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Today is the AT&T Mobility v. Concepcion argument

The case will decide the extent to which state courts can override freedom of contract by permitting consumers to negotiate for a lower price in exchange for a promise that they won't bring a class action—an expensive and clumsy procedural device that all too often does nothing other than transfer wealth from consumers and businesses to attorneys.

The general argument against arbitration is that it forces consumers into uneconomic proceedings, but no one can make that complaint about the AT&T Mobility contract, where the company agrees to pay the cost of the arbitration, not to seek attorney's fees, and to pay a bounty if the arbitral award exceeds a written settlement offer. (And it's telling how bad the class-action system is if a corporation is willing to agree to such consumer-friendly dispute resolution procedures in an effort to avoid it.) Nevertheless, the Ninth Circuit considered it "unconscionable."

Professor Brian Fitzpatrick generally writes intelligently about class actions, so I was surprised at his San Francisco Chronicle op-ed touching on all the left-wing talking points, and bemoaning that the case could "end" class actions. But that's plainly false; looking at my docket at the Center for Class Action Fairness (which (1) is not affiliated with the Manhattan Institute and (2) submitted an amicus brief in this case), about half of my cases involve consumer or securities transactions not readily susceptible to a class-action waiver: an ice cream or headset vendor isn't going to find it worthwhile to set up a retail structure requiring consumers to sign a contract to proceed with a transaction. Moreover, nothing in the Federal Arbitration Act prohibits state attorneys general from bringing consumer actions against defendants who are actually unfairly treating a class of consumers.

And even if neither of those facts were true, so what? In every single one of my cases, my clients would have been better off, ex ante, with the AT&T Mobility arbitration provision than with what class action attorneys negotiated for them—even aside from the lower prices they would have realized in 90% of those cases. The fact that the arbitration provision does not provide classwide relief is hardly relevant: if hundreds of consumers bring identical claims under arbitration because the company is treating consumers uniformly unfairly, AT&T Mobility will eventually find it profitable to accommodate those complaints.

Unfortunately, the media is uniformly describing this case as one of consumers vs. businesses, when it's really one of consumers vs. lawyers trying to protect their monopoly on dispute resolution procedures.

See also Bainbridge. Earlier.

Update: Andrew Trask makes similar points.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.