Climate Change' Investigation: "Engaging in scientific research and public advocacy shouldn't be crimes in a free country. Using the criminal law to shame and encumber companies that do so is a dangerous arrogation of power." (Bloomberg View Editorial)... Read More