Week 4 Case Study – Arbitration Versus Class Action
What Should the Judge Do?
1. The judge should let the arbitration proceed as Mr Groetsch has the right to pursue any action that he believes is necessary to advance his claim. Class action suits normally take longer to prosecute because attorneys want to find and represent as many claimants as possible. Attorneys handling the litigation receive a substantial fee from the compensation settlement whereas the cost of arbitration is minimal. Litigation also requires court fees as well as attorney costs while arbitration may only require the cost of a personal attorney and the fee for the arbitrator. Class action lawsuits are argued in a court of law and may require an extensive amount of
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3. I don’t think the judge should encourage Mr Groetsch to drop his arbitration case in favor of joining the class action, even if it were possible. Once arbitration is agreed to by both parties, I’m not sure either party can withdraw from the process. The downside may be that the decision of the arbitrator is usually final and there is no appeal possible, whereas the court may allow lawsuits to be heard by higher courts if a settlement is not deemed fair and reasonable. The court system may become lengthy depending on the number of appeals and the caseload of the courts. The fact that Mr Groetsch suffers from Alzheimer’s disease adds an element of urgency to the case, as his testimony is vital. He may not have time to wait for a class action settlement. The probability of a favorable outcome to the arbitration is good given that Medical Capital was exposed as a fraud. There is also a question of other defendants such as Securities America and their broker, Ron Carazo. Are the broker and the parent company also liable, since they continued to sell bonds in Medical Capital for years after concerns were raised about the legitimacy of the company? If the arbitration doesn’t cover all the defendants, Mr Groetsch may be able to pursue other avenues of resolution.
4. Arbitration doesn’t normally cover punitive damages so it may be possible for Mr Groetsch to use the arbitration process to recover