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.

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.

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.'”

Trump v. CFPB on Arbitration

Trump administration trying to stop CFPB rule prohibiting arbitral class waivers. House Republicans too.

Unsurprisingly, NY Times takes CFPB's side.

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.

New Book on Arbitration Law

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

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.

Religious Arbitration

Emory Law Professor Michael Broyde blogging on his new book, “Sharia Tribunals, Rabbinical Courts, and Christian Panels: Religious Arbitration in America and the West”

ABA Section on Dispute Resolution's Annual Arbitration Training Institute

Great to be in Chicago for arbitrator training.

Steve Ware

The American Bar Association Section on Dispute Resolution's 10th Annual Arbitration Training Institute. Collaborating Organizations: American Arbitration Association,  College of Commercial Arbitrators, FINRA, International Institute for Conflict Prevention and Resolution (CPR), JAMS.

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."

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

International Arbitration Conference in NY

Promising conference on international arbitration at Columbia Law School, May 24, hosted by the
American Arbitration Association International Centre for Dispute Resolution

Center for Public Resources Honors Article on NFL Arbitration

The Center for Public Resources issued the Joseph T. McLaughlin Original Student Article Award to
Theresa Mullineaux, The Latest NFL Fumble: Using Its Commissioner as the Sole Arbitrator, 2016 J. Disp. Resol. (2016)

Arbitration in Israel

Newsletter of the Israeli Institute of Commercial Arbitration

The Centrist Case Against Current (Conservative) Arbitration Law

The Centrist Case Against Current (Conservative) Arbitration Law is my article just published in the Florida Law Review. 

In The Politics of Arbitration Law and Centrist Proposals for Reform, published in the Harvard Journal on Legislation, I explained how issues surrounding consumer and other adhesive arbitration agreements became divisive along predictable political lines (progressives vs. conservatives) and proposed an intermediate (or centrist) position to resolve those issues. However, The Politics of Arbitration Law did not argue the case for my proposals. It left those arguments for this Article, which makes the case against current (conservative) arbitration law, and a third article, which will make the case against progressive proposals to reform arbitration law. In other words, this Article stands out from the many other articles critiquing current arbitration law because this Article’s critique comes from a centrist, rather than progressive, perspective. For that reason, this Article’s critique may be more likely than progressive critiques to gain traction with lawmakers. 

I welcome comments directed to ware@ku.edu

NY Times Criticizes Confidentiality of Employment Arbitration

Today's New York Times refers to "the murky world of corporate arbitration, in which serious charges of misconduct are often settled behind closed doors." The case accuses parent of Kay Jewelers "of discriminating against women by denying them equal pay and promotional opportunities. The accusations of sexual harassment are included in statements employees made about pay and promotion disparities, and the accusers have sought to link the accusations to their wages."

University of Kansas Law Professor and arbitration expert Chris Drahozal gave me permission to add his point that "the arbitration rules in the Kay Jewelers arbitration agreement (National Arbitration and Mediation) are unusual in the U.S. In imposing a confidentiality obligation on the parties. By comparison, the AAA and JAMS rules impose a confidentiality obligation only on the arbitrator and the administrator. Under the AAA and JAMS rules, either party remains free to release any information about the arbitration (in the absence of a confidentiality order by the arbitrators) without consent of the other party."