Cardozo Law Professor Myriam Gilles made her name as a class action scholar when, years before Concepcion, she identified (and publicized) the defense tactic of requiring potential plaintiffs to arbitrate their claims instead of bringing class actions.
Her latest paper, co-authored with Cardozo colleague Anthony Sebok is Crowd-Classing Individual Arbitrations in a Post-Class Action Era. It seeks to follow up on her previous prescience. Professors Gilles and Sebok predict that arbitrations will soon be subject to aggregation one way or another, since, in their view, that is the only way arbitration of consumer claims is economically viable.
The two professors make a lot of assumptions that would undermine their argument in a court of law, or even public policy. They assume–contrary to evidence–that class actions are on a steep and irreversible decline. And they assume–contrary to the intent of arbitration–that a successful arbitration against a corporation requires the same deep discovery and expensive experts as proving a classwide claim. (In fact, they assume that a successful arbitration always requires a lawyer.)
But they do identify two possible tactics plaintiffs’ lawyers might undertake to keep certain kinds of class actions profitable even in the face of an arbitration clause. The first of these is to seek a classwide declaration "on spec," and then make their money back prosecuting arbitrations:
[I]n some cases, the plaintiffs’ lawyers will be able to bring a class action under Rule 23(b)(2) for declaratory or injunctive relief. This will be true, for example, where complete relief for a claimant requires a market-wide injunction governing the defendant’s conduct vis-a-vis all market participants. Likewise, if there are any claimants who are not covered by an arbitration clause, a judicial liability determination may provide the requisite predicate for our serial arbitration strategy. And so would public enforcement actions, whether brought in a law enforcement capacity or parens patriae. Indeed, enterprising plaintiffs’ lawyers might even be well advised to offer their services at a discount to state enforcers in order to obtain the springboard of a judicial liability holding.
Once lawyers have obtained a judicial declaration of wrongdoing, many of the financial disincentives to individual arbitration described above are altered. For example, the hybrid model reduces transaction costs where discovery produces the identities of affected consumers, enabling lawyers to contact potential clients to determine their willingness to sell, assign or otherwise have their claims arbitrated. On this model, information costs are significantly reduced because lawyers would be able to recoup their fees and other related costs of proving wrongdoing.
With the fully-enforceable judicial declaration in hand, lawyers could then move to the arbitral fora to individually arbitrate claims in what essentially become a series of damages inquests.
(Emphasis added.) This declaration strategy sounds like a dodge of Concepcion, and it’s likely that courts will identify it as such. Among other things, it is unclear why a court would entertain a class action for declaratory relief only when an arbitration would benefit the individual more. (In technical terms, it is unclear why the court would not grant the defendant’s motion to compel arbitration, since what the plaintiff would really be after was a final adjudication of her own claim.)
The second alternative would be to consolidate a series of individual arbitrations:
The second and complementary model envisions “arbitration entrepreneurs” – either lawyers or non-lawyers – buying up legally-identical, potentially-valuable individual claims that are subject to arbitration. Upon procuring as many discrete claims as the market will bear and which can net a profit, the arbitration entrepreneur would then file a single arbitration seeking to collectively resolve the hundreds or even thousands of claims she has amassed.
This predicted strategy is intriguing, although it contains at least one potential drawback for lawyers that the professors never discuss. Their analysis says nothing about how people will feel about being constantly solicited by "entrepreneurs." Based on the number of TCPA class actions filed over unsolicited texts and faxes, potential clients may be more annoyed than empowered. But maybe they can take those grievances to arbitration against the firms.