Tuesday, September 25, 2012
George Padis (Texas 2012) has just posted on SSRN his Note (forthcoming Tex. L. Rev.) Arbitration Under Siege: Reforming Consumer and Employment Arbitration. Here's the abstract:
In its recent terms, the U.S. Supreme Court has taken up the issue of arbitration - most notably in AT&T Mobility LLC v. Concepcion, Rent-A-Center West v. Jackson, and Stolt-Nielson S.A. v. AnimalFeeds International. All three decisions expanded the scope of federal arbitration in consumer and employment contexts in important and surprising ways. Scholars have been sharply critical of these decisions: For example, Concepcion prompted Dean Erwin Chemerinsky to remark in an op-ed in the L.A. Times that the decision is 'part of a disturbing trend of the five most conservative justices closing the courthouse doors to injured individuals . . . . [and] favoring the interests of businesses over consumers, employees and others suffering injuries.'
Meanwhile, cases like Jones v. Hallburton (portrayed in the HBO movie Hot Coffee) have cast a public spotlight on arbitration, and arbitration is under siege. Congress has enacted two measures to address this problem: The Consumer Financial Protection Bureau is empowered to address the issue of consumer arbitration and a defense appropriations rider in 2010 - portrayed in Hot Coffee - prohibits arbitration in employment contracts by defense contractors. A third proposal, the Arbitration Fairness Act, would ban arbitration in all consumer and employment contracts. This Article argues that the approach in the Supreme Court - broadly enforcing all arbitration agreements regardless of the specific nature of the dispute - is too broad and extends arbitration into areas where it presents serious problems, most notably the small-claim consumer class action context. But the congressional reforms banning arbitration in all consumer and employment contracts are also overly broad.This Article proposes a middle ground: Administrative regulations promulgated by the Consumer Financial Protection Bureau and the EEOC that provide dispute-specific guarantees for consumers and employees and safe harbors for companies.
Maybe. But the EEOC has only procedural (not substantive) rulemaking authority under Title VII, and neither the CFPB nor the EEOC have rulemaking authority regarding the FAA. Thus, this leaves the door open for the Court to say that the text of the FAA trumps the regs of the EEOC/CFPG; even if the text of the FAA really doesn't, cases like Stolt-Nielsen and Concepcion illustrate that the Supreme Court is all too willing to wilfully misread the plain language of the FAA in favor of the Court's policy preference for arbitration. The solution, ultimately, is to get a new Court majority.