Law Commons^™

The Effect Of Forum Selection Clauses On District Courts’ Authority To Compel Arbitration, Thomas V. Burch, John W. Hinchey

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This is a short piece written for the AAA's Dispute Resolution Journal on two competing provisions in Section 4 of the FAA. One provision tells district courts to compel arbitration in accordance with the parties' agreement, including any forum selection clause. The other says that the court can compel arbitration only within its own territory. This, of course, creates a problem when the forum selection clause calls for arbitration in another jurisdiction. This short article addresses the conflict, showing how courts tend to rule on the issue (as of 2006).

Origin, Scope, And Irrevocability Of The Manifest Disregard Of The Law Doctrine: Second Circuit Views, Christian Turner, Joshua Ratner

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After arbitration has occurred, parties may seek judicial enforcement of the arbitral award, converting the private determination into an enforceable judgment. Parties that did not prevail in the arbitration may, at the same time, seek to have the arbitral award vacated. This article concerns the doctrine that permits courts to vacate an arbitral award when the arbitrators “manifestly disregarded” the law, focusing on recent developments in the Second Circuit. Despite the exceedingly deferential scope of this doctrine, the Second Circuit has actually vacated a handful of arbitrations on grounds of manifest disregard, and the doctrine is routinely raised by litigants. …

Market Solutions To Market Problems: Re-Examining Arbitral Immunity As A Solution To Unfairness In Securities Arbitration, Peter B. Rutledge

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This paper addresses the fairness of securities arbitrations in the United States. A few decades ago, such a topic would have been relegated to the academic hinterlands. For the first fifty years following the enactment of the nation's securities laws, pre-dispute arbitration agreements between investors and the securities industry were not enforceable. In a series of decisions in the late 1980s, the Supreme Court reversed course and held that such disputes were indeed arbitrable. Following those decisions, arbitration quickly became the preferred method of dispute resolution for cases arising under the nation's securities laws, especially disputes between investors and broker-dealers. …

Party Autonomy In Choice Of Commercial Law: The Failure Of Revised U.C.C. § 1-301 And A Proposal For Broader Reform, Jack M. Graves

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No abstract provided.

Final Offer Arbitration, Harold I. Abramson

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No abstract provided.

Creeping Mandatory Arbitration: Is It Just?, Jean R. Sternlight

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This Article examines the phenomenon of mandatory binding arbitration, imposed on consumers and employees, and considers whether this type of dispute resolution serves or instead undermines justice. It is fairly easy to attack binding arbitration as unfair, for example pointing to the fact that it undermines rights to jury trial and to proceed in class actions. However, this Article seeks to examine the phenomenon of mandatory binding arbitration from a broader perspective, recognizing that it is inappropriate to assume that justice requires our existing system of litigation, with its class actions and jury trial. The Article concludes that while informal …

Toward A Contractual Approach To Arbitral Immunity, Peter B. Rutledge

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This Article breaks from conventional wisdom in both case law and scholarship. It proposes a simple but novel thesis: Arbitrators and arbitral institutions, in cases of voluntary submission of disputes, should not be entitled to any form of legal immunity. Instead, any limit on or waiver of the arbitrator's or institution's liability should come in the form of a contractual release-either adopted in the parties' arbitration agreement or negotiated between the parties and the arbitrator.

Central to this thesis is a distinction between two types of immunity. The first form of immunity is “contractual immunity.” The hallmark of contractual immunity …

Necessity Never Made A Good Bargain: When Consumer Arbitration Agreements Prohibit Class Relief, Thomas V. Burch

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The American system of arbitration is constantly evolving. From the first formal arbitration tribunal in 1786—established by the New York Chamber of Commerce—to the creation of the Federal Arbitration Act in 1925—passed to suppress judicial hostility towards arbitration -- the system has continuously adapted to accommodate changing business practices and rising judicial concerns over the legitimacy of the institution. In fact, the system’s adaptation has been so effective that the Supreme Court now recognizes a “national policy favoring arbitration.” This “national policy” is the most recent phase of the arbitration evolution, and it raises several concerns. Most significantly, lower courts …

Georgia General Assembly Adopts "Manifest Disregard" As A Ground For Vacating Arbitration Awards: How Will Georgia Courts Treat The New Standard?, John W. Hinchey, Thomas V. Burch

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Generally, courts may only set aside arbitration awards on the grounds listed in the Federal Arbitration Act or the applicable state arbitration code. However, all federal circuit courts and a few state courts have adopted a non-statutory exception that allows a court to overturn an arbitrator's decision if the arbitrator has exemplified a "manifest disregard" of the law.

