In my prior post about the Supreme Court’s decision in AT&T Mobility v. Concepcion, I made some preliminary observations about how insurance companies might take advantage of the opportunity provided by that decision to potentially reduce class action exposure through the use of arbitration clauses that bar class arbitrations.  I’ve given some further thought to that recently and thought I would share my thoughts with readers of my blog: 

  1. In order to significantly limit class action exposure through the arbitration mechanism, arbitration clauses would need to be added to homeowners’ policies (which currently have only appraisal provisions) and life insurance policies, and the scope of such clauses in auto insurance policies would need to be expanded (currently arbitration is typically limited to UM/UIM coverage).  That would require a major change in the manner in which disputes under these types of policies historically have been resolved.  Some insurers may not be comfortable having a dispute over a $250,000 loss to a house resolved in arbitration, with no appellate review and limited means of judicial review.  But class actions rarely involve $250,000 losses, so one approach might be to limit the scope of what is arbitrated to only small claims (perhaps under $10,000).
  2. Some insurers and their counsel are much more comfortable with judges deciding coverage issues, and there may be concern about leaving coverage issues significant enough to be raised in a putative class action for arbitrators to resolve.  One potential way of addressing this issue would be to have the arbitration clause require the use of an arbitrator with insurance expertise.  That might even lead to better results than the parties might get before a generalist judge, say one who just joined the bench after 20 years of a practice limited to criminal law.
  3. Whether the outcome in a small arbitration could somehow be the basis for collateral estoppel in a future case is an issue requiring research in any jurisdiction where this approach might be considered.
  4. There are some jurisdictions that have statutes barring the use of arbitration in insurance policies.  Under the federal McCarran-Ferguson Act, state law barring arbitration might “reverse preempt” the Federal Arbitration Act.  For a couple of cases addressing this issue, see American Bankers Ins. Co. v. Inman, 436 F.3d 490 (5th Cir. 2006) and McKnight v. Chicago Title Ins. Co., 358 F.3d 854 (11th Cir. 2004).
  5. Regulatory approval is obviously an issue but it seems that insurance companies would have a strong argument that an appropriately-drafted arbitration clause providing for swift resolution is fairer to insureds who have small disputes than subjecting them to time-consuming and expensive litigation.
  6. There may be some benefit to waiting to see how things play out in court decisions applying Concepcion and in arbitrations under other consumer contracts before an insurance company decides what to do on this.  AT&T, for example, recently got hit with a large number of arbitrations filed by a couple of law firms, attempting to challenge its merger with T-Mobile (see this Reuters article for more information).  AT&T has filed suits seeking to block these arbitrations on the grounds they are effectively an end-run around the prohibition on class arbitrations, and they seek relief beyond the scope of what AT&T’s arbitration clause provides for.  This development suggests that using arbitration clauses may lead to some unanticipated problems.  

If anyone has further thoughts about additional considerations I haven’t addressed on this issue, I’d be interested to hear them by e-mail

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.