Do Arbitration Organizations Comply with California Disclosure Laws?

Carolyn Said writes in the San Francisco Chronicle that while "a decade-old California law already requires arbitration companies to post data on their cases online. The problem is that many don't do it. A UC Hastings study found that only half post any data, and it's short of what's required."


"The vast majority of California consumer arbitrations, about 95 percent, are done by JAMS (formerly Judicial Arbitration and Mediation Services), the American Arbitration Association or Kaiser's independent administrator, and all of these organizations comply with the disclosure law," said Donne Brownsey, a lobbyist for the California arbitration industry.
"JAMS is compliant with California's consumer arbitration disclosure requirements," the organization's general counsel, John Walsh, said in a statement.

Eleventh Circuit Enforces Class Waiver Clauses in Employment Arbitration Agreements

NLRB v. Courts

Class Action Waivers

While the NLRB says such clauses are unenforceable, courts disagree--including the now the Eleventh Circuit in Walthour v. Chipio Windshield Repair, LLC, 2014 WL 1099286 (11th Cir., March 21, 2014),

Contract Terminated; Arbitration Clause Survives

So says Liz Kramer and the Sixth Circuit in Huffman v. The Hilltop Cos., LLC, __ F.3d __, 2014 WL 1243795 (6th Cir. March 27, 2014), .

The NLRB v. The Courts: Class Actions v. Arbitration

The NLRB holds for class actions

The National Labor Relations Board holds that individual employment agreements may not prevent employees from engaging in protected concerted activity in both union and nonunion environments.

The Board ruled in D.R. Horton that individual, as opposed to collectively bargained, arbitration agreements that are a condition of employment, may not bar collective action through both arbitral and judicial forums.

In contrast, most courts enforce arbitration agreements that foreclose class actions.

See for example, the Fifth Circuit.

This article "The NLRB v. The Courts: Showdown Over the Right to Collective Action in Workplace Disputes" by Boston College Professors Stephanie M. Greene & Christine Neylon O'Brien sides with the NLRB’s interpretation.   American Business Law Journal, Vol. 51, No. 4, 2014

Mass Arbitration and Democratic Legitimacy

Mass Arbitration and Democratic Legitimacy 

This very well written article by UC Davis Law Professor David Horton reviews Margaret Jane Radin’s "dazzling new book, Boilerplate."

Horton's Essay argues that Radin’s democratic degradation thesis is particularly compelling in the context of consumer and employment arbitration.

Allegation that Companies Breach Promises to Pay Consumers' Arbitration Fees

Arbitration Fees: Do Companies Breach Duty to Pay Them?

Via Art Hinshaw at ADR Prof, and Jean Sternlight of UNLV writes that Public Justice's Paul Bland (here) argues that although many companies promise to pay arbitration fees incurred by their customers and employees, "quite a few fail to pay those fees on the rare occasion when someone actually brings a claim against them in arbitration.  The post further discusses how the AAA has begun to send letters to such companies demanding that they stop using the AAA name in company documents. Bland identifies car dealers as a common culprit,"

California's Ethics Standards for Neutral Arbitrators in Contractual Arbitration

California's Ethics Standards for Neutral Arbitrators in Contractual Arbitration

California's Ethics Standards for Neutral Arbitrators in Contractual Arbitration are important because our largest state is a leader in arbitration and these are both rules of ethics and rules of law.  They are made rules of law by California Code of Civil Procedure section 1281.85.

California's Ethics Standards for Neutral Arbitrators in Contractual Arbitration have recently been amended.

Consumer Arbitration by Bruce Wardhaugh

Thoughtful new article, Unveiling Fairness for the Consumer: The Law, Economics and Justice of Expanded Arbitration, by Dr. Bruce Wardhaugh of Queen's University, Belfast.  I appreciate the extent to which he addresses my own articles, particularly Paying the Price of Process: Judicial Regulation of Consumer Arbitration Agreements. 

Bruce Wardhaugh writes "some argue that pre-dispute agreements in consumer (and employment) matters are consumer welfare enhancing: they decrease the costs of doing business, which is then passed on to the consumer. This Article examines these latter claims from both an economic and normative perspective. The economic analysis of these arguments shows that their assumptions do not hold. Rather than being productive of consumer surplus, the use of arbitration is likely to have the opposite effect. The industries from which the recent Supreme Court cases originated not only do not exhibit the industrial structure assumed by the proponents of expanded arbitration, but are also industries which exhibit features that facilitate consumer welfare reducing collusion."

 

The Problem with Class Arbitration

"The Problem with Class Arbitration" is an article by Neil Troum, an adjunct professor at Temple University's Beasley School of Law.  He makes what seems to me a powerful point:

"The current state of the law is: where the parties have consented to class arbitration, an arbitrator can enter a class award that a court will confirm and that will have the same res judicata effect as a class action judgment in court. There is a problem with this. The problem is not the incompatibility of the class action's traits with those of the arbitral realm, however--which is how a majority of the Supreme Court currently sees things. It is instead that an arbitrator possesses what power he has only with the consent of the parties whose claim he will resolve. As a result, a class arbitration judgment should not be deemed to have preclusive effect on absent (i.e., nonconsenting) class members, like a class judgment issued from a court. This is not the law, however."

Supreme Court Decides Investment Arbitration Case

Today, the Supreme Court decided BG v. Argentina, in which an arbitration panel awarded BG $185 million in damages.

The basic issue is who—court or arbitrator—bears primary responsibility for interpreting and applying an investment treaty provision providing for arbitration 18 months after litigation in Argentina’s courts.