In 2002, after several years of tentative lower court decisions, the Georgia Supreme Court, in Progressive Data Systems v. Jefferson Holding Corporation, held that manifest disregard is not a proper ground for vacatur in Georgia. The court emphasized that Georgia's Arbitration Code …

Problem-Solving Advocacy In Mediations, Harold I. Abramson

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No abstract provided.

Using Arbitration To Eliminate Consumer Class Actions: Efficient Business Practice Or Unconscionable Abuse?, Jean R. Sternlight, Elizabeth J. Jensen

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Companies are increasingly drafting arbitration clauses worded to prevent consumers from bringing class actions against them in either litigation or arbitration. If one looks at the form contracts she receives regarding her credit card, cellular phone, land phone, insurance policies, mortgage, and so forth, most likely, the majority of those contracts include arbitration clauses, and many of those include prohibitions on class actions. Companies are seeking to use these clauses to shield themselves from class action liability, either in court or in arbitration.

This article argues that while the unconscionability doctrine offers some protections, case-by-case adjudication is a costly means …

Arbitration, Unconscionability, And Equilibrium: The Return Of Unconscionability Analysis As A Counterweight To Arbitration Formalism, Jeffrey W. Stempel

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However incomplete, unaggressive, or sub-optimal, unconscionability analysis of arbitration agreements has made something of a comeback in the late twentieth century and early twenty-first century. Just as nature abhors a vacuum, water seeks to be level, and ecosystems work to retain environmental stability, the legal system has witnessed an incremental effort by lower courts to soften the rough edges of the Supreme Court's pro-arbitration jurisprudence through rediscovery of what might be called the “unconscionability norm”--a collective judicial view as to what aspects of an arbitration arrangement are too unfair to merit judicial enforcement. In rediscovering and reinvigorating the unconscionability norm …

The Rise And Spread Of Mandatory Arbitration As A Substitute For The Jury Trial, Jean R. Sternlight

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THE CIVIL JURY trial is fast disappearing from our legal landscape, and one important reason for its disappearance is the rapid growth of mandatory arbitration. Yet, the imposition of mandatory arbitration eliminates the civil jury, and often this elimination is not made through a knowing, voluntary, or intelligent waiver. As I have argued elsewhere in greater detail, unless federal courts are generally willing to abandon the Seventh Amendment "knowing/voluntary/intelligent" civil jury trial waiver standard, they need to significantly revise their approach to mandatory arbitration clauses. If a given state allows the civil jury trial right to be waived through a …

Forgetfulness, Fuzziness, Functionality, Fairness And Freedom, In Dispute Resolution, Jeffrey W. Stempel

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Professor Subrin is a self-professed traditionalist who has been one of the most forceful defenders of what I might term neo-traditional “Clarkian” litigation. By that, I mean the model of civil disputing in which litigation is a primary vehicle. More important, the litigation is based on notice pleading, broad discovery, and a preference for adjudication on the merits.

Key Subrin works over the years have focused on the historical path of the Clarkian model, which served to fuel much of the law revolution of the mid-Twentieth Century, to the “new era” of civil procedure and dispute resolution that dominated the …

On The Importance Of Institutions: Review Of Arbitral Awards For Legal Errors, Peter B. Rutledge

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In my view, legislatures, rather than courts or parties, should decide whether (and to what extent) courts should review arbitral awards for errors of law. The optimal legislative mechanism should not be compulsory but should offer parties the choice whether to "opt-in" to this regime of expanded review by inserting language to that effect in their arbitration agreement. A legislative solution with an "opt-in" feature has a sounder doctrinal foundation, better respects the distribution of power between various branches of government, involves a lower risk of error and minimizes transaction costs. From this position, two additional conclusions follow: first, courts …

Should An Arbitration Provision Trump The Class Action? No: Permitting Companies To Skirt Class Actions Through Mandatory Arbitration Would Be Dangerous And Unwise, Jean R. Sternlight

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Companies are deliberately using mandatory arbitration to prevent consumers and employces from joining together in class actions. As Carroll Neesemann has explained, eliminating the class action is a "strong incentive" of those companies that impose the requirement of arbitration on consumers and employees. Mr. Neesemann defends this phenomenon, and his article offers companies and their attorneys some tips on how to effectively use arbitration to insulate themselves from the threat of class actions. By contrast, this essay argues that it is dangerous and unwise to permit companies to use mandatory arbitration to exempt themselves from class action suits.

