AT&T Mobility and the Future of Small Claims Arbitration

This article focuses on small claims arbitration and examines the impact of AT&T Mobility on the legitimacy of the process. Part II of the article describes the Supreme Court’s AT&T Mobility decision, which held that the FAA preempts a California rule that declared a class arbitration waiver in a consumer contract unconscionable. Part III describes the primary features of the two options remaining for the Concepcions—small claims court and small claims arbitration, as well as their perceived advantages and disadvantages. Part IV demonstrates that courts have endorsed simplified arbitration. Part V examines whether simplified arbitration is a fair method of resolving small arbitration claims. Part VI explores other dispute resolution models for resolving small dollar value commercial disputes, including on-line dispute resolution, telephonic arbitration, and a small claims arbitrator. Part VII concludes by urging dispute system designers to consider changing the default mechanism of arbitrating small claims cases from paper or “desk” arbitration to a live hearing before a small claims arbitrator

Arbitration Case Law Update 2012

Parties to arbitration agreements sometimes invoke the judicial system to litigate collateral issues arising out of the arbitration process, such as arbitrability of some or all of the claims, arbitrator bias, and award enforcement or vacatur. When deciding these collateral issues arising out of securities arbitration, courts interpret and apply the Federal Arbitration Act (FAA). This chapter identifies recent decisions by the Supreme Court under the FAA, as well as selected lower court decisions that could have an impact on securities arbitration practice

Perceived Equity, Motivation and Final Offer Arbitration in Major League Baseball

Final offer salary arbitration in major league baseball offers a unique institutional arrangement that creates a naturally occurring non-equivalent groups repeated measure research design. The structural arrangements allow for examination of anticipatory expectancy effects and for assessment of behavioral responses consistent with equity theory predictions. Additionally, equity theory can be tested without the methodological problems inherent in defining the referent other. Performance and mobility were examined for major league baseball position players who won and lost their arbitration hearings. Pre-arbitration performance was found to significantly predict arbitration outcome. Despite similar patterns of post-arbitration performance between winners and losers, a significant relationship was noted between losing arbitration and postarbitration performance declines. Analyses also suggested that losers were also significantly more likely to change teams and leave major league baseball. The causality of the relationship between performance and arbitration outcome is discussed along with expectancy and equity effects as they relate to performance and mobility following the arbitration intervention

Comparing Mandatory Arbitration and Litigation: Access, Process, and Outcomes

[Excerpt] What do we know about mandatory arbitration and its impact? Some existing studies have examined samples of employment arbitration cases, usually obtained from the American Arbitration Association (AAA), which is currently the largest arbitration service provider in the employment area. Although some early studies found relatively high employee win rates and damage awards in arbitration, comparable to those in litigation, these results were mainly based on arbitration under individually negotiated agreements or in the securities industry and involved relatively highly paid individuals. More recent studies using larger samples of cases based on mandatory arbitration agreements find much lower employee win rates and smaller damage amounts than typical in litigation. Existing studies, however, have not been able to account for differences in the types of cases that are heard in arbitration. In particular, previous work has not been able to systematically compare outcomes in arbitration and litigation in the same study. In this study, we take a new approach to investigating mandatory arbitration that allows us to do a systematic comparison of arbitration and litigation, accounting for key factors that differentiate between the types of cases brought in these forums. We do this by collecting survey data on a comparable sample of arbitration and litigation cases from attorneys involved in those cases. We also investigate the overall experiences of the attorneys in representing plaintiff employees in mandatory arbitration and litigation. The ability to obtain and finance legal representation is a crucial, yet understudied aspect of the system of enforcement of employment rights. Absent the ability to obtain effective representation, employees may be unable to pursue and win cases even where their statutory rights have been violated. One of the potential benefits held out for arbitration compared to litigation is that it could provide a cheaper, more accessible forum to allow employee claims to be heard and adjudicated. It is certainly the case that existing research indicates many limitations of the litigation system, particularly the relatively poor outcomes obtained by plaintiff employees compared to other litigants. What we are able to investigate empirically in this study is whether mandatory arbitration ameliorates some of the limitations of the litigation system or whether it is equally or even more limited in its accessibility

Democracy and Dispute Resolution: The Problem of Arbitration

This article seeks to bring the submerged issue of arbitration\u27s relationship to democracy to the surface of the mandatory arbitration debate. Its goal is relatively modest: To recognize and articulate the relationship between democracy and arbitration as an issue worth considering, to analyze the democratic character of arbitration and to suggest some implications of this assessment

Arbitration Revisited: Preemption of California’s Unconscionability Doctrine after Concepcion

This commentary looks at a Supreme Court case, Imburgia v. DIRECTV, in which the Court faces the question of whether an arbitration agreement, made pursuant to the Federal Arbitration Act, preempts state unconscionability doctrine which would render that agreement unenforceable. The Author argues that holding that federal law implementing a policy favoring arbitration fully preempts state law doctrines from preventing the enforcement of arbitration agreements

