Arbitration and the Supreme Court

I hope you all have been reading the superb NYT series about how mandatory arbitration agreements permit powerful businesses to violate the rights of consumers and employees with impunity. Andrew Koppelman adds an additional observation:

Today’s New York Times reports the increasingly widespread use of arbitration clauses in consumer contracts, with the Supreme Court’s encouragement, to insulate businesses from class action suits. The consequence is that the misbehavior that such suits target – small thefts and abuses that affect large numbers of consumers, producing millions of dollars in illicit profits – is insulated from any legal remedy.

Among the lawyers who devised this clever trick was one John G. Roberts. He later provided the crucial vote to interpret the Federal Arbitration Act to shut down consumer and employment discrimination suits, in defiance of the intentions of the act’s authors.

Doubtless class action suits can be a nuisance for businesses, and sometimes they’re not meritorious. But when they are entirely blocked, really nasty business practices can be conducted with impunity. The Times describes one case in which Sprint allegedly imposed roaming charges for customers’ cellphone calls from their homes. If this was true, each individual suffered a roughly $20 loss, far too little to be worth suing for on an individual basis, even though it was worth quite a bit to Sprint. (Sprint’s successful legal argument was that it did not matter if it was true.)

In the world that the Court’s arbitration jurisprudence has brought about, businesses that do not swindle their customers for small sums are foolishly leaving money on the table.

It gets less attention than Citizens United and Shelby County, but AT&T Mobility v. Concepcion belongs at near the top of any list of Roberts Court atrocities. Not only is the result outrageous, but the opinion is as good an illustration of Scalia’s lack of commitment to “textualism” as the sovereign immunity cases.