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Sunday, November 26, 2017

Arbitration of Sex Discrimination Cases

"Comparing the Effects of Judges' Gender and Arbitrators' Gender in Sex Discrimination Cases and Why It Matters" is the title of an article by Professor Pat K. Chew, of the University of Pittsburgh School of Law

Prof. Chew's abstract:

Empirical research substantiates that the judges’ gender makes a difference in sex discrimination and sexual harassment court cases. The author’s study of arbitration of sex discrimination cases administered by the American Arbitration Association between 2010 and 2014, however, finds that this judges’ “gender effect” does not occur. Namely, there is no significant difference in the decision-making patterns of female and male arbitrators as indicated by case outcomes.

The author proposes that characteristics of arbitrators, the arbitration process, and arbitration cases all combine to help explain the gender effect differences. Further, she suggests that this analysis reveals concerns about the arbitration process more broadly: do the employers’ advantages as a repeat player, the arbitrators’ competitive pressures, and the arbitrators’ unmonitored discretion in decision-making all combine to explain both the gender effect differences and problematic biases in the arbitration process? 

Saturday, October 28, 2017

V.P. Pence Casts Deciding Senate Vote to Overrule CFPB Rule Against Arbitral Class Waivers

The Vice President cast the 51st Senate vote Tuesday to repeal the Consumer Financial Protection Bureau’s rule banning class-waivers in consumer financial services contracts' arbitration clauses.
The senate thus joined the house in using the Congressional Review Act which allows Congress to overturn an agency's recently finalized rule by a majority vote.

American Banker writes "Financial companies and the powerful U.S. Chamber of Commerce both opposed the rule, joining Republicans who claimed that the new regulation would expose financial companies to costly class-action lawsuits that rarely deliver significant compensation for plaintiffs. They pointed to a CFPB study that found that consumers who went through a closed-door arbitration process received more than $5,000 on average opposed to $32 in class-action lawsuits."

Slate quotes the NY Times as saying "The [CFPB] found that once blocked from suing, few people went to arbitration at all. And the results for those who did were dismal. During the two-year period studied, only 78 arbitration claims resulted in judgments in favor of consumers, who got $400,000 in total relief.”

NBC News points out "Two Republicans sided with Democrats to keep the rule — Lindsey Graham of South Carolina and John Kennedy of Louisiana." That these GOP defections were not the usual defectors--like McCain, Murkowski, Collins, Snowe, or Paul--but southern conservatives, perhaps indicates the pressure to defect came primarily from trial lawyers--often a particularly strong factor in  otherwise-conservative southern states.

Friday, September 29, 2017

Business Groups Sue Today to Block CFPB Arbitration/Class-Action Rule

Business groups today sued the Consumer Finance Protection Bureau (CFPB) in federal court seeking an injunction against the CFPB’s Arbitration Rule, which would nullify arbitration agreement prohibitions of class actions.

Unless blocked, the Arbitration Rule mandates compliance for pre-dispute arbitration agreements entered into on or after March 19, 2018. 

Hat Tip to Mark Kantor and Chris Drahozal.

Wednesday, September 13, 2017

Arbitration Speedier Than Litigation, Says AAA Study

The American Arbitration Association says "on average, U.S. district court cases took more than 12 months longer to get to trial than cases adjudicated by arbitration (24.2 months vs 11.6 months)." While one can always question whether the litigated cases studied are similar to the arbitration cases studied, this data fits the received wisdom from earlier data that arbitration tends to be quicker than litigation. This study is part of a broader website of AAA resources on arbitration.

Sunday, August 27, 2017

CFPB Director Defends Class Action Rule Over Arbitral Class Waivers

Consumer Financial Protection Bureau Director Richard Cordray argues in the NY Times for his proposed rule banning arbitration agreement provisions requiring individual, rather than class, proceedings.

Cordray summarizes CFPB study of class payouts vs. arbitration "In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total." Moreover, "It is true that the average payouts are higher in individual suits. But that is because very few people go through arbitration, and they generally do so only when thousands of dollars are at stake, whereas the typical group lawsuit seeks to recover small amounts for many people. Almost nobody spends time or money fighting a small fee on their own. As one judge noted, 'only a lunatic or a fanatic sues for $30.'”

