Class Dismissed: Compelling a Look at Jurisprudence Surrounding Class Arbitration and Proposing Solutions to Asymmetric Bargaining Power Between Parties

Chicago-Kent Law Review, Mar 2018

Class actions and arbitrations have existed since the United States’ inception. Since the mid-twentieth century, both Congress and the U.S. Supreme Court have helped arbitration blossom from litigation’s overshadowed alternative to a prominent means of resolving disputes. Soon, the commercial industry proceeded to incorporate arbitration provisions in their consumer and employment contracts. That way, when a dispute arose between the business and a person, the business would arbitrate with claimants individually. Plaintiffs’ attorneys who favored collective action proceedings like class actions, however, pushed for courts’ allowance of class arbitration—a class proceeding conducted within an arbitration’s confines. Corporations litigated such class arbitrations’ legitimacy; their efforts are catalogued in a series of U.S. Supreme Court challenges that started in the early 2000s and continue to the present day. In many instances, these seemingly mundane cases resulted in sharply divided holdings by the Court’s justices; most notable of these were AT&T Mobility, LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant, where the Court upheld individual arbitration provisions in pre-dispute contracts, and foreclosed plaintiffs’ access to class arbitrations and class actions in many contractual contexts. This Note begins by summarizing the jurisprudential stance presently assumed by the Supreme Court in cases addressing arbitration provisions. It subsequently outlines the kaleidoscopically variant viewpoints on arbitration clauses from legal scholars, large law firms, and media outlets. Finally, the Note posits several solutions to the growing problem many individuals face when they enter into some of the most routine contracts of everyday life: the foreclosure of their ability to proceed as a class in a collective action against a plaintiff and effectively redress their grievances.

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Class Dismissed: Compelling a Look at Jurisprudence Surrounding Class Arbitration and Proposing Solutions to Asymmetric Bargaining Power Between Parties

