After the Revolution: An Empirical Study of Consumer Arbitration

Professors David Horton and Andrea Cann Chandrasekher, University of California, Davis School of Law, have authored “After the Revolution: An Empirical Study of Consumer Arbitration,” Georgetown Law Journal, Vol. 104, 2015, Forthcoming.  In their paper, the authors examine the consumer complaints that were filed with the American Arbitration Association during the four-year-period between 2009 and 2013.

Here is the abstract:

For decades, mandatory consumer arbitration has been ground zero in the war between the business community and the plaintiffs’ bar. Some courts, scholars, and interest groups argue that the speed, informality, and accessibility of private dispute resolution create a conduit for everyday people to pursue claims. However, others object that arbitration’s loose procedural and evidentiary rules dilute substantive rights, and that arbitrators favor the repeat playing corporations that can influence their livelihood by selecting them in future matters. Since 2010, the stakes in this debate have soared, as the U.S. Supreme Court has expanded arbitral power and mandated that consumers resolve cases that once would have been class actions in two-party arbitration. But although the Court’s jurisprudence has received sustained scholarly attention, both its defenders and critics do not know how it has played out behind the black curtain of the extrajudicial tribunal.

This Article offers fresh perspective on this debate by analyzing nearly 5,000 complaints filed by consumers with the American Arbitration Association between 2009 and 2013. It provides sorely-needed information about filing rates, outcomes, damages, costs, and case length. It also discovers that the abolition of the consumer class action has changed the dynamic inside the arbitral forum. Some plaintiffs’ lawyers have tried to fill this void by filing numerous freestanding claims against the same company. Yet these “arbitration entrepreneurs” are a pale substitute for the traditional class mechanism. Moreover, by pursuing scores of individual disputes, they have inadvertently transformed some large corporations into “extreme” repeat players. The Article demonstrates that these frequently-arbitrating entities win more and pay less in damages than one-shot entities. Thus, the Court’s consumer arbitration revolution not only shields big businesses from class action liability, but gives them a boost in the handful of matters that trickle into the arbitral forum.

This and other scholarly articles written by Professors Horton and Chandrasekher may be downloaded free of charge from the Social Science Research Network.

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