Cellphone Arbitration Clauses Under Attack

Time Magazine published on Sunday a joint op-ed in which Federal Communications Commissioner Mignon Clyburn (D) and U.S. Senator Al Franken (D-Minn.) argue that cellphone carriers and other communications businesses have used class action waivers in arbitration agreements to “evade accountability by effectively locking the courtroom doors on their customers.”  

The FCC contemplates a rulemaking in February 2017 with respect to arbitration clauses in consumer communications services contracts.  

Hat tip to Mark Kantor

Yale Law Prof. Opposed to Supreme Court's Arbitration Decisions

Yale Law Professor Judith Resnik in the New York Times objects to "the growing privatization of judging and the closing of access to courts."  She says "The Supreme Court has accelerated this trend through its expansive interpretation of the Federal Arbitration Act."  She asserts "the court stretched that law to apply to consumers and employees."  In contrast, I defend the Court's arbitration decisions on that question here where I wrote in fn.76: 

It is true, as Jean Sternlight argues, that when the FAA was enacted “the economy looked substantially different than it looks today. There were very few transactions between large merchants and individual consumers that would have involved interstate commerce and thus fallen under the jurisdiction of the FAA.”  The great number of transactions now held to involve interstate commerce reflects not only an increase in long-distance consumer transactions, but also the Supreme Court's expansion of the Commerce Clause to cover transactions previously considered beyond the reach of federal legislation. See Henry C. Strickland, The Federal Arbitration Act's Interstate Commerce Requirement: What's Left for State Arbitration Law?, 21 Hofstra L. Rev. 385, 459 (1992) (“Consumer disputes (and other disputes that are the subject of special consideration in state arbitration statutes) were unlikely to find their way to federal court in 1926, because they seldom involved citizens of more than one state[,] and they usually did not meet the requisite amount in controversy. Indeed, Congress may have considered such disputes beyond its commerce power in 1925.”). If applying the FAA to consumer contracts is inconsistent with the intent of the Congress that enacted it, that inconsistency is more properly blamed on the Court's interpretation of the Commerce Clause than on the Court's interpretation of the FAA.

Yale Prof. Resnik also complains that "purchasers of cellphones and prospective employees are frequently required to sign 'contracts' replacing court access with [arbitration] procedures companies choose. These are take-it-or-leave-it deals. If you want a cellphone or a job, you have to agree to private dispute resolution." Maybe if you want that cellphone or that job then arbitration is part of the take-it-or-leave-it offer to the consumer or employee, however, some cellphones (prepaid) and many employers do not include arbitration clauses in their contracts.  Arbitration is one of many factors a consumer or employee may consider in choosing which contracts to form.  I'm generally happy to see arbitration clauses in contracts.  For some reasons see here