October 16, 2012

Class Actions are Dead, Long Live Social Media?

By Art Hinshaw

Another guest posting from FOI Jean Sternlight (UNLV).

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With the demise of class actions (thank you Supreme Court in AT&T Mobility v. Concepcion)  consumer advocates are struggling to find a way to continue to fight corporate malfeasance.  Several consumer advocates have formed an organization, Consumers Count,  which is designed to help unite multiple consumers who have been wronged by the same corporate practice.  Once a critical mass of consumers have complained about the same practice the complaints will be referred to a law firm which can then enter into fee agreements with the multiple consumers and attempt to pursue their claims, indiviudally, in arbitration.  See www.consumerscount.org.  The website is clear that part of the purpose of the organization is to teach consumers and others about the negative aspects of mandatory arbitration.  As one founder puts it in his blog, “Consumers Count is dedicated to creating a consumer movement to end arbitration in consumer contracts.”  Indeed, an amusing video on the website explains the impact of the Concepcion case on consumers’ ability to protect themselves from corporate misdeeds.

Not all have welcomed the website with open arms.  Alan Kaplinsky, a longtime advocate of mandatory arbitration in the financial services sector, calls the entity “anti-arbitration” and notes that the founders have said their purpose is “to turn arbitration into an unexpected nightmare for corporations.”  Apparently Kaplinsky fears  that the Consumers Count endeavor may allow so many consumers to bring claims that companies will be forced to pay inordinately  high filing fees in arbitration.  Many companies’ arbitration clauses do require them to pay consumers’ filing fees.

For myself, I welcome the new enterprise but do not think it can realistically take the place of most class actions.  No doubt some consumers will learn about Consumers Count and register their complaints on that web site.  Perhaps the related law firm will help these consumers join together and file some claims against certain companies.  I hope so.  However, the vast number of consumers will remain ignorant of the fact they have been harmed or will not spend the time and energy necessary to pursue claims with Consumers Count.  In sum, it is a great idea, and I hope it does some good, but we must not pretend that creative enterprises such as this can actually replace class actions.

Last 5 posts by Art Hinshaw

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