There has been a lot written about what impact the Supreme Court’s decision in AT&T Mobility, LLC v. Concepcion will have on the future of class actions (if you haven’t followed this closely, see my prior posts about the Supreme Court’s decision, opinions by the Colorado federal court and Northern District of California applying Concepcion, and Concepcion’s potential impact on insurance class actions).  

The boldest claim I have seen is in a recent article in Class Action Watch — “Did the Supreme Court Just Kill the Class Action?” by Professor Brian Fitzpatrick of Vanderbilt Law School.  His article is quite short and to the point, it’s a good read.  He argues that Concepcion “could lead to the end of class actions brought against businesses across most – if not all – of their activities.”   He makes three claims:  (1) large businesses can require nearly everyone who might bring a class action against them to sign an arbitration agreement that includes a class action waiver, including consumers, employees and shareholders (these three groups combined bring nearly all class actions); (2) based on Concepcion, state law obstacles should not bar any class action waivers, because Justice Scalia’s opinion (Fitzpatrick clerked for Scalia) did not turn on anything unique in California law, or on the particular provisions of AT&T’s arbitration clause; and (3) he thinks it unlikely that any other federal law, except for the Dodd-Frank Act (which allows the Consumer Financial Protection Bureau to regulate the use of arbitration clauses in consumer financial products), will trump the Federal Arbitration Act.  He notes that Congress could effectively overrule or limit Concepcion with new legislation, but that seems unlikely with the current political balance. 

Last week I attended a telephonic debate hosted by the Federalist Society between Professor Fitzpatrick and Ted Frank of the Center for Class Action Fairness (Ted, who regularly objects to class action settlements he finds unfair, was recently profiled in the Wall Street Journal blog).  Frank argued that, while it may be possible for a lot of class actions to be defeated through increased use of arbitration, we have not seen companies eager to use arbitration.  He noted that employers have been able to compel arbitration of Title VII claims for a long time, but many do not do that and we see plenty of Title VII suits.  He said public companies have not implemented arbitration agreements with shareholders likely because they are looking for a safe harbor ruling from the SEC.  He also argued that many consumer transactions are small enough that there isn’t room for the transaction costs of arbitration or there may be no opportunity, as a practical matter, to obtain the consumer’s consent to an arbitration agreement.  Frank also noted that some courts have stricken down arbitration provisions after Concepcion.  (For a thorough recent update on that case law, see the recent post on Andrew Trask’s Class Action Countermeasures Blog, and also the post about a recent California Court of Appeal decision on the Class Action Defense Strategy Blog).  In response, Professor Fitzpatrick argued that almost any consumer transaction can be the subject of a “shrinkwrap” type of agreement which courts have enforced, and that there is nothing in federal law that prevents requiring shareholders to agree to arbitration with issuers.    

So where do I stand on this?  Some might say I have a vested interest in the outcome of this debate because if class actions disappear so would this blog, but then again so will Professor Fitzpatrick’s research focus, Ted Frank’s public interest center and numerous other blogs.  But the end of class actions would not end the insurance industry’s need for legal representation, and I’d probably change my focus to another area that is part of my practice and of intellectual interest to me.  In any event, one point I see missing here is that broad-scale implementation of arbitration provisions by businesses not only potentially could end class actions as we know them, it would fundamentally change litigation as we know it.  Unless these arbitration provisions are somehow carefully restricted in some manner that targets them toward disputes that give rise to class actions (typically, but not always, smaller dollar-value disputes) and exempts other disputes that America customarily fights out in court, what Prof. Fitzpatrick is suggesting could completely change our legal system as we know it — a vast number of disputes would end up in arbitration.  There are good reasons why, despite the Federal Arbitration Act being in place for over 80 years, the number of lawsuits still overwhelmingly exceeds the number of arbitrations.  Arbitrations frequently (but not always) can be more costly (someone has to pay the arbitrators, but not a judge), more time consuming (arbitrators usually have another day job, unlike judges), less predictable (arbitrators are sometimes not bound by legal precedent, and are not subject to appellate review), and involve collateral disputes that do not happen in litigation (such as disputes over selecting the arbitrator(s), their impartiality, what procedures to follow, etc.).  By using arbitration provisions, businesses who have lots of smaller, non-class action disputes with their customers, including insurance companies, would be fundamentally changing how many of those disputes are resolved and in a way in which the potential impact on the bottom line could be very difficult to predict.  This potentially could eliminate class actions, but with what ultimate savings or cost?  Will customers be more or less likely to use arbitration than litigation, and will the outcomes be more or less favorable to businesses?  That remains to be seen.  I think we will see some companies experimenting with greater use of arbitration after Concepcion in order to reduce their class action exposure, and others will not do this because they are not as comfortable with arbitration or they haven’t been faced with significant class action exposure.  The end of the class action eventually could come, but only if companies find that arbitration is ultimately cheaper than litigation and the balance of power in Congress and on the Supreme Court does not fundamentally change in a way that undermines or invalidates Concepcion.

Insurers are in a somewhat unique position on this issue, as I noted in a prior post.  The McCarran-Ferguson Act postdates the Federal Arbitration Act and some federal appellate courts have held that state law barring or restricting arbitration controls over federal law.  But there are many states that have no statutory bar on insurance arbitrations, and state legislatures in states that have such laws might be persuaded to change them if the new law provides adequate protection to insureds.  I have not yet seen any articles about insurance companies taking advantage of Concepcion, but that does not surprise me.  These kinds of internal decisions take quite a while and even once a decision is made to try to implement arbitration, it could take substantial time for regulatory approval of changes to policy forms.  One risk I see that insurers have is that if plaintiffs’ lawyers who bring consumer class actions no longer have viable targets in other industries (telecommunications, manufacturing, etc.) because of wide-scale implementation of arbitration provisions, and the insurance industry either largely decides not to use arbitration or it has greater obstacles in implementing it, the insurance industry could become a much larger target for the plaintiffs’ bar.  The same is true where some companies in a given industry decide to go the arbitration route and others choose not to – the ones that don’t implement arbitration will become the class action targets.  The top plaintiffs’ lawyers make millions in fees in class actions and don’t go away easily.

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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.