Arbitration - The Possible Price of Inaction Following Concepcion
The practical impact of AT&T Mobility v. Concepcion is already starting to become apparent. As reported by Robin Sidel in the Wall Street Journal, large and small financial institutions are beefing up the arbitration language in their consumer agreements. The article even gives details on how Regions Financial implemented changes to its existing mandatory arbitration provision.
In a prior post, we examined the U.S. Supreme Court’s decision and took a look at some of the possible legislative and regulatory reactions. However, John Lewis' report on Jock v. Sterling Jewelers over at Baker Hostetler's Employment Class Action Blog discusses a possible downside of the post-Concepcion environment. Specifically, what if a hospitality company fails to make changes to its employee/customer agreements in reaction to the U.S. Supreme Court's decision?
Well, in the event the arbitration provision is silent as to class proceedings (as it was in Jock), you could end up with an arbitrator making a conclusion along the following lines:
Because this contract was drafted by [employer] and was not the product of negotiation, it was incumbent on [employer] to ensure that all material terms, especially those adverse to the employee were clearly expressed. . . . [Employer] acknowledges . . . that it has deliberately not revised the . . . arbitration agreement to include an express prohibition [of class proceedings]. [C]onstruing the Agreement to contain a waiver of a significant procedural right would . . . insert a term for the benefit of one of the parties that it has chosen to omit . . . .
According to John's post, metaphysics still reigns when it comes to divining the parties' intent to permit class proceedings in arbitration. As such, it is probably better to make an affirmative policy decision than to rely on an arbitrator's uncertain logic.