Chicago-Kent Law Review Volume 92 Issue 3 Dignity Takings and Dignity Restoration Article 24 3-6-2018 Class Dismissed: Compelling a Look at Jurisprudence Surrounding Class Arbitration and Proposing Solutions to Asymmetric Bargaining Power Between Parties Matthew R. Hamielec IIT Chicago-Kent College of Law Follow this and additional works at: https://scholarship.kentlaw.iit.edu/cklawreview Part of the Civil Procedure Commons, and the Dispute Resolution and Arbitration Commons Recommended Citation Matthew R. Hamielec, Class Dismissed: Compelling a Look at Jurisprudence Surrounding Class Arbitration and Proposing Solutions to Asymmetric Bargaining Power Between Parties, 92 Chi.-Kent L. Rev. 1227 (2018). Available at: https://scholarship.kentlaw.iit.edu/cklawreview/vol92/iss3/24 This Notes is brought to you for free and open access by Scholarly Commons @ IIT Chicago-Kent College of Law. It has been accepted for inclusion in Chicago-Kent Law Review by an authorized editor of Scholarly Commons @ IIT Chicago-Kent College of Law. For more information, please contact . CLASS DISMISSED: COMPELLING A LOOK AT JURISPRUDENCE SURROUNDING CLASS ARBITRATION AND PROPOSING SOLUTIONS TO ASYMMETRIC BARGAINING POWER BETWEEN PARTIES MATTHEW R. HAMIELEC * I. INTRODUCTION Every Thanksgiving season—after the family stuffs itself with a turkey that itself had only been stuffed a few hours beforehand—my mother and I satiate our inner shopaholic with some Black Friday bargain hunting. Last year was no exception. However, rather than purchasing each family member a few tchotchkes we would find while window shopping, this year featured us braving long lines, shiny signage, and the occasional shopping cart crash at Costco. After years of suffering at the hands of our “dumb” LG slide phones, we decided to equip the family with the latest Lyft-hailing and Snapchat-posting smartphone swag from that one company’s newly minted inventory. I think their logo is a pear? No! An orange. I forget . . . With Costco poised as our Black Friday Olympiad’s closing ceremony, I expected to walk into a store that had devolved into a consumerthemed Hunger Games. A short line in front of the kiosk initially raised my spirits, but my hopes were short-lived, as the gentleman directly in front of us whined that he had been standing there for hours. Glancing past his shoulder, I understood why: each transaction was a mini treaty negotiation that consisted of selecting a phone, finding the perfectly colored protective Otterbox in which to encase one’s purchases, signing and initialing contracts, orally accepting said contracts by phone, printing and signing receipts, and receiving triplicate copies of everything. No wonder the line was short. This wasn’t The Hunger Games; this was a live-action version of The Oregon Trail—everyone else had died of dysentery. Finally, we reached the salesperson. “Which provider does your family use?” AT&T, we informed her. She opened a drawer and withdrew sev* J.D. candidate, May 2017, Chicago-Kent College of Law, Illinois Institute of Technology; B.A./B.S./M.S., University of Illinois at Urbana–Champaign. The author would like to thank his friends and family for constantly supporting his academic and professional endeavors, as well as Professors Joan Steinman and Elizabeth De Armond for their tireless editing and pithy suggestions. Finally, the author wishes to thank the entire editorial staff of the Chicago-Kent Law Review. 1227 1228 CHICAGO-KENT LAW REVIEW [Vol 92:3 eral stapled packets that radiated a contractual aura. My law-school skills primed, I shoved the papers off to my mother for her signature, and inquired about the phone number I needed to dial to orally accept the new contractual terms. The salesperson gave me a slip of paper, and I thumbed in the digits on my phone. The familiar AT&T tone greeted me, followed by an automated voice. “Welcome to the AT&T wireless contract menu. Para español, oprima el dos . . . if you’re here to accept the terms of your new AT&T wireless contract, press one.” BEEP. “Great! Please listen to the following recording, as it describes important components of your new wireless contract. Your new wireless device number is (384) 791-4 . . .” My mind glazed over, and I became entranced in the nearest 4K TV’s broadcast of a bark-colored chameleon hunting its prey. Just as the reptile whipped out its tongue at a languishing fly, the automated recording shrilly pierced my eardrum. “Please note that by accepting this contract, you agree to AT&T’s method of dispute resolution, which includes a mandatory arbitration provision. To accept these terms, press one. To repeat—” BEEP. Though flawed in many respects, the class action mechanism accords litigants a balance between justice and efficiency. 1 Theoretically, both plaintiffs and defendants benefit. For the former, class actions aggregate individuals’ claims and—perhaps more importantly—pool financial resources under one lawsuit. 2 Rather than burdening one named representative with paying for a litany of experts and steep court costs, law firms initially bankroll class litigation, and then pocket a portion of a settlement or judgment’s proceeds to cover costs before distributing the remainder amongst claimants. 3 This claim-aggregation synergy converges financial inequities between claimants and commercial defendants. On the flipside, a court that grants defendants a settlement, motion for summary judgment, or judgment on the merits curtails those defendants’ long-term risk exposure from individual suits. 4 Effectively, class actions possess the proverbial power to kill dozens of birds (potential plaintiffs) with one, preclusive stone (an order or settlement agreement). 5 1. RICHARD L. MARCUS ET AL., COMPLEX LITIGATION: CASES AND MATERIALS ON ADVANCED CIVIL PROCEDURE 7 (5th ed. 2010). 2. Id. at 224–25. 3. Id. at 579, 581; In re Cardinal Health, Inc. ERISA Litigation, 225 F.R.D. 552, 555 (S.D. Ohio 2005). 4. MARCUS ET AL., supra note 1, at 782. 5. Id. 2017] ASYMMETRIC BARGAINING POWER 1229 A. The Growth of Alternative Dispute Resolution The past thirty years have played host to an unprecedented proliferation of quasi-privatized forms of alternative dispute resolution (“ADR”). 6 Part of this growth stems from the United States Supreme Court’s shifting outlook on ADR; whereas the Court once carried a disdain for arbitration much like Dr. Frankenstein did his humanoid, by the end of the twentieth century, the Court scrutinized the process with more measured glance. 7 In 1984, the Burger Court buried the antiquated notion that ADR did not adjudicate parties’ legal rights, and championed a “national policy favoring arbitration.” 8 Parties flocked to mediations and arbitrations, keen to take advantage of their informal, efficient, and economical services. 9 Why not, after all? If those parties can avoid the bureaucratic nightmare of a lumbering court system with a faster and cheaper alternative, t (...truncated)


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Matthew R. Hamielec. Class Dismissed: Compelling a Look at Jurisprudence Surrounding Class Arbitration and Proposing Solutions to Asymmetric Bargaining Power Between Parties, Chicago-Kent Law Review, 2018, Volume 92, Issue 3,