Appeal tests corporate strategy to bar mass arbitration

Alison Frankl at Reuters writes that a pending appeal asks the Ninth Circuit to approve arbitration provisions that block "mass arbitrations."

As the article explains: "Verizon’s consumer contract, in essence, eliminates consumers’ ability to arbitrate en masse, thus neutralizing their leverage from the steep initial arbitration fees companies are required to pay under AAA rules. The telecom’s consumer contract mandates that if more than 25 customers who are represented by the same plaintiffs' firm file similar demands for arbitration, the cases are to be arbitrated in batches of only 10 at a time, five picked by plaintiffs' lawyers and five by defendants."

Consumer lawyers worry that the provisions are designed to increase the cost of prosecuting claims by consumers, while reducing corporations' defense costs.

The issue arose in a case against Verizon in which customers claim that the company deceptively tacked on administrative fees to their monthly wireless bills.

Briefing is underway. No argument date has been set.

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