I think that's true, although I hardly think it strikes a mortal blow against the CLS movement. Much the opposite, I think this is precisely what modern CLSers would predict--conservatives mask their policy preferences as "rule of law," when in reality they are just contorting law to fit the policy. This is how law can be enlisted so easily to impede social change--it's content never is unambiguous and thus no conservative will ever feel compelled to make any earth-shaking or radical reform to society via law.
In sum, I feel like Seidman's understanding of the history and "ideology" (such as it is) of CLS and successor movements is weak, although the prescriptive portions of his paper are better. However, he does score significant points for this passage, explaining why CLS scholars think the discourse of rights can actually be harmful towards achieving social reform:
The rhetoric of rights tended to objectify and distort the actual situation in which people found themselves. Rights were abstract, alienating, and individuating rather than concrete, liberating, and unifying. 12 These deficiencies were, in turn, reinforced by what might be called the "Lucy-and-the-football" phenomenon. The possibility of vindicating legal rights was endlessly dangled before the dispossessed. Rights were in fact vindicated frequently enough so as to keep people in the game. However, the indeterminacy of rights allowed courts to yank them away just when any truly meaningful reform seemed within reach. Consequently, endless time and energy were wasted in the pursuit of legal remedies, when the time might better have been spent organizing nonlegal popular resistance. (578)
Agree with it or no, I certainly think that portrays the argument in a delightful, succinct, and lucid manner.
Incidentally, Volokh-the-younger also links to Jack Balkin's Deconstruction's Legal Career [27 Cardozo L. Rev. 719 (2005)], which is a spectacular piece and one I cannot recommend highly enough.