New Report: Attacks on Arbitration Bad for Consumers

Eliminating arbitration will undo progress against lawsuit abuse.

NEW YORK, NY – Arbitration—the use of a third party rather than the courts to settle contract disputes—has become more commonplace as a mechanism for avoiding class-action lawsuits that impose costs on consumers, but the Obama administration in its waning days has moved aggressively to curb the practice. A new report from the Manhattan Institute’s Trial Lawyers, Inc. series examines the three areas in which the Obama administration has attempted to eliminate arbitration: nursing-home care, financial products, and labor disputes. Author James R. Copland argues that in each case, trial lawyers stand to gain substantial financial benefits at the expense of consumers.

Specifically, Copland discusses the motivations behind and likely impact of: the NLRB’s order regarding arbitration clauses precluding class-action wage-and-hour lawsuits, the CFPB’s proposed rule for consumer finance contracts, and the CMS rule for nursing-home contracts. He shows that these rules hold enormous potential costs and would turn back progress against rising litigation costs and lawsuit abuse.

The report is the latest in the Trial Lawyers, Inc. series, which has been tracking litigation abuse and barriers to reform since 2003.

Click here to read the full report.