Arbitration and the Individuation Critique

Abstract:     
Skeptics and champions of the use of arbitration for consumer and employment disputes do not agree about much, but each group views arbitration as an individuated dispute resolution process. According to many skeptics, arbitration prevents consumer and employee claimants from aggregating their claims (by formal or informal means) and thus forces these claimants into individualized proceedings where neither they nor their lawyers can counter the advantages presumably enjoyed by more powerful, repeat-player businesses. I call this the individuation critique. In reply, arbitration proponents defend its fairness as a forum and advance efficiency arguments in its favor, but they generally do not suggest that arbitration could or should facilitate the aggregation of consumer and employee claims.

This article calls into question skeptics' and proponents' shared conception of arbitration. Relying in part on evidence from the recent, and rather unusual, phenomenon of class arbitration, I argue that the individuation critique may overestimate the extent to which arbitration agreements and arbitration procedures currently individuate the disputing process. Moreover, I argue that arbitration may have significant potential to facilitate formal and informal aggregation, especially for consumer claimants. Class arbitration illustrates this potential most clearly, for it may enable forms of collective adjudication that are unavailable to litigants in court. Even in individual disputes, however, arbitration might facilitate aggregation in informal but important ways. For example, although arbitrators generally do not create or follow precedent, evidence from pending class arbitrations suggests that they may be strongly influenced by other arbitrators' decisions in similar cases. Under the right conditions, arbitrators may produce something akin to informal precedent, and this possibility may encourage plaintiffs' lawyers to invest in creating rules from which multiple claimants can benefit. I conclude by suggesting some reforms to arbitration provider policies that might encourage specialized, repeat-player lawyers to accept, even seek out, arbitration cases and to make meaningful investments in these disputes.

Number of Pages in PDF File: 44

Accepted Paper Series