The Gatekeepers of the Federal Arbitration Act: An Empirical Analysis of the FAA in the ‎Lower Courts

Abstract

This article presents the results of the first comprehensive empirical study of motions to ‎compel arbitration under the Federal Arbitration Act (FAA). Arbitration has become a divisive ‎issue both in the United States Supreme Court and in American society, fueling calls to restrict or ‎entirely ban its use in certain contexts, such as employment and consumer disputes. At the same ‎time, little empirical attention has been paid to how thousands of arbitration cases are actually ‎argued before and decided by the lower courts—the gatekeepers of the FAA—who retain ‎considerable discretion to refuse to enforce arbitration agreements. ‎

Our study statistically analyzes an original hand-coded dataset of 1,450 decisions in ‎contested motions to compel arbitration under the FAA, rendered by all state and federal courts ‎‎(excluding the Supreme Court) across the United States between June 1, 2021 and May 31, ‎‎2022. We examine the effect of different variables on the outcome of these motions to compel ‎arbitration. We find that the strongest predictors of the outcome of such motions are the ‎arguments raised by the parties (e.g., existence/formation of the arbitration agreement, scope of ‎the arbitration agreement, etc.), the types of disputes that we tested (e.g., business, employment, ‎consumer, etc.), and specific combinations of the political association of the judge ‎‎(Democratic/Republican) with type of court (state/federal) and level of court (trial/appellate). ‎

The goal of our study is explanatory as well as normative. We aim to provide a detailed and ‎objective account of parties’ and lower courts’ approaches to FAA arbitration. This account is not ‎merely of academic interest to those studying arbitration or judicial decision-making. It also ‎offers important insights for parties’ litigation strategy and equips policy-makers with important ‎empirical data for evaluating the FAA.‎

Keywords: Federal arbitration Act, courts, motion to compel arbitration, empirical

JEL Classification: K31, K33, K39, K41, K49