Originally from:

Journal of American Arbitration (JAA) - Vol. 2, No. 1

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ARTICLES

The Use of Mandatory Arbitration Clauses to
Prevent Class Actions: A Problem for Plaintiffs
and a Problem for Society
By Stephanie Smith

I. INTRODUCTION
Corporations exist to preserve capital and generate profits, but they
have a duty to do so responsibly and without unduly harming society.
Because social responsibility is often unprofitable, it is necessary to
provide individuals with some meaningful way to demand it. If a
corporation or employer is not punished for its detrimental behavior,
businesses will continue with the behavior up until the point when it is no
longer cost effective. The class action is one of the primary means
available to individuals seeking to challenge irresponsible corporate
activity. The class action prevents a corporation or employer from
continuing its bad behavior by imposing financial consequences through
monetary damages and injunctive relief. This Comment will show how
corporations and employers are using mandatory arbitration clauses to
prevent the use of class actions by harmed individuals, thus preserving
their ability to profit at society’s expense. Part II examines utility of class
actions in modern society. Part III looks at arbitration as a dispute
resolution mechanism and the strong support for this method provided by
the judiciary. Part IV examines what happens when class actions and