Daniel Fisher of Forbes has written another article criticizing the NY Times for its stance on arbitration. Last week, Mr. Fisher criticized the first article in the Times’ three-part series on arbitration for disregarding the many negative aspects of class action litigation. (Alan Kaplinsky, Practice Leader of Ballard Spahr’s Consumer Financial Services Group, was quoted extensively in the first article and 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. The U.S. Chamber of Commerce has also been highly critical of the Times’ articles.)
In his new article, Mr. Fisher comments that the Times “drew a lot of criticism, from me and others, for its three-part series on arbitration that largely ignored the wealthy special-interest group that opposes arbitration the most: Class-action lawyers.” He also observes that in its editorial this past weekend, the Times “repeat[ed] the error, equating arbitration with a ‘shift away from the civil justice system,’ as if people with $2 disputes over their cell phones could recover any meaningful relief through a conventional lawsuit.” He comments that “to reject [arbitration] wholesale would be to chip away at the right of individuals to order their transactions the way they want.”
Mr. Fisher criticizes the Times for “paint[ing] a simplistic, either-or portrait of arbitration, however, leaving readers with the impression consumers who agree to arbitration have given up their ‘right to sue’ when that is a practical illusion. No lawyer will take small consumer disputes unless they are bundled together into a class action, where there is ample evidence attorneys often settle on terms that are profitable for them but don’t bring much to their clients.” He also calls into question the CFPB’s statement that its proposal to ban class action waivers “would give consumers their day in court to hold companies accountable for wrongdoing.”
Mr. Fisher observes that the CFPB’s own final arbitration study released in March 2015 “casts doubt on that conclusion,” noting that in the study, the CFPB “concluded that in 60% of 562 class actions filed between 2010 and 2012, consumers got nothing, mostly because lawyers settled their cases without negotiating a payment for the class (but presumably getting a fee for themselves).” He also references Alan Kaplinsky’s analysis, which showed that “only 15% of the class actions studied by the CFPB resulted in settlements that provided monetary benefits to class members. Consumers who received settlement cash payments got $32.35 on average after waiting for up to two years, while class counsel class recovered $424,495,451 in attorneys’ fees.”
