Determining the Proper Standard for Invalidating Arbitration Agreements Based on High Prohibitive Costs: A Discussion on the Varying Applications of the Case-by-Case Rule

Transactions: The Tennessee Journal of Business Law, Vol. 14 #1, Fall 2012, Forthcoming

30 Pages Posted: 20 Jun 2012

See all articles by Mark Gerano

Mark Gerano

Northern Kentucky University - Salmon P. Chase College of Law

Richard A. Bales

Ohio Northern University - Pettit College of Law

Date Written: 2012

Abstract

Compulsory arbitration agreements placing a high risk of prohibitive costs on plaintiffs can make it difficult for plaintiffs to bring their disputes and effectively vindicate their statutory claims. The Supreme Court has indicated that high costs can make an arbitration agreement unenforceable, but the Court has not yet articulated a clear standard on when agreements should be invalidated on that basis. While most courts agree that a case-by-case inquiry is appropriate, the courts are split on whether to apply the case-by-case inquiry to the individual plaintiff’s situation, or to a broader class of prospective plaintiffs. This article argues that the proper case-by-case inquiry is the broader approach, which evaluates the agreement’s impact on a group of prospective plaintiffs because it provides the most protection of the deterrent function of anti-discrimination statutes for the broad group of parties the statutes are designed to protect.

Keywords: arbitration, cost

Suggested Citation

Gerano, Mark and Bales, Richard A., Determining the Proper Standard for Invalidating Arbitration Agreements Based on High Prohibitive Costs: A Discussion on the Varying Applications of the Case-by-Case Rule (2012). Transactions: The Tennessee Journal of Business Law, Vol. 14 #1, Fall 2012, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2088223

Mark Gerano

Northern Kentucky University - Salmon P. Chase College of Law ( email )

Nunn Hall
Highland Heights, KY 41099
United States

Richard A. Bales (Contact Author)

Ohio Northern University - Pettit College of Law ( email )

525 South Main Street
Ada, OH 45810
United States
419-772-2205 (Phone)

HOME PAGE: http://law.onu.edu/node/3073

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