Darr - One of the Points Lawyers - Consumer Arbitration

Darr - One of the Points Lawyers - Consumer Arbitration


What about arbitration filing fees? Aren’t they often prohibitively expensive?


Not at all. For a consumer arbitration, the fees are typically capped at $200 or $250. Moreover, a lot of arbitration provisions state that the business will cover those filing fees as well.


What point are you trying to make? I can’t follow your train of thought.

Yes, a $5 million class action settlement is better for consumers as a whole, because its purpose is to deter corporations from screwing all consumers as a whole. When a bank adds some illegal $1/mo charge to your account statement, and a phone rep tells you “tough luck, the charge is here to stay”, you might not want to deal with it – arbitration may not be worth your (or any other account holder’s) time. Class action is therefore the only way to deter the bank from doing something like this. But now you can’t, because all agreements prohibit individuals from joining a class.


My point was just that, a class action is only “better” for consumers as a large group, and that’s only because a vast majority of that group wont pursue any sort of relief on their own - something will always look better than nothing. But most times, arbitration produces much better results on an individual basis. And yes, both avenues can be a deterrent to the business, and effect a change in business practices. The perceived benefits, and higher effectiveness, of class actions is only due to the stigma against and under-utilization of the arbitration process.


This is how I read your point to be. @Scripta, I bring lots of claims with very small out of pocket damages (or no out of pocket damages) and recover substantial settlements for clients.

In some ways, it’s sort of like the lottery. Everyone chucks in a buck a month, and some folks call me up with good claims and cash in.

One other point, I’m 99% certain that my arbitrations have made changes at major financial institutions.


Only unlike the lottery, where the spoils are limited to small handful of “winners”, anyone and everyone who has “chucked in a buck” can call you up (or file on their own) and cash in on their claim. It doesn’t matter if there are 10 claims or 100,000 claims being made, your successful claim will be based on your specific details - you won’t lose simply because someone else already won. That’s why I have no problem pocketing my gains from an arbitration, when many others suffering the same damages will get nothing - my claim doesn’t preclude anyone else from making their own claim.


You also won’t win simply because someone else already won in arbitration.

Class actions don’t preclude anyone else from making their own claim if they opt out.

I’m not against arbitration – I’m opposed to mandatory and binding arbitration and the “no class action” clauses.


My guess is the only way you can do that is when there are statutory damages and obvious violations of some laws you mentioned earlier.

What if a bank makes a mistake, charges me $1 more each month and refuses to fix it – would I be able to recover more than actual damages?


Right. But how do you bring your claim? You still have all of the issues previously identified. Do you need an expert? Etc. Etc.

Absolutely. That’s not a guarantee, but there are all sorts of state consumer protection statutes designed to rectify just this type of practice. These often have minimum, statutory damages and attorney’s fees.

No one’s going to get rich. But there’s recourse.


Would it be worth anyone’s time, other than perhaps the attorney’s?


Yep. And you and a few other customers might switch banks, but it’s just a numbers game for them. If a few percent of customers switch and everyone else doesn’t notice the charge or doesn’t think anything of it, it’s probably still profitable – and still a harmful scheme overall.

I’ve just gotten caught up on the last few days of comments. I agree with the lottery ticket comparison – you’re likely to get faster and higher settlements when your leverage is “well, we can take this to a JAMS in-person trial, and I’ll probably win, with you paying the high JAMS costs,” but I’d rather have the fairer results from class actions, even if I personally might benefit more from individual arbitrations (if I’m aware of and pursue every claim). A small number of individual arbitrations won’t produce change when the violation is deliberate and carefully calculated.


I’d imagine not, but have you taken any cases where damages fall below the fee amount, and if you’re allowed to provide, what was the result?

If not, what do you think a company receiving a claim for $150 would do where they would be required to pay the $200 with no opportunity to recover those costs?


This gets into mushy but also semi-technical detail. If I have a client with $150 of damages, typically there’s some other claim I can bring in good faith to increase those damages. If your damages really are only $150 and there’s no other claim then I think you call it a day.

But I think the main point is that there are almost always some type of compensable damages in this area thanks to state consumer protection laws.

This is the part I have to push back on. I speak from personal experience. Either it’s a heck of a coincidence or my actions caused it but a major, too big to fail bank changed a pervasive practice after resolving a handful of my individual arbitrations.

I’m not saying we can fix every issue this way, and I don’t care for any glory, but I want to give arbitration its due.

I’m reminded of McDonald’s policy regarding coffee (the infamous, litigation-attracting coffee). Supposedly McDonald’s continues to keep their coffee hot enough to scald and burn because they’ve determined that the loss in customers is worth the occasional lawsuit. I have no inside information if that’s true, but they don’t seem to be adjusting behavior in response to the lawsuits.

Definitely. Let’s say the small case settles for “only” $800 and you split it with the attorney. That’s going to be at least $400 for you (depending on arrangement with attorney).

I’m reminded of a case I had for someone. It was minor, but a handbag fell apart and the warranty wasn’t honored–bag only cost $250. Fired off a quick arbitration demand and the case resolved. Client got a voucher for a replacement bag and a couple hundred dollars for troubles. I got paid a few dollars as well.


Do you suspect the practice was a deliberate and calculated scheme, or just incompetence by the bank where profit wasn’t really the main consideration? If the latter, I suspect that would increase the likelihood of a few individual arbitrations causing change.

That makes sense. It looks like they did change the cup design to make spills less likely. Beyond that, since these are individual claims (not a viable class action), I’m sure they learned their lesson from the infamous lawsuit and are now more amenable to settling reasonable claims (IIRC, the high jury verdict was at least in part because McDonald’s played hardball with settlements). It’s unsurprising that it could be cheaper to settle the occasional claim than to actually fix the problem(s).


Incompetence. Your point is well taken. If they’re making more than they’re losing, no reason to change behavior. But if I find a systemic issue where the company is making money, and have to arbitrate each case individually, it might make sense for me, and, with enough arbs, cause a change.