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The Virtues of Arbitration

By November 14, 2015November 27th, 2015No Comments

Via the New York Times

To the Editor:

Your three-part series on arbitration, beginning with “Arbitration Everywhere, Stacking the Deck of Justice” (front page, Nov. 1), is a one-sided view of arbitration and class-action lawsuits that parrots the plaintiffs’ lawyers’ talking points.

Does anyone in the year 2015 still honestly think that class-action lawsuits do a good job of compensating consumers for alleged corporate wrongdoing?

A recent report by the Consumer Financial Protection Bureau shows that in 87 percent of class actions no class members get any money except (sometimes) the named plaintiff. When there is a monetary settlement, the bureau’s data shows on average that 41 percent of the money goes to the plaintiffs’ lawyers. On average, calculating from that data, lawyers get $1 million per case, while class members get $32.35.

Arbitration provides consumers with a fairer, simpler, cheaper and faster way of resolving disputes, and one with greater potential benefits to individual consumers.

The seven-million-member Kaiser Health plan in California uses arbitration to resolve its disputes with patients and employees; 90 percent of the claimants and their attorneys who participated in arbitration last year reported that it was better than or the same as going to court.

Arbitration clauses incentivize companies to settle disputes with their customers quickly in order to avoid litigating. Class actions discourage companies from trying to resolve disputes with individual consumers because the company knows that it will be sued anyway, even if it hasn’t done anything wrong.

Ironically, one of the American companies that includes mandatory arbitration clauses in its contracts with its Times Journeys customers is The New York Times.


President, U.S. Chamber Institute for Legal Reform


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