Consumer Advocates Form "Anti-Arbitration" Organization


[authors: Alan S. Kaplinsky, Mark J. Levin]

A group of consumer advocates have formed a nonprofit organization that seeks through mass arbitration to undermine the effect of the U.S. Supreme Court's landmark decision in AT&T Mobility LLC v. Concepcion. In that decision, the Supreme Court held that the Federal Arbitration Act preempts state laws that refuse to enforce class action waivers in consumer arbitration agreements as unconscionable or against public policy. (See our legal alert on Concepcion.) The new organization, Consumers Count, states on its website that it is "dedicated to restoring our consumer rights and ending corporate immunity."

The organization's website identifies various allegedly unfair corporate practices and invites consumers who claim to have been affected by such practices to supply information about their experiences. Consumers are also invited to launch new "causes." According to the website, once a case reaches "critical mass," the organization will refer it to the Consumers Count Litigation Group, LLP, a separate entity run by attorneys, some of whom are also associated with Consumers Count.

According to the press release announcing the organization’s formation, its goal is to eliminate the use of arbitration. Consumers Count's co-founders say in the release that the organization "is designed to turn arbitration into an unexpected nightmare for corporations" and that mass arbitration will force companies to "disavow arbitration."

The attempted use of mass arbitration to destroy consumer arbitration does a great disservice to consumers who stand to benefit from the efficiencies and economies inherent in the arbitral process. Arbitration enables consumers to resolve their disputes in months, not years, and at little or no expense because the companies bear most of the expenses under the rules of the national arbitration administrators. Moreover, many companies have already successfully managed mass arbitrations and continue to find individual arbitration to be a more efficient and cost-effective dispute resolution process than class action litigation. We have substantial experience in counseling companies in connection with mass arbitrations, both real and threatened.

Ballard Spahr’s Consumer Financial Services Group pioneered the use of pre-dispute arbitration provisions in consumer financial services agreements. It is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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