The Supreme Court today holds that investment treaties should in some respects be treated like ordinary contracts.  "A treaty is a contract between nations, and its interpretation normally is a matter of determining the parties’ intent. Where, as here, a federal court is asked to interpret that intent pursuant to a motion to vacate or confirm an award made under the Federal Arbitration Act, it should normally apply the presumptions supplied by American law."

The relevant presumptions are those the Supreme Court articulated, primarily in its Howsam decision:

In an ordinary contract, the parties determine whether a particular matter is primarily for arbitrators or for courts to decide.  If the contract is silent on the matter of who is to decide a "threshold" question about arbitration, courts determine the parties’ intent using presumptions. That is, courts presume that the parties intended courts to decide disputes about "arbitrability," e.g., Howsam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 84, and arbitrators to decide disputes about the meaning and application of procedural preconditions for the use of arbitration, see id., at 86, including, e.g., claims of "waiver, delay, or a like defense to arbitrability,"  and the satisfaction of, e.g., " ‘time limits, notice, laches, [or] estoppel,’ " Howsam, 537 U. S., at 85. The [treaty] provision at issue is of the procedural variety.

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

Dropbox Adds Arbitration Clause

California Mediation and Arbitration reports the clause has what are now pretty typical provisions for consumer agreements:

Arbitration will be administered by the AAA under the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes. 

Arbitration will be held in the US in the county where you live or work, San Francisco (where Dropbox is headquartered) or any other location the parties agree to.

Dropbox will pay arbitration fees for claims less than $75,000.  If you receive a more favorable award than what Dropbox offers to pay, you get a bonus of $1,000, in addition to the award.  Dropbox won’t seek fees and costs in arbitration – unless the arbitrator determines your claim is frivolous.

Exceptions to the arbitration requirement include small claims, or injunctive relief for certain claims.

There is a class action waiver:  “You may only resolve disputes with us on an individual basis, and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action.”

Pace University Law Professor Jill Gross writes at the consistently-strong ADR Prof Blog "I wonder whether Dropbox adopted the few consumer-friendly features of the clause simply to please its users, to forestall any finding of unconscionability based on the class action waiver, or to try to retain users who might object."

Arbitration as an Article of Constitutional Faith

Michigan State Law Professor Jim Chen's book review of Georgia Law Professor Peter(Bo) Rutledge’s book, Arbitration and the Constitution (Cambridge, 2012).



Abstract:      

Scarcely any legal question arises in the United States that is not resolved, sooner or later, through arbitration. If Alexis de Tocqueville could survey contemporary American legal culture, he would rub his eyes with amazement at the privatization of adjudication across a wide swath of issues previously committed to judicial resolution. From trade disputes posing serious questions of economic diplomacy to consumer contracts adhering to cell phones and credit cards, mandatory arbitration has displaced conventional adjudication. In the country that de Tocqueville characterized as driven by its dedication to constitutional lawmaking through litigation, arbitration has become a dominant form of dispute resolution with little if any direct doctrinal influence by federal constitutional law. This is the overriding theme of Peter B. Rutledge’s book, Arbitration and the Constitution (Cambridge, 2012).

Arbitration Articles in DePaul Symposium Issue

11 DEPAUL BUSINESS & COMMERCIAL LAW JOURNAL, NO. 4, SUMMER, 2013.

Symposium. Commercial Arbitration: Advancing and Refining the ADR Process. 11 DePaul Bus. & Com. L.J. 441-543 (2013). [H][L][LA][W]

Sklar, Stanley. Arbitration advocacy: its role in business and legal education, and new options for dispute resolution. 11 DePaul Bus. & Com. L.J. 441-453 (2013). [H][L][LA][W]

Lurie, Paul M. Guided choice arbitration. 11 DePaul Bus. & Com. L.J. 455-469 (2013). [H][L][LA][W]

Martin, Christopher. Costs of arbitration and the options for controlling those costs. 11 DePaul Bus. & Com. L.J. 471-481 (2013). [H][L][LA][W]

Varallo, Gregory and John Mark Zeberkiewicz. Delaware private arbitration: an explanation of Delaware's Chancery arbitration program and its benefits. 11 DePaul Bus. & Com. L.J. 483-517 (2013). [H][L][LA][W]

Delaware Private Arbitration: Its Practicality, Constitutionality, and Potential Influence on Other States. John Mark Zeberkiewicz, moderator; Christopher Martin, Hon. Clifford Meacham, Gregory Varallo, panelists. 11 DePaul Bus. & Com. L.J. 519-543 (2013). [H][L][LA][W]

11th Circuit Holds New No-Arbitration Agreement Supersedes Earlier Arbitration Agreement

 

Dasher v. RBC Bank (USA), __ F.3d __, 2014 WL 504704 (11th Cir. Feb. 10, 2014), is a class action part of the larger Checking Account Overdraft Multidistrict Litigation.  As the 11th Circuit explains, the original account agreement "contained an arbitration clause with terms broad enough to cover this overdraft fee dispute.” When the bank was acquired by another bank, it sent out to new account agreements with no arbitration clause.  In the 11^th Circuit, the bank cited a labor arbitration case stating there is “a presumption of arbitrability in the sense that an order to arbitrate . . . should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650, 106 S. Ct. 1415, 1419 (1986) (internal quotation marks omitted).  The 11^th Circuit rejected this argument by citing a labor arbitration case holding that this presumption of arbitrability applies when an “arbitration agreement is ambiguous about whether it covers the dispute at hand.” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, __, 130 S. Ct. 2847, 2858 (2010). The FAA’s presumption is inapplicable in this situation, as courts are to apply “the presumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand.” Granite Rock, 561 U.S. at __, 130 S. Ct. at 2858 (emphasis added).

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