Too Much Power and Not Enough: Arbitrators Face the Class Dilemma
21 Lewis & Clark L. Rev. 1031 (2018)
49 Pages Posted: 17 Jun 2018
Date Written: May 31, 2018
After a series of Supreme Court decisions limiting the use of class arbitration and allowing defendants to contractually prohibit it, many expected that the end of this form of arbitration was imminent. Others argued that, given arbitrators’ wide discretion and the limited scope for judicial review, class arbitration might continue much as it had before. The empirical data developed in this Article show that neither side is completely correct. Class arbitration with the country’s largest provider, the American Arbitration Association (AAA), has not ended, but it has changed significantly. Arbitrators’ willingness to find that a contract gives them jurisdiction to allow class arbitration has decreased dramatically.
AAA’s publicly available awards demonstrate that the class arbitration system was neither dismantled nor unaffected. Instead, the arbitrators’ approach to the change wrought by the Supreme Court resembles that of judges. Some businesses have updated their contracts to include class waivers, but many arbitrations have gone forward under contracts that are not so clear. Although they once routinely ruled that class arbitration was permitted in such instances, arbitrators have now split nearly 50-50 on whether ambiguous clauses permit class arbitration. The arbitrators take the law seriously, and its inconsistencies have resulted in the present muddle. Unlike judges, however, arbitrators cannot write their way out of trouble by creating a general default rule. Their authority is simultaneously too broad and not broad enough.
Keywords: class actions, Federal Arbitration Act
JEL Classification: K40
Suggested Citation: Suggested Citation