Thursday, July 20, 2017

Shareholders Lawsuits and Arbitration Clauses in Corporate Charters

Should the Securities and Exchange Commission permit arbitration clauses in a public company's charter? A member of the SEC recently said yes.

"For shareholder lawsuits, companies can come to us to ask for relief to put in mandatory arbitration into their charters," said Michael Piwowar. "I would encourage companies to come and talk to us about that."

As Reuters reports, "The issue garnered attention in 2012, when the SEC pressured private equity firm Carlyle Group L.P. to drop a mandatory arbitration requirement before the regulator would sign off on its IPO plans."

Piwowar's use of the word "mandatory" cuts against his position because, as the saying goes, "arbitration is a matter of contract," and contracts are consensual, not mandatory. Piwowar's position should rest of the view that a corporate charter is contractual so becoming a shareholder is consent to (agreeing to a contract that provides for) arbitration of disputes. In contrast, making arbitration "mandatory" sounds like "forcing" shareholders to arbitrate, which is likely what Piwowar's opponents will argue.


Friday, July 14, 2017

New Book on Arbitration Law

Pleased to announce publication of my new book, Principles of Arbitration Law.


Stephen Ware Kansas KU Arbitration Professor


Thanks to my excellent co-author, Ariana Levinson, Professor of Law at the University of Louisville's Brandeis School of Law.

Thanks also for the Nice plug from Professors Rick Bales and Sarah Cole.

As the publisher (West) says and Amazon quotes:

The Concise Hornbook Principles of Arbitration Law is an authoritative and extensively cited treatise on arbitration. It thoroughly discusses general arbitration law―from federal preemption of state law to the formation, performance, and enforcement of arbitration agreements―and provides in-depth coverage of specialized law governing international arbitration and labor arbitration. The last few decades have witnessed the growth of a large body of legal doctrine―from statutes, judicial decisions, and other sources―focused on arbitration. This Concise Hornbook summarizes that body of law, so should be useful to lawyers and scholars researching arbitration law and to students learning about arbitration.

This Concise Hornbook is designed to be used as the primary or secondary text in a law school course. Many teachers of arbitration design their courses to develop a wide array of practice skills, generally through the use of role-playing exercises. Because this book is clear and concise, students reading it can quickly gain a solid understanding of arbitration’s central concepts and legal doctrines. This efficient use of time enables the teacher to devote many class sessions to role-playing exercises, and discussion of them. This Concise Hornbook can also serve as the primary text for arbitration seminars. Before venturing into a field of scholarship, students generally need a solid foundation in the field’s central concepts and legal doctrines. This book provides that foundation with only a limited amount of reading, thus enabling students to devote substantial time to the seminar’s more-advanced work of reading scholarly articles and writing original papers.


Sunday, June 4, 2017

Fate of Obama-Era Arbitration Rules Under Current Republican President and Congress

Perry Cooper, of Bloomberg News, writes  “A half dozen Obama-era rules to limit mandatory arbitration have met a variety of fates in the four months since Donald Trump became president.”

Arbitration Update: CFPB Rule Uncertain, Mixed Fates for Others goes on to say:


  1. "The Consumer Financial Protection Bureau rule, which covers financial products, hasn’t been finalized yet and is in a perilous position."
  2. "Congress reversed the federal contractor rule under the Congressional Review Act in March."
  3. Anti-arbitration rules covering nursing homes and communication contracts have been put on hold by their originating agencies, while rules that apply to for-profit colleges and financial advisers "appear to be in the clear, at least for now."


Tuesday, May 16, 2017

Supreme Court: Federal Arbitration Law Preempts State Law on Nursing Home Power of Attorney

By a 7-1 vote, the U.S. Supreme Court reversed a Kentucky Supreme Court decision refusing to enforce nursing-home arbitration agreements entered into by agents with power of attorney on behalf of their principals.

The Kentucky Supreme Court "fails to put arbitration agreements on an equal plane with other contracts," according to the opinion, authored by Justice Elana Kagan. "By requiring an explicit statement before an agent can relinquish her principal’s right to go to court and receive a jury trial, the court did exactly what this Court has barred: adopt a legal rule hinging on the primary characteristic of an arbitration agreement."

Commentary by University of North Carolina law professor Mark Weidemaier

The Hill coverage

SCOTUS blog coverage