Document Type
Article
Publication Date
3-2021
Abstract
Many firms require consumers, employees, and suppliers to sign class action waivers as a condition of doing business with the firm, and the U.S. Supreme Court has endorsed companies’ ability to block class actions through mandatory individual arbitration clauses. Are class action waivers serving the interests of society or are they facilitating socially harmful business practices? This paper synthesizes and extends the existing law and economics literature by analyzing the firms’ incentive to impose class action waivers. While in many settings the firms’ incentive to block class actions may be aligned with maximizing social welfare, in many other settings it is not. We examine conditions in which class action waivers can compromise product safety, facilitate anticompetitive conduct, and support harmful employment practices. Our analysis delivers a more nuanced, policybased critique of the recent U.S. Supreme Court cases, highlights several new unresolved issues, and identifies future challenges for legal scholarship to address.
Recommended Citation
Choi, Albert. "The Economics of Class Action Waivers." Kathryn E. Spier, co-author. Yale J. on Reg. 38, no. 2 (2021): 543-65.
Included in
Dispute Resolution and Arbitration Commons, Law and Economics Commons, Social Welfare Law Commons, Supreme Court of the United States Commons
Comments
Working paper version available at SSRN: https://dx.doi.org/10.2139/ssrn.3665283