Is a Surge of Mass Arbitration Really Coming?
Data Strategy, Security and Privacy attorney William Farley was quoted in a Law.com article exploring the idea of mass arbitration and how it is currently being used. Although the type of surge predicted by some defense firms has not manifested itself thus far, Mr. Farley noted that a handful of firms have become active in the space and are pioneering its use. He explained that plaintiffs turn to mass arbitration when arbitration clauses prevent them from filing a class action lawsuit.
"It's a different strategy, a different business model, than a class action lawsuit," he said. "The idea from the plaintiffs' standpoint is that for companies that have an arbitration provision in their terms of use, the plaintiffs aren't able to file class actions against those companies because of arbitration. Because they can't do class action, they wanted to find another way to bring a big lucrative case against a defendant company, and a way around that is to do it through mass arbitration."
However, mass arbitration presents costs for both defendants and plaintiffs. For corporate defendants, each claim could cost thousands of dollars to file, making the cost to adjudicate pile up quickly. Plaintiffs also often have to pay some portion of the fees. Despite these costs, Mr. Farley commented, mass arbitrations are on the rise, especially in the privacy space.
"We know from experience, being one of the main defense firms in this area, that the number of firms are growing, the types of claims are growing," he said.