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.

All Results for Arbitration

  1. U.S. Supreme Court Upholds Arbitration Contracts

    May 22, 2018 | News

    In a 5-4 ruling yesterday, the U.S. Supreme Court upheld arbitration contracts between employers and employees.... Read More

  2. Supreme Court Accepts Case on Employment Arbitration in Transportation

    February 28, 2018 | News

    The U.S. Supreme Court announced that it would consider whether the Federal Arbitration Act (FAA) applies to independent contractors in the transportation industry, Reuters reports.... Read More

  3. In the News Today - December 14, 2017

    December 14, 2017 | News

    9th Circuit Strikes Constitutional Challenge to the Arbitration Act; Growth in class actions to come under scrutiny... Read More

  4. In the News Today - November 29, 2017

    November 29, 2017 | News

    NLRB Judge Says Arbitration Agreements Violate Labor Laws... Read More

  5. CFPB director Richard Cordray to step down at the end of November

    November 16, 2017 | News

    Richard Cordray, the embattled head of the Consumer Financial Protection Bureau, said Wednesday he will step down before the end of the month.... Read More

  6. In the News Today - October 31

    October 31, 2017 | News and Blog

    Investors in Litigation Financing Target Commercial Auto; So What If You Can't Join a Class Action?... Read More

  7. In the News Today - October 30, 2017

    October 30, 2017 | News and Blog

    The Senate Just Voted to Protect Banks. But It's Actually a Win for You.; New Bill Would Allow Litigation Financing in Ireland... Read More

  8. "McConnell 1, Cordray 0"

    October 26, 2017 | News and Blog

    The Wall Street Journal Editorial Board called repeal of the Consumer Financial Protection Bureau's (CFPB) anti-arbitration rule "a victory for the economy and Mitch McConnell's leadership."... Read More

  9. Comptroller: CFPB Relied on "Secret Analysis" for Anti-Arbitration Rule

    October 19, 2017 | News and Blog

    In a letter to the leadership of the Senate Committee on Banking, Housing and Urban Affairs, Acting U.S. Comptroller of the Currency Keith Norieka said the "CFPB's secret analysis" will not benefit consumers, according to Legal Newsline.... Read More

  10. Study Finds CFPB Anti-Arbitration Rule Will Cost Consumers

    October 02, 2017 | News and Blog

    The Office of the Comptroller of the Currency released a study finding that lenders may charge up to 25% more for credit after factoring in the cost of class action litigation stemming from the CFPB's anti-arbitration rule, reports the ABA Banking Journal.... Read More