Originally from American Review of International Arbitration - ARIA

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AT&T MOBILITY v. CONCEPCION: CAN CLASS ACTIONS BE
BROUGHT IN ARBITRATION?
Hans Smit∗
 

I. INTRODUCTION

Mass marketers have shown an understandable affinity for arbitration clauses
in their contracts. In arbitration, there is no jury, parties can choose their own
arbitrators, and the claimant must put up its share of the estimated cost of
arbitration up front. In addition to these advantages, building on the notion that
arbitration is a product of contract, mass marketers have also included in their
contracts clauses excluding punitive damages or other clauses limiting otherwise
available remedies, including clauses precluding class actions.

The notion that arbitration is a contractual form of dispute settlement provided
an arguable legal basis for these attempts at loading the dice in favor of providers
of mass goods or services. Since class actions are a most attractive device for
combining small individual claims into a large collective one, the question of
whether class actions would be available in arbitration raised an issue of primary
concern to mass marketers who sought to use recourse to arbitration as a means to
limit their liability. Their concern took two forms: first, are class actions available
in arbitration; and second, if they are, can recourse to them be contractually
precluded?

The first question was answered affirmatively by the Supreme Court in
Bazzle. In that case, the Court ruled that it was, at least in the first instance, for
the arbitrators to decide whether a class action could be brought. Implicit in that
ruling was the decision that the arbitrators had to decide what form of class action
was appropriate.