AT&T Mobility and FAA Over-Preemption

The Supreme Court\u27s recent arbitration law decisions reflect the Court\u27s strong support for arbitration agreements, but also severely limit the states’ powers to police the fairness of arbitration. In particular, the Court’s decision in AT&T Mobility v. Concepcion, LLC expands the FAA preemption doctrine beyond its prior boundaries, signaling how far the Court is willing to go to support arbitration clauses at the expense of states’ rights and the values of federalism. This article explores the impact of AT&T Mobility on the preemption of state arbitration law, and the concomitant impact on the balance between state and federal power in the arbitration arena. This article argues that AT&T Mobility results in FAA over-preemption, as it unduly shifts arbitration law-making power away from the states, in violation of the FAA’s savings clause

The Uncertain Legacy of Gilmer: Mandatory Arbitration of Federal Employment Discrimination Claims

The United States Supreme Court in Alexander v. Gardner-Denver Co. held that an employee could not be forced to arbitrate his discrimination claim against an employer pursuant to his union\u27s collective bargaining agreement. Subsequent cases viewed Gardner-Denver as prohibiting mandatory arbitration in employment discrimination claims, until the Supreme Court upheld an agreement to submit all statutory discrimination claims to arbitration in Gilmer v. Interstate/Johnson Lane Corp. Gilmer seems to have limited the prohibition of mandatory arbitration in Gardner-Denver to collective bargaining agreements. Subsequently, many lower courts interpret Gilmer as an approval of arbitration clauses in employment agreements, and as such, employers have increasingly included these compulsory arbitration clauses in employment contracts and applications. However, there is still varied treatment of mandatory arbitration clauses by courts. The note explores court decisions which treated subsequent congressional legislation as barring such agreements, additional safeguards imposed by some circuit courts regarding mandatory arbitration agreements, the principal arguments in favor of such agreements, and the countervailing arguments, most represented by the stance of the Equal Employment Opportunity Commission (EEOC). The note concludes by arguing that the United States Supreme Court should clarify the issue in favor of mandatory arbitration agreements, but require that arbitration proceedings from such agreements incorporate fundamental procedural protections for employees, as opposed to the present scheme in which arbitrators do so only on a voluntary basis

The Majority Approach to Arbitration Waiver: A Workable Test or A License for Litigants to Play Games with the Courts?

[Excerpt] “The freedom of parties to agree to arbitrate their disputes is enshrined by contract law and federal law. By inserting a mandatory arbitration clause in a contract, both parties agree that, should a dispute arise between them, they will not bring the matter to court. Instead, they agree to submit any disputes to a mutually-agreed-to third party, such as the American Arbitration Association; this third-party acts like a judge and resolves the dispute. Arbitration has many advantages, such as reducing the cost and increasing the efficiency of dispute resolution. Because of these reduced costs and greater efficiency, businesses can pass along their savings to consumers by offering them lower prices and more value. Notwithstanding all of these advantages, the freedom of parties to insert enforceable arbitration clauses in their contracts has its fair share of detractors. Big businesses often insert such clauses in take-it-or-leave-it consumer contracts, such as credit card and cell phone agreements. Consumers who want or need the service provided by these businesses are forced to agree to mandatory arbitration clauses, which grant to both parties the legal right to insist upon arbitration as the sole dispute resolution method. While almost no one disagrees that arbitration is efficient and less costly, some argue that it is an unfair process. Since the business party usually appears before the third-party arbitrator repeatedly, whereas the consumer appears before him only once, the arbitrator may feel inclined to find in favor of the business party, its repeat customer. This debate between efficiency and the unfairness underlies any discussion about arbitration. This note will address this debate by analyzing merely one facet of arbitration: arbitration waiver. All of the circuits agree that when a party with a contractual right to arbitrate chooses to litigate a dispute, the party’s election to litigate may waive his ability to move the case out of court and into arbitration. However, they disagree about what test should be applied to decide whether a particular election to litigate constitutes arbitration waiver. The circuits have formulated primarily two different tests. In the majority of circuits, two elements must be proven: (1) the party seeking arbitration must have participated in litigation; and (2) the party resisting arbitration must show that he will suffer prejudice. A minority of circuits keep the first element, but the prejudice requirement has been eliminated.

A Model for Arbitration: Autonomy, Cooperation and Curtailment of State Power

As compared with the formal pleadings, massive discovery, aggressive motion practice, and endless appeals of litigation, arbitration is undoubtedly more efficient as a dispute resolution mechanism. However, efficiency is only one of many advantages of arbitration. Arbitration empowers disputing parties, promotes individual autonomy and cooperation, and curtails the power of government in the process. Still, the state should not wholly limit its involvement in arbitral processes; the courts do and should have a substantial role in determining the enforceability of arbitration agreements and awards in a few select contexts. Overall, courts should enforce arbitration agreements and only limit enforceability that are vulnerable to contract defenses like fraud, duress or illegality. Courts should also monitor arbitration to ensure that arbitrators properly enforce the intent of the contracting parties, and if they fail at this task, there may be necessary judicial review for errors of law. However, the state should be hestitent to tamper with arbitration processes beyond this point. This approach maximizes individual autonomy and cooperation while minimizing governmental interference