AT&T Mobility and the Future of Small Claims Arbitration

Abstract:     
Small claims arbitration has not received much attention from dispute system designers and scholars. Several coalescing developments require a reassessment of the small claims arbitration process: (1) the Supreme Court’s strong endorsement of the Federal Arbitration Act and arbitration as a favored dispute resolution mechanism, (2) the proliferation of pre-dispute arbitration clauses in consumer products and services agreements, (3) the judicialization of arbitration, and (4) most recently, the Court’s condemnation, in AT&T Mobility v. Concepcion, which held that the FAA preempts a California rule that declared class arbitration waivers in consumer contracts unconscionable, of class arbitration as a procedural device to resolve aggregable yet arbitrable low dollar value claims. The article 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. The article also examines whether simplified arbitration is a fair method of resolving small arbitration claims, and explores other dispute resolution models for resolving small dollar value commercial disputes, including on-line dispute resolution, telephonic arbitration and a small claims arbitrator. The article 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.

Number of Pages in PDF File: 39

Keywords: arbitration, small claims, dispute resolution, dispute system design

JEL Classification: K40

Accepted Paper Series