Is The U.S. Out On A Limb? Comparing The U.S. Approach To Mandatory Consumer And Employment Arbitration To That Of The Rest Of The World, Jean R. Sternlight

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After quickly summarizing the landscape of mandatory arbitration both within and without the United States, this article will consider why mandatory arbitration is treated so disparately, whether it is problematic that approaches to mandatory arbitration are so varied among countries, and what the differing jurisdictions can and should learn from one another. The article concludes that the United States Congress should be very concerned with the fact that we are treating mandatory arbitration more permissively than other countries. I, along with many others, have previously presented many arguments for why mandatory arbitration is problematic. Our outlier status on this issue …

Ulysses Tied To The Generic Whipping Post: The Continuing Odyssey Of Discovery "Reform", Jeffrey W. Stempel

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One need not be a charter member of the Critical Legal Studies Movement (“CLS”) to see a few fundamental contradictions in litigation practice in the United States. A prominent philosophical tenet of the CLS movement is that law and society are gripped by a “fundamental contradiction” and simultaneously seek to embrace contradictory objectives. Civil litigation, particularly discovery, is no exception: New amendments to the discovery rules are the latest example of this contradiction. Although the new changes are not drastic, they continue the post-1976 pattern of making discovery the convenient scapegoat for generalized complaints about the dispute resolution system. One …

Mandatory Binding Arbitration And The Demise Of The Seventh Amendment Right To A Jury Trial, Jean R. Sternlight

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How can the body of law which protects the federal constitutional jury trial right be reconciled with a body of arbitration law which often states such propositions as (1) arbitration is favored; (2) arbitration clauses may be upheld absent a showing of voluntary, knowing, or intentional consent; (3) the party opposing arbitration bears the burden of proof; (4) arbitration can sometimes be imposed using unsigned envelope "stuffers," handbooks, and warranties; and (5) ambiguous contracts should be construed broadly to support arbitration? To be valid, in most courts the waiver and whether it was actually state arbitration clauses need not be …

Fighting Arbitration Clauses In Franchisor Contracts, Jean R. Sternlight

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Purporting to serve justice, efficiency, and freedom of contract, business interests are increasingly attempting to use binding arbitration clauses to secure unfair advantages over unknowing parties. Courts seemingly have been eager to enforce arbitration clauses that appear in franchise agreements. This article discusses courts’ enforcement of arbitration clauses, undermining protections to the franchisee, and how franchisees can create a more level playing field.

Identifying Real Dichotomies Underlying The False Dichotomy: Twenty-First Century Mediation In An Eclectic Regime, Jeffrey W. Stempel

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Some people (lawyers, scholars, judges, dispute resolvers, policymakers) are more concerned about fidelity to procedural protocols while others are more concerned with the substantive rules governing disputes and substantive outcomes. Those in the dispute resolution community preferring facilitation tend to be proceduralists. For them, the observance of proper procedure is a high goal, perhaps the dominant goal. They reason, often implicitly, that adherence to the rules of procedure is the essence of neutrality, fairness, and the proper role of a dispute resolving apparatus. At some level, usually subconscious, there is a post-modern philosophical aspect of this preference. Because humans cannot …

The Inevitability Of The Eclectic: Liberating Adr From Ideology, Jeffrey W. Stempel

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The problem with viewing facilitation as the only legitimate form of mediation, of course, is that it borders on tautology: mediation is nonevaluative, therefore any evaluation in mediation must be impermissible. Although this view remains strongly held in many quarters, it appears to be in retreat, both within the mediation community and in the legal community at large. Courts and commentators have shown increasing favor toward some evaluative or advising component of mediation. More important, the eclectic style appears to be what takes place in the metaphorical trenches of mediation practice (although sound empirical data is necessarily hard to obtain …

Recent Case Developments, Jeffrey W. Stempel

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Recent case developments in Insurance Law in the years 1999 and 2000.

