Report Calls Out Plaintiff’s Attorneys for Mass Arbitration “Shakedown”

The U.S. Chamber of Commerce’s Institute for Legal Reform has published a report calling out plaintiff’s attorneys for filing hundreds or thousands of similar demands against a defendant in arbitration proceedings that force defendants to settle claims in a form of “blackmail.”

A copy of the report can be accessed by clicking here.

Attorneys in the accounts receivable management industry have noted an uptick in the number of arbitration claims being filed by consumers and plaintiff’s attorneys, especially in the wake of rulings from across the country determining that plaintiffs don’t have standing to sue in federal court for alleged violations of the Fair Debt Collection Practices Act. The costs to arbitrate a case can be just as high as defending a case in federal or state court, leaving the defendant with the choice of paying money to settle a case — and potentially painting a target on its back for similar claims — or spending tens of thousands of dollars to defend itself.

The only group that does not benefit from the arbitration process is plaintiff’s attorneys, the report argues. So they have turned to filing mass arbitration claims, which triggers an “immediate, massive bill to businesses for arbitration fees,” leaving the company with the decision to settle or pay the fees to try and defend itself.

The report suggests using a bellwhether arbitrations to arbitrate a select group of test cases and then use the ruling on the merits to settle all of the remaining cases, or choose another group of cases to arbitrate.

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