Gilles & Sebok on Crowd-Classing Individual Arbitrations

In a new article published as part of DePaul Law School’s excellent annual Clifford Symposium on Tort Law & Social Policy, Miriam Gilles and Tony Sebok take up the subject of Crowd-Classing Individual Arbitrations in a Post-Class Action Era. They suggest that enterprising plaintiffs’ attorneys have two potentially viable avenues for making it financially viable to pursue multiple small claims in the teeth of widespread arbitral class waivers. First, arbitration-free plaintiffs could be recruited to litigate test-cases, with favorable judgments used to support future arbitrations. (The authors suggest that the major arbitration providers will have to modify their rules to provide for some degree of issue preclusion and/or precedent-recognition in the face of large numbers of individually-brought claims.) Second, “arbitration entrepreneurs” could purchase numerous small claims and bring them as separate claims, but in a single arbitration proceeding. (Again, the authors suggest the providers will have to provide for some mechanism of consolidation of claims if they begin to see large numbers of small claims brought.)

The limitation on crowd-classing will be finding claimants. I was recently speaking with a partner at a New York City firm that represents AT&T, among other companies that have used arbitration agreements to stifle class action litigation. He told me that they are starting to see efforts by plaintiffs’ attorneys to collect lots of individual small claims and pursue them as separate arbitrations. So far, however, the strategy is just a ripple on the surface of the claims pool, because of the difficulty plaintiffs’ attorneys have in identifying and recruiting genuine, live human beings as claimants. He told me that when they actually looked into the claims, they often found problems with the claimants (dead, unaware of the claim, etc.).

Perhaps the magic of social media will make it possible to identify and recruit claimants on a scale large enough to make crowd-classing viable. But given the reality that many people who are entitled to a benefit as a result of class action litigation never bother to claim it, it seems unlikely that large numbers of people will consistently respond to calls to pursue or assign claims, even if some small benefit is offered.


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