Janet Cooper Alexander, a professor at Stanford Law and a scholar of civil procedure and class actions, is not a fan of the U.S. Supreme Court’s 2011 ruling in AT&T Mobility v. Concepcion. In an upcoming paper for the University of Michigan Journal of Law Reform, Alexander discusses why, in her view, the high court majority “fundamentally misread” legislative history and congressional intent when it used the Federal Arbitration Act “to advance an agenda that is hostile to consumer litigation and classwide procedures.” Alexander argues that Concepcion‘s overarching endorsement of mandatory arbitration clauses has had a dire impact on the ability of consumers and employees to litigate small claims, since they’re “subject to unilaterally imposed arbitration provisions that overwhelmingly contain class waivers.”
“(Concepcion) may lead to the virtual death of the class action in employment cases and consumer contracts involving the sale of goods and services – any small-dollar transaction that can be governed by shrinkwrap, clickwrap, claim check, or other form of contract,” Alexander wrote.
Like I said, not a fan of the ruling. The professor thinks it’s highly unlikely that the current Congress will pass federal legislation to roll back Concepcion, and though she believes executive-branch agencies have the power to issue regulations restricting mandatory arbitration clauses, “such regulations, of course, could only govern contracts within the agency’s sphere of authority and could not apply broadly to all consumer contracts,” she wrote. And since Concepcion dealt specifically with a state attempt to preclude a purportedly unconscionable arbitration clause, employees and consumers can’t rely on statewide regulation to reopen the courthouse doors for their claims.
But all hope is not lost for Concepcion detractors. Alexander suggests that state legislatures could use California’s Private Attorneys General Act (PAGA) of 2004 as a model to enact laws that give employees and consumers the right to pursue aggregated small claims on behalf of the state. “Rather than trying to prevent corporations from requiring consumers and employees to resolve their claims for contractual monetary remedies in bilateral arbitration, a state could create an alternative means for private enforcement of the substantive law,” Alexander writes. “That is, rather than looking for a way for consumers and employees to bring their individual claims for compensatory damages in an aggregate proceeding in order to preserve the public benefits of holding violators liable, the state could simply provide a means for private litigants to enforce the substantive law directly, without the necessity to amass individual damages claims. Specifically, a state could enact a statutory penalty for consumer fraud or violation of state labor laws and provide for private enforcement through a qui tam or private attorney general action.”
According to Alexander, if the laws are drafted well, private AG actions would be insulated from mandatory arbitration clauses, even after Concepcion, because the qui tam plaintiff is suing for statutory damages on the state’s behalf, not for individual compensatory damages. “Because the suit does not attempt to adjudicate the legal interests of absent parties, the due process concerns familiar in class action litigation are not implicated,” the professor argues. And even if the case were deemed to require arbitration, she says, it could still be prosecuted on a classwide basis. “Assuming that an arbitration provision could require a relator to pursue the action in arbitration rather than in court, it could not bar the relator from seeking a recovery based on a large number of violations because the suit would not seek to adjudicate individual claims, but rather to enforce the state’s right to penalties for unlawful conduct against a group,” the paper says.