The U.S. Chamber of Commerce has issued strong criticism of the first two articles on arbitration published in the New York Times this past Sunday and earlier this week.  (The articles were part of a series of three reports.)  Alan Kaplinsky, Practice Leader of Ballard Spahr’s Consumer Financial Services Group, was quoted extensively in the first article.  Alan has blogged about the article’s failure to acknowledge many critical facts concerning consumer arbitration and class actions that are inconsistent with the article’s negative conclusions.

In its analysis, the Chamber similarly observes that much important favorable information about arbitration was left out.  In addition to noting that the Times only quoted legal scholars who oppose arbitration and ignored the scholars who support arbitration or criticize class actions, the Chamber comments that “the bias in the Times report goes much deeper. It (a) assumes that class actions provide consumers with real, unalloyed benefits; (b) ignores any possible benefits provided by arbitration; and (c) concludes that arbitration therefore must be harmful.”

Among the omitted issues identified by the Chamber are:

  • A discussion of how class actions actually work in practice.  In particular, the Chamber notes that the articles did not  include data, including the CFPB’s own data in its final arbitration study, that shows consumer class actions deliver little benefit to class members and that consumers and plaintiffs’ lawyers do far better than class members.
  • A discussion of how arbitration provides consumers with access to procedures that offer consumers greater potential benefits than class actions and that are easier to use than lawsuits in court, including that (1) because it provides a fair and efficient means of adjudicating small consumer claims, arbitration redresses consumer injuries that would go unresolved without arbitration; (2) arbitration is procedurally simpler and thus more accessible to consumers; and (3) because it is less expensive than court litigation, arbitration reduces companies’ costs of dispute resolution which, as many academics have indicated, allows companies to pass those cost savings on to consumers through lower prices.
  • The “consumer-friendly” steps taken by many companies to make arbitration cost-free for consumers and give consumers the choice of whether to resolve a dispute via written submissions, telephone hearings, or in-person proceedings (including that some companies agree to pay customers a bonus if they prevail in arbitration and receive more than the company’s last written settlement offer and that many companies have arbitration provisions that allow for expert witness and other discovery costs to be shifted to the company if the claimant prevails.)

The Chamber also takes the Times to task for its suggestion that “‘corporate America’—particularly large banks—engaged in a conspiracy to promote arbitration” and its decision “to add some innuendo attacking the Supreme Court.”  The Chamber concludes its comments with the following statement: “There is an honest debate to be had over the role of class actions in our society and whether arbitration offers consumers a positive alternative.  Unfortunately, the Times approached this issue with a closed mind.  Its ‘investigation’ is little more than an opinion piece masquerading as fact.”