45 Pages Posted: 12 Dec 2012 Last revised: 12 Feb 2013
Date Written: December 10, 2012
By mandating that numerous plaintiffs litigate their common question claims separately in individual arbitrations rather than jointly in class action arbitrations, the Supreme Court in AT&T Mobility LLC v. Concepcion created a potent structural and systemic bias in favor of defendants. The bias arises from the parties’ divergent stakes in the outcome of the common question litigation in individual arbitrations: each plaintiff will only invest to maximize the value of his or her own claim, but the defendant has an incentive to protect its entire exposure, and thus will have a classwide incentive to invest more in contesting common questions. This investment advantage enables the defendant to wield superior litigation power against each plaintiff, skewing the outcome of individual arbitrations in its favor and frequently rendering claims not worth filing in the first place. Concepcion perpetuates the bias by precluding the use of a class arbitration solution. We propose that courts neutralize the Concepcion bias by appointing class counsel to represent each plaintiff in individual arbitrations. Without offending Concepcion’s prescriptions for maintaining the efficiency of arbitral procedures, in particular the general bar against class arbitration without express contractual authorization, the class counsel solution equalizes the parties’ investment incentives to transform individual arbitrations into a socially useful legal system for promoting the deterrence, compensation, and other public policy objectives of federal and state substantive law.
Keywords: Class Actions, Civil Litigation, Liability, Torts
JEL Classification: K00, K13, K41
Suggested Citation: Suggested Citation
Korn, David and Rosenberg, David, Concepcion's Pro-Defendant Biasing of the Arbitration Process: The Class Counsel Solution (December 10, 2012). Harvard Public Law Working Paper No. 13-09. Available at SSRN: https://ssrn.com/abstract=2187463