Lawmaking in the Shadow of the Bargain: Contract Procedure as a Second-Best Alternative to Mandatory Arbitration

Abstract

In consumer and employment arbitration, companies have more freedom to choose dispute resolution procedures than they do in courts. Specifically, companies may, through their form contracts, require their customers and employees to waive their rights to present certain forms of evidence, conduct certain forms of discovery, appeal a final judgment, and join a class. Because these procedural terms are attractive to companies, they often require their consumers and employees to bring claims to arbitration rather than to courts. Consequently, consumer and employment disputes appear less frequently on courts’ dockets than they would in the absence of mandatory arbitration, preventing courts from providing important public goods. Many critics have proposed various large-scale legislative reforms that would limit the scope of mandatory arbitration. These proposals, however, have largely not gained political traction. In the absence of large-scale legislative reform, this Note considers whether enforcing more procedural options in courts may be the second-best alternative to mandatory arbitration. Permitting parties the same procedural options in courts that are already available in arbitration may influence companies to allow their consumer and employment disputes to be brought in courts, thus allowing courts to play their role in generating important public goods.

Keywords: arbitration, procedure, contract procedure, mandatory arbitration, consumer arbitration, procedural options, procedural optionality