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Consumer Arbitration Agreements: 10.7.3.7 Settlement

Settling on behalf of a group of similarly situated clients presents practical challenges and attorneys must be prepared to grapple with certain ethical issues. It is impractical (if not impossible) to negotiate thousands of individual settlements on a case-by-case basis. Consequently, most mass arbitrations involve aggregate settlements. This is also consistent with the approach preferred by the business, which is the total cost of its liability, not individual components.

Consumer Arbitration Agreements: 10.7.4.1 Overview and What to Watch Out For

This subsection considers consumer or worker court challenges when a business’s arbitration provision requires unfair mass arbitration procedures. Those unfair procedures may be found in the arbitration provision itself, or the arbitration provision may specify an arbitration provider whose mass arbitration rules are unfairly one-sided.

Consumer Arbitration Agreements: 10.7.4.2 Challenging the Formation of Agreements Specifying Unfair Procedures

When a consumer or worker was already subject to a preexisting arbitration provision, any amendment to that provision must be validly formed. Formation questions are for the court and not the arbitrator to decide even if there is a delegation clause.139 Thus, consumers and workers can seek a court order that an amended arbitration provision was not validly consummated, negating any amendment that might impose limitations on mass arbitrations.

Consumer Arbitration Agreements: 10.7.4.3 Who Decides Unconscionability Challenges

If an arbitration provision containing a mass arbitration provision is validly formed, consumers and workers may nevertheless wish to challenge the enforceability of the mass arbitration procedures on unconscionability grounds. Such a challenge is for the court to decide unless the arbitration provision includes a clear and unmistakable delegation clause that requires that the arbitrator determine enforceability issues. In practice, many arbitration provisions contain such a delegation clause.

Consumer Arbitration Agreements: 10.7.4.4 Unconscionability Challenges

This subsection considers the unconscionability of unfair mass arbitration procedures imposed on the worker or consumer by either the arbitration provider’s rules or by the arbitration provision itself. A successful challenge to the mass arbitration procedures may result in the entire arbitration provision being invalidated, allowing individual or class claims to proceed in court, or to proceed as a mass arbitration without the unconscionable procedures.

Consumer Arbitration Agreements: 10.7.5.1 General

Businesses faced with a mass arbitration may refuse to pay their filing fees or refuse to participate in the arbitrations. If filing fees are not paid, an arbitration provider typically closes the filed arbitrations.

Consumer Arbitration Agreements: 9.1.1.1 Adequate Client Representation May Require Use of Arbitration

The previous eight chapters have considered challenges to forced arbitration agreements, but often courts uphold arbitration requirements or refuse to even consider challenges to them, leaving the enforceability of the arbitration agreement up to the arbitrator to evaluate. And courts finding a part of an arbitration agreement unconscionable may enforce the agreement except for that one offending provision.

Consumer Arbitration Agreements: 9.1.1.2 The Consumer’s Arbitration Fees Are No Greater Than a Court Trial

The two main arbitration providers, JAMS and the American Arbitration Association (AAA), provide a special fee schedule for arbitrations conducted under consumer arbitration rules.1 The AAA fee cap is $200 and the JAMS fee cap is $250. These amounts are paid up-front, and then the business is responsible for all other fees and the cost of the arbitrator.2 The business’s obligation can be as much as $5000 or more.

Consumer Arbitration Agreements: 9.1.1.3 Discovery Is Often Possible

While there is often less formal structure to discovery in an arbitration than in a court case, if the plaintiff explains at the preliminary hearing what discovery is needed and why, many arbitrators will allow appropriate discovery. The arbitrator can even issue subpoenas.

Consumer Arbitration Agreements: 9.1.2 Importance in Arbitration of Getting to Know the Client and Witnesses

An arbitration proceeding is more likely to be tried on the merits than a case in court, so case selection is critical. The consumer will likely testify in front of the arbitrator. Therefore, advocates should get to know their clients well enough that they trust the consumers to tell their story, the consumers trust the advocates in telling their story, and advocates understand firsthand what the consumer’s story is. Role playing with the consumer, including re-enacting relevant scenes and events, will greatly help an attorney appreciate what the consumer went through.

Consumer Arbitration Agreements: 9.10 Post-Hearing Briefs Instead of Closing Arguments

Most arbitrators prefer that closing arguments be made in post-hearing briefs rather than at the hearing.242 Keep this preference in mind during the proceedings, and understand that there is no need to fight with witnesses to try to get them to agree with your position while in front of the arbitrator. All of the consumer’s arguments, and clarification of such, can be made in the post-hearing brief.

Consumer Arbitration Agreements: 9.11 Punitive Damages

Case law generally permits arbitrators to issue awards for punitive damages,244 including when arbitrators find a defendant was unrepentant, among other reasons.245 There have been some sizable punitive damage awards in arbitration, including in consumer cases.246

Student Loan Law: 1.9.1 First Steps

While private student loan issues are similar to other areas of consumer law, federal student loans are a different animal. Advocates helping clients with private student loan issues should refer to Chapter 16, infra. This section focuses on federal student loan issues and will help advocates prepare for, organize, and review a student loan case.

Student Loan Law: 1.9.2 Collecting Information About a Borrower’s Federal Loans

The most important information available to an advocate is a specific TXT file report—now called the MyStudentAid Data Report—which can be accessed on studentaid.gov. Given borrowers’ confusion about what types of loans they have, advocates should not provide student loan advice to a borrower without first analyzing the information from this report. The borrower can download their MyStudentAid Data Report by clicking the “View Details” button on the borrower’s studentaid.gov dashboard.

Student Loan Law: 1.9.5 Evaluating a Borrower’s Repayment Options

If a borrower is not eligible for full discharge or cancellation of their student loans, and they are not currently in default, a top priority should be developing a repayment strategy that meets their financial goals and will help them avoid default in the future. Borrowers who are in default but working to get out of default will also need help with a repayment strategy to avoid redefaulting.

Repossessions: 1.4.1 Overview

When analyzing a repossession case, it is helpful to break down the transaction into stages. The following subsections identify the issues that arise and the questions the advocate should ask at each stage of a secured transaction. This discussion is intended as a broad-brush description of the issues.