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The Litigation-Arbitration Dichotomy Meets the Class Action

Richard A. Nagareda

Deceased (Vanderbilt University Law School)

September 2, 2010

Notre Dame Law Review, Forthcoming
Vanderbilt Public Law Research Paper No. 10-34

Courts and commentators often conceive of litigation and arbitration as dichotomous regimes for civil dispute resolution. Two new decisions from the Supreme Court provide the occasion to rethink this conventional view. In Shady Grove v. Allstate Insurance, the Court acknowledges that a class action often alters dramatically the incidence of claiming but, for purposes of the Rules Enabling Act, the Court deems this effect to be merely “incidental.” In Stolt-Nielsen v. AnimalFeeds, however, the Court deems the use of class-wide arbitration to be such a “fundamental” change as to lie outside the authority of arbitrators in the face of contractual silence as to class treatment.

This Article – for the annual Federal Courts, Practice & Procedure issue of the Notre Dame Law Review – urges a more synthetic understanding of litigation and arbitration. For all their differences, the Court’s accounts of class treatment under the Rules Enabling Act and the Federal Arbitration Act (FAA) evidence a deep, but undertheorized, convergence. Shady Grove is the latest of the Court’s efforts to map the proper relationship between federal and state law under the Erie and Hanna doctrines. This Article explains how the Court’s arbitration jurisprudence has come to replicate key structural features of the Erie and Hanna doctrines in litigation. The Article then underscores the transnational dimensions of arbitration in our modern world of globalized commerce – one that frames in a new light the holding in Stolt-Nielsen within the context of the Court’s thinking about extraterritoriality and transnational recognition of judgments in litigation.

The Article then turns to a case now before the Court – AT&T Mobility v. Concepcion – concerning an arbitration clause that would waive the opportunity for consumers to participate in either a class action or a class arbitration. The Article explains how the approach of the lower courts in Concepcion presents the Supreme Court with the counterpart, in the arbitration setting, to the mistaken application of state law rightly overturned in Shady Grove under the Hanna doctrine. Such a view nonetheless would afford ample latitude for contextual, Erie-like analysis of other arbitration clauses with class waivers tantamount to exculpatory clauses. The Article concludes by situating its synthetic conception of litigation and arbitration within ongoing debate over the proposed Arbitration Fairness Act.

Number of Pages in PDF File: 54

Keywords: Arbitration, Arbitration Fairness Act, Class Action, Class Arbitration, Concepcion, Erie Doctrine, Extraterritoriality, Federal Arbitration Act, Hanna Doctrine, Rules Enabling Act, Shady Grove, Stolt-Nielsen, Transnational Judgment Recognition

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Date posted: September 2, 2010  

Suggested Citation

Nagareda, Richard A., The Litigation-Arbitration Dichotomy Meets the Class Action (September 2, 2010). Notre Dame Law Review, Forthcoming; Vanderbilt Public Law Research Paper No. 10-34. Available at SSRN: http://ssrn.com/abstract=1670722

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Richard Allen Nagareda (Contact Author)
Deceased (Vanderbilt University Law School)
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