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Closing thoughts on the arbitration symposium

It seems especially notable that despite the broad range of backgrounds of the contributors to this symposium, not a single author has even attempted to defend the reasoning or holding of Concepcion.  The implications of that are both profound and troubling.

Many of my esteemed colleagues have written about the impact of the Concepcion decision, suggesting that the result of the decision may be to eliminate class actions and shut the courthouse doors to small consumer and employment claims.  My sense is that the elimination of class actions is not merely a possible result of the decision; rather, it was pretty clearly the goal of the majority.  It was the final stop of their  class arbitration “farewell tour,” which started with the Court’s decision in Green Tree Financial Corp. v. Bazzle, and then continued with Stolt-Nielsen and Concepcion.   And again, the implications of that reality are also profound and troubling especially because the last mechanism of fairness protection, state unconscionability doctrine, got shot when it stood in between the Court and its target.

Several of my colleagues have astutely analyzed the Court’s arbitration decisions on the same “contract” plane as the Court itself has done.  And I certainly agree with their analysis. But the real vice of the Court’s decisions is not how they have contorted contract law and the FAA to reach their desired result, but rather that they have refused to analyze the issues under the Constitution or real statutory public policies which sit higher on the continuum of legal analysis and require the waiver of rights inherent in an arbitration agreement to be knowing and voluntary. And there shouldn’t be a freedom of contract analysis when the contract was not entered into freely.

Professor Drahozal was certainly correct in recognizing that Concepcion was providing additional motivation for a legislative fix but the Arbitration Fairness Act was not a reaction or overreaction to that one case. A version of legislation prohibiting the mandatory arbitration of employment cases in particular has been introduced in every Congress since 1994. The Arbitration Fairness Act itself was introduced long before Concepcion. It was not introduced as a response to Concepcion; it was introduced as a response to Gilmer’s insult to the civil rights laws, and Circuit City’s inversion of congressional intent.  It was introduced in response to many of the Court’s other decisions that have failed to address the coercive nature of consumer and employment  arbitrations  and many of the outrageous abuses that have arisen because of the lack of the voluntariness and consent the Constitution requires.  The Arbitration Fairness Act is a necessary effort by Congress to ensure the truly knowing and voluntary decision to waive constitutional rights that the Court itself should be insisting on.  It is necessary if Congress wants to ensure that the laws it has passed have any meaning at all. The notion that the Court has told the entities that Congress determined to regulate, that they could unilaterally opt out of the full enforcement of that regulation, is a slap in the face of Congress.

It has been interesting to read all of the commentary by so many distinguished academics and practitioners regarding the flaws in the Court’s arbitration jurisprudence.  But it would be a mistake to treat this as merely a disagreement over legal analysis.  Powerless consumers and employees are losing valuable rights and careers every day in unfair arbitration proceedings.  The courts themselves are losing many of the best and the brightest judges to the “do it yourself tort reform” industry and losing their institutional credibility by having judges falsely proclaim that public policy favors coerced arbitrations right before they take the leap themselves. It has been reported that sitting judges are refusing assignments to criminal departments because of its negative impact on their marketability as private judges and that sitting judges are hiring consultants to learn how to make themselves more appealing to the big firms that will hire them in the private judging world.  It is not only the institution of arbitration that is being injured by this scandal.

It is time for the Court to hit the “refresh” button and update its approach to coerced arbitrations.  In 1991, the Justices may have preferred not to presume the inappropriateness of arbitration for certain claims. But we now have twenty years’ worth of empirical data proving the real world negative impact it has had on the vindication of statutory rights. We now have twenty years’ worth of statistics confirming dramatic repeat player advantages. We have well-documented scandals including the shuttering of the National Arbitration Forum, the nation’s third largest provider for unspeakable conflicts and fraud on the public. And we have numerous new laws passed by Congress prohibiting mandatory arbitration in many different contexts and others specifically authorizing class actions, which haven’t yet found their way into a real public policy analysis.  Whatever implied public policies the court can discern or insert into the 1925 FAA have been superseded by far more recent and far more specific statutes which the Court has yet to acknowledge.

It is important that judges, academics, and lawyers of conscience, who still cling to our naïve belief in the majesty of our courts and the beauty of a system of justice that is focused on reaching the right result, continue to speak up for the fundamental constitutional right of American citizens to access a public justice system, with judges paid by the state and who are obligated to follow the law.    An “intervention” of sorts for a system of justice we all cherish is in order.

Justice is not a liberal-conservative or Republican or Democratic concept.  Civilizations are evaluated by the quality of their civil justice systems. We can no longer lecture the world on the “rule of law” when American citizens don’t have the right to have the laws passed for their protection enforced correctly and are instead relegated to secret corporate tribunals with no right of appeal.

Recommended Citation: Cliff Palefsky, Closing thoughts on the arbitration symposium, SCOTUSblog (Sep. 26, 2011, 6:41 PM),