The Price of Justice: An Analysis of the Costs That Are Appropriately Considered in a Cost-Based Vindication of Statutory Rights Defense to an Arbitration Agreement

Ramona Lampley, Assistant Professor of Law at St. Mary’s University School of Law, has published “The Price of Justice: An Analysis of the Costs That Are Appropriately Considered in a Cost-Based Vindication of Statutory Rights Defense to an Arbitration Agreement,” Brigham Young University Law Review, No. 4, 2013.  In her paper, Professor Lampley discusses the methods a court may utilize to examine the potentially prohibitive costs associated with pursing individual arbitration following recent United States Supreme Court precedent in American Express Co. v. Italian Colors Restaurant and other cases.

Here is the abstract:

In the wake of AT&T Mobility LLC v. Concepcion, parties opposing enforcement of an arbitration agreement with a class waiver increasingly relied on the prohibitive-costs-based vindication of statutory rights defense. The Supreme Court recently held in American Express Co. v. Italian Colors Restaurant that the effective vindication doctrine cannot be used to invalidate an otherwise enforceable arbitration agreement with class-action waiver simply because the opponents have no “economic incentive” to pursue individual arbitration. However, the Court’s bases for this holding are unclear and unnecessarily call into question the very existence of the “effective vindication doctrine.” This Article examines the historical underpinnings of the prohibitive-costs-based defense and the different frameworks courts have employed to analyze those costs. These approaches can be summarized as (1) the subjective approach, which compares the costs of arbitration to the litigant’s ability to pay; (2) the comparative approach, which compares the costs of arbitration to the costs of proceeding in litigation; (3) the cost/benefit approach, which compares the costs of arbitration to the likelihood of the plaintiff’s potential recovery; and (4) the incentive-based approach, which considers whether the plaintiffs or their potential attorneys have any incentive, given the costs involved, to pursue their claims. This Article concludes that the comparative approach is the only approach that is both grounded in the text of the Court’s vindication of statutory rights jurisprudence and serves the purposes of the FAA and enforcing statutory rights.

This scholarly article may be downloaded without charge from the Social Science Research Network.

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