NYLJ on Arbitration

Marcia Coyle reports on looming judicial and legislative developments in arbitration, with quotes from Andrew Tulumello, Charles Craver, and Paul Bland. The next six months promises to be an eventful period in arbitration land, with a decision in Rent-a-Center on the horizon, followed by AT&T Mobility v. Concepcion next term and possible Congressional action on the Arbitration Fairness Act of 2009. One senses that a strategic battle is underway, with the Supreme Court thrusting and waiting to see whether Congress parries or dodges. Stolt-Nielsen was such a thrust in my view, and if Rent-a-Center goes the Chamber of Commerce’s way, Congress will face a square challenge. I have doubted that Congress would actually pass significant arbitration reform (the business interests arrayed against it being simply too powerful), but the combination of Stolt-Nielsen and a business win in Rent-a-Center might be enough to push them to action. The question then becomes whether legislation can pass before the mid-term elections and the likely loss of at least some Democratic seats. If it doesn’t happen, will the conservatives on the Court become even more emboldened to find for AT & T in the pending case? Would even a narrowly-divided Congress allow the Supreme Court to unilaterally abolish consumer and civil rights class actions? Interesting times for what used to seem like an arcane subject.

4 thoughts on “NYLJ on Arbitration”

  1. I think the political impact comes not from individual consumer constituents, but from the trial attorneys, and specifically the class action attorneys, who have big money in this fight. Congressional Democrats are likely to support consumer and civil rights class actions in the abstract, and money from plaintiffs’ attorneys may be enough to get them to move. But that isn’t a sure thing, by any means. You might be right that an anti-Rent-a-Center law is the only thing that can get through.

    On your first point, I do agree that arbitration has lost some of its luster. But if it became a means to avoid class actions entirely, I suspect its popularity would recover substantially.

  2. Another thought.

    I’m not convinced that AT&T Mobility v. Concepcion, or Stolt-Nielsen have much political impact at all. Both cases deal with the impact of arbitration on class action rights.

    The public is deeply ambivalent about class actions cases, particularly in consumer cases. Few people who potentially benefit from class action options realize that they do, few people are aware that class arbitration might even be possible, and IMHO, people are more upset about not being able to take their cases personally to court due to the existence of an arbitration clause than their loss of an ability to participate in a class action. Indeed, the people who are most upset about being forced to arbitrate are often also upset at being included in a class action that they didn’t initiate. For most practical purposes, class actions are simply a form of mediation (or at least ADR) in which the parties in fact are less involved. Legislation limiting class action rights has not stirred up public outrage.

    The Rent-a-Center case is something different entirely. The concept there: that an arbitrator gets to decide if his own process is unconscionable, is a huge rhetorical stick to attack consumer arbitration in general with amidst a legislative fight. And, any decision in favor of Rent-a-Center, because it has to dance around precedents already in place, is going to look unprincipled. This case has Catch-22 written all over it.

    Even if the Arbitration Fairness Act of 2009 doesn’t have the votes, a narrow anti-Rent-a-Center law would be a slam dunk. How do you tell your constitutents that you favor a law that prevents courts from striking down arbitration proceedures that would be unconscionable under state law. This undermines the business argument that arbitration is actually fair.

  3. It isn’t clear to me that business support for arbitration is nearly as great as it used to be after the collapse of credit card arbitration last year.

    Arbitration has gone from default legal recommendation for drafters to niche product over the last decade or two.

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