Can a claim on behalf of a class of plaintiffs be handled effectively and fairly in an arbitration proceeding? Anecdotal opinions about that subject are expressed freely, but they often have questionable evidentiary bases. More information that may contribute to this discussion now is being made available by arbitral organizations, arbitral awards and court decisions involving class arbitrations and by the Consumer Financial Protection Bureau (CFPB). The CFPB also has proposed rulemaking for future consumer financial transactions that could encourage class arbitrations, perhaps in contexts other than those under CFPB jurisdiction.
Class arbitration has found little favor in the U.S. Supreme Court in recent years. Justice Antonin Scalia, writing for a majority of five in AT&T Mobility v. Concepcion,1 found class arbitration inconsistent with basic goals of the Federal Arbitration Act because in his view it is slower than traditional individual party arbitration, more costly, “more likely to generate procedural morass than final judgment” and more formal. He added that class arbitration increases the risk to defendants of large, potentially devastating losses because of the absence of comprehensive judicial review. According to Scalia, the deferential judicial review of arbitral awards is “unlikely to have much effect” and “makes it more likely that errors will go uncorrected.”
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