A recent column by David Lazarus in the Los Angeles Times, “Microsoft Ending Consumers’ Ability to File Class-Action Suits,” reports that Microsoft is implementing arbitration provisions with class action waiver provisions.  The article discusses a blog post by Tim Fielden, Assistant General Counsel of Microsoft regarding this change.  Fielden’s blog post explains:

When a customer in the United States has a dispute about a Microsoft product or service, many of our new user agreements will require that, if we can’t informally resolve the dispute, the customer bring the claim in small claims court or arbitration, but not as part of a class action lawsuit. Many companies have adopted this approach, which the U.S. Supreme Court permitted in a case it decided in 2011.      . . .

We think this is the right approach for both Microsoft and our U.S. customers. Our policy gives Microsoft powerful incentives to resolve any dispute to the customer’s satisfaction before it gets to arbitration, and our arbitration provisions will be among the most generous in the country. For instance, we permit arbitration wherever the customer lives, promptly reimburse filing fees, and, if we offer less to resolve a dispute informally than an arbitrator ultimately awards, we will pay the greater of the award or $1,000 for most products and services—plus double the customer’s reasonable attorney’s fees. Most important, this approach means customer complaints will be resolved promptly, and in those cases where the arbitrator agrees with the customer’s position, the customer will receive generous compensation, and receive it quickly.

David Lazarus’ article argues that Microsoft’s action, and the Supreme Court’s decision in AT&T v. Concepcion, are unfair to consumers.  He writes:

[D]espite the company’s assertions of increased customer satisfaction, the reality is that Microsoft is telling people they can stuff it if they want to join together in exercising their constitutional right to a jury trial.

And the company has the full backing of the U.S. Supreme Court in staking out this arrogant, deeply consumer-unfriendly position.

. . .

So Microsoft’s barring of class actions will only serve to encourage other tech heavyweights to follow suit. As it stands, people can file a class-action lawsuit against Google. They can file a class action against Apple, and Facebook, and Twitter.

Anyone want to bet how long that’ll last?

I don’t think Lazarus is correct.  Taking my class action defense lawyer hat off for a moment, when I, as a consumer, buy a product that I’m really unsatisfied with for one reason or another, and expect that other consumers also are unhappy, my current options are:  (1) taking the product back to the store and getting a refund, if that is an option; (2) calling the 800 number and arguing with the person on the other end of the line (which these days is often someone overseas) for a refund; or (3) waiting until someone brings a class action (it’s pretty unlikely I want to deal with the hassle of being a named plaintiff myself),  then waiting years for that case to work its way through the court system and eventually settle, if that happens, and then waiting months while the settlement works its way through the approval process until a check for some small amount of money, far below the purchase price of the product, finally arrives in my mailbox (while the lawyers representing the class pocket millions of dollars in attorneys’ fees).  The jury trial that Lazarus talks about is largely a fiction because class actions almost never go to trial, and those that do often result in settlement while on appeal.  In my mind, if options (1) and (2) are unavailable or unsuccessful, a quick-and-easy arbitration would be more preferable, and give me a better chance of obtaining significant relief for myself than waiting for a class action to materialize, if it does. 

Another question that Microsoft’s new adoption of arbitration brings to mind is whether insurance companies will follow what AT&T and now Microsoft have done.  I’ve written on that subject before on this blog a number of times, see my August 22, 2011 post, and the Arbitration/Appraisal topic area on this blog.  Insurers have a number of things to think about that differ from AT&T and Microsoft, including potential state statutory and regulatory obstacles, and the fact that insurance contracts tend to lead to more litigation and different types of litigation than cases that tend to be filed under a “shrinkwrap” software contract or a cell phone contract.  Arbitration may or may not be a successful strategy for the insurance industry.  Only time and trial and error will tell for sure, if any insurer adopts it (and it would likely have to be a major carrier that takes the lead since it would need to be a carrier that regularly faces class actions).  One risk that insurers have is that, if most or all of the other major industries that today are large targets for consumer class actions adopt arbitration provisions with class action waivers, insurers could see an uptick in class action filings against them simply because they have not implemented arbitration.

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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.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

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 work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.