The Corporation as Courthouse

58 Pages Posted: 20 Nov 2016 Last revised: 1 Jul 2017

Rory Van Loo

Boston University School of Law; Yale Law School

Date Written: November 18, 2016

Abstract

Despite the considerable attention paid to mandatory arbitration, few consumer disputes ever reach arbitration. By contrast, institutions such as Apple’s customer service department handle hundreds of millions of disputes annually. This Article argues that understanding businesses’ internal dispute processes is crucial to diagnosing consumers’ procedural needs. Moreover, businesses’ internal processes interact with a larger system of private actors. These actors include ratings websites that mete out reputational sanctions. The system also includes other corporations linked to the transaction, such as when American Express adjudicates a contested sale between a shopper and Home Depot. This vast private order offers promise to advance societal dispute resolution goals by providing large-scale redress and preserving relationships in ways that more formal institutions cannot. At the same time, businesses closely guard their internal processes as trade secrets. Out of public view, they are pushing the bounds of dispute resolution by, for example, considering factors such as a customer’s social network in deciding how to handle a complaint. If public intervention is needed, courts are at best only part of the solution. Instead, the frontier of consumer dispute resolution lies beyond arbitration and class actions in agency supervision of collaborative negotiations between consumers and corporations.

Keywords: digital platforms, Amazon, algorithms, behavioral economics, market power, CFPB, FTC, consumer protection, competition policy, contracts, antitrust, dispute systems design, technology, inequality, civil procedure, settlement, internet

JEL Classification: K10, K12, K20, K2, K20, K23, K21, K4, K40, K41, L13, L14, L1, L10, L21, L22, L24, L41, L43, L51, L53

Suggested Citation

Van Loo, Rory, The Corporation as Courthouse (November 18, 2016). Yale Journal on Regulation, Vol. 33, No. 547, 2016; Boston Univ. School of Law, Public Law Research Paper No. 16-48. Available at SSRN: https://ssrn.com/abstract=2872096

Rory Van Loo (Contact Author)

Boston University School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Yale Law School

127 Wall Street
New Haven, CT 06511
United States

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