Posted May 19th, 2015 in Top Stories, Legal Insights

Crowdsourced Arbitration Claims Could Shake Up Labor Law

In 2011, the Supreme Court ruled in AT&T v. Concepcion that it was lawful for businesses to include class action waivers in their service contracts, thereby requiring consumers to file individual arbitration claims instead. As a result, companies began adding mandatory arbitration clauses to their employment contracts to protect against class action lawsuits. However, at least one new, third-party service is stepping around this issue by gathering thousands of arbitration claims together via online crowdsourcing and reassigning them to a company that will pursue them collectively. Currently, the service is focused solely on cell-phone provider contracts, but Jen Cornell of Nilan Johnson Lewis sees ways that this approach could morph into something that impacts labor and employment law, as well. “What was once a cost-effective move could backfire if a company is targeted through a crowdsourced effort,” says Cornell. “Essentially that could lead to ‘death by 1,000 cuts.’ And until the courts have scrutinized this strategy, companies should be wary of the potential impact a crowdsourced arbitration or claims movement can have on labor and employment claims.” Contact Jen Cornell at (612) 305-7717 or jcornell@nilanjohnson.com, or Angela Deeney at (651) 789-1277 or angela@kohnstamm.com.