Is Binding Arbitration A Form Of Adr?: An Argument That The Term "Adr" Has Begun To Outlive Its Usefulness, Jean R. Sternlight

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Professor Frank Sander has, for many years, been one of the most prescient commentators on the alternative dispute resolution ("ADR") movement. His 1976 Pound Conference speech has been identified by many as marking the birth of the modern ADR phenomena. That speech, which compared some of the pros and cons of litigation and an array of other dispute resolution processes, has been summarized as proposing the concept of the "multi-door courthouse." In contrast, Professor Sander's more recent and very interesting review of the present and future of ADR makes little attempt to distinguish between mediation and binding arbitration, the two …

As Mandatory Binding Arbitration Meets The Class Action, Will The Class Action Survive?, Jean R. Sternlight

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Assuming that the traditional prerequisites for a class action have been met, courts have four choices: (1) order the dispute to be resolved in an individualized arbitration, thereby denying plaintiffs either a litigation or arbitration venue for their class claims; (2) refuse to mandate arbitration, and instead allow plaintiffs to litigate their class claims; (3) order that the dispute be resolved through an arbitral class action, also known as classwide arbitration; or (4) order the dispute to arbitration but allow the arbitrators to make the determination as to whether the dispute should be resolved individually or on a class basis. …

Protocols For International Arbitrators Who Dare To Settle Cases, Harold Abramson

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The best time to settle an international business dispute can be after the international arbitration proceeding has been commenced. Just like in court litigation, parties may be ready to settle only after the adjudicatory process has begun and even has progressed. In court, judges commonly open the door to settlement; they hold settlement conferences and even actively participate in settlement negotiations. But arbitrators rarely open the door to settlement; when they do, they risk losing their jobs. So, what can international arbitrators safely do? What dare they do?

In this article, the author explores the dilemma presented when one neutral …

Compelling Arbitration Of Claims Under The Civil Rights Act Of 1866: What Congress Could Not Have Intended, Jean R. Sternlight

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The Civil Rights Act of 1866 was a very special statute, designed at minimum to eliminate all "badges and incidents of slavery" and to ensure that the freed slaves would be provided with civil rights equal to those of white persons. Its enforcement depends on the availability of a neutral public system of justice. Private arbitration cannot assure these characteristics. Thus, courts should not enforce agreements to arbitrate future disputes that may arise under this statute. This Article, however, does not argue that arbitration of claims under the Civil Rights Act of 1866 should be prohibited altogether. Disputants who mutually …

Contracting Access To The Courts: Myth Or Reality? Bane Or Boon?, Jeffrey W. Stempel

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Many scholars of the dispute resolution system perceive a sea change in attitudes toward adjudication that took place in the mid-1970s. Among the events of the time included the Pound Conference, which put the Chief Justice of the United States and the national judicial establishment on record in favor of at least some refinement, if not restriction, on access to courts. In addition, Chief Justice Burger, the driving force behind the Pound Conference, also used his bully pulpit as Chief Justice of the Supreme Court to promote ADR, particularly court-annexed arbitration. The availability of judicial adjuncts such as court-annexed arbitration …

Mandatory Pre-Dispute Arbitration: Steps Need To Be Taken To Prevent Unfairness To Employees And Consumers, Jean R. Sternlight

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Courts, arbitral organizations and governmental agencies are increasingly recognizing that mandatory binding arbitration can be used both to disadvantage employees and consumers, and to evade legal requirements. Over the last decade, private parties such as employers, manufacturers and financial organizations began using binding arbitration agreements to skirt the public law, and public juries, with increasing intensity. As so often happens, overreaching may once again be giving way to retrenchment, as the tide seems to be turning away from the “anything goes” approach of the earlier 1990s.

Gateway Widens Doorway To Imposing Unfair Binding Arbitration On Consumers, Jean R. Sternlight

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Hill v. Gateway, is but the most extreme example of a series of court decisions that allow large companies to impose potentially unfair binding arbitration agreements on unwitting consumers. The outcome in Gateway, however, is questionable on federal statutory, common law, and constitutional grounds.