The Evolution and Decline of the Effective-Vindication Doctrine in U.S. Arbitration Law

Pepperdine Dispute Resolution Law Journal Volume 14 | Issue 3 Article 4 5-15-2014 The Evolution and Decline of the EffectiveVindication Doctrine in U.S. Arbitration Law Okezie Chukwumerije Follow this and additional works at: https://digitalcommons.pepperdine.edu/drlj Part of the Consumer Protection Law Commons, Dispute Resolution and Arbitration Commons, and the Labor and Employment Law Commons Recommended Citation Okezie Chukwumerije, The Evolution and Decline of the Effective-Vindication Doctrine in U.S. Arbitration Law, 14 Pepp. Disp. Resol. L.J. Iss. 3 (2014) Available at: https://digitalcommons.pepperdine.edu/drlj/vol14/iss3/4 This Article is brought to you for free and open access by the School of Law at Pepperdine Digital Commons. It has been accepted for inclusion in Pepperdine Dispute Resolution Law Journal by an authorized editor of Pepperdine Digital Commons. For more information, please contact , . Chukwumerije: The Evolution and Decline of the Effective-Vindication Doctrine i 5$!0
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The Evolution and Decline of the Effective-Vindication Doctrine in U.S. Arbitration Law Okezie Chukwumerije* INTRODUCTION This Article evaluates the role of the effective-vindication doctrine in U.S. arbitration law. Conceived as a means of ensuring that arbitration is an effective mechanism for vindicating federal statutory rights, the doctrine has played an important role in promoting access to justice. However, the Supreme Court’s recent decision in American Express Co. v. Italian Colors Rest.1 has severely restricted the availability of the doctrine. This article examines the broad policy implications of the Court’s narrow interpretation of the doctrine. Over the years, the Court has adopted an expansive interpretation of the Federal Arbitration Act (FAA).2 As a result, it has broadened the reach and scope of the Act beyond what was intended by its drafters. The Court has interpreted the Act as reflecting both the “fundamental principle that arbitration is a matter of contract,”3 and a “liberal federal policy favoring arbitration.”4 Consequently, the Court has sought to put arbitration
* Professor of Law, Thurgood Marshall School of Law, Houston, Texas. I wish to thank Devin Vickers for her research assistance, and Rebecca Stewart for her helpful comments. All errors are my own. 1. Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304 (2013)., 186 L. Ed. 2d 417, 2013 U.S. LEXIS 4700, 81 U.S.L.W. 4483, 163 Lab. Cas. (CCH) P10,607, 2013-1 Trade Cas. (CCH) P78,432, 24 Fla. L. Weekly Fed. S 337, 2013 WL 3064410 (U.S. 2013).(2013). 2. 9 U.S.C. §§ 1-16, 201-08, 301-07 (2006). 3. Rent-A-Ctr,., W., Inc. v. Jackson, 130 S. Ct. 2772, 2776 (2010). 4. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. 460 U.S. 1, 24 (1983). It should be noted that some observers have observed that the FAA was not intended to favor arbitration but =A?
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agreements “on an equal footing with other contracts.”5 Consistent with what it perceives as the pro-arbitration policy of the FAA, the Court has liberalized the availability of arbitration by narrowly construing the grounds under which arbitration agreements can be invalidated under the FAA’s “savings clause”6 and by transferring an increasing array of gateway issues to arbitrators. The effect of the Court’s expansive interpretation of the FAA is particularly felt in consumer and employment transactions. Claims arising from these transactions often implicate statutory rights that afford vital protections to consumers and employees. Additionally, the monetary value of many of these claims is so small as to make individual prosecution economically unfeasible. As a result, there is the question of whether these claims, which implicate vital statutory rights, should be arbitrable, and if so, whether there should be safeguards to ensure that arbitration is a fair arena for resolving these disputes. At the time the FAA was drafted, there were some indications that it was intended to facilitate the arbitration of commercial disputes between businesses.7 Arbitration was infrequently used outside the commercial context during this period. In fact, some commentators felt that the FAA was intended to have limited application with respect to employment disputes8 and was not envisaged to apply to the resolution of consumer disputes. As one commentator has noted, the “FAA was intended to facilitate self-regulation within commercial communities, not to regulate relationships between consumers and large corporations in arm’s length, anonymous transactions.”9 Nonetheless, the Court has made it clear that the
to prohibit discrimination against arbitration agreements. See Rhonda Wasserman, Legal Process in a Box, or What Class Action Waivers Teach Us About Law-Making, 44 LOY. U. CHI. L.J. 391, 39596 (2012). 5. AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011). 6. Section 2 of the Act provides that an arbitration agreement may be invalidated “upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. §2. 7. See, e.g., Sarah Rudolph Cole, Incentives and Arbitration: The Case Against Enforcement of Executory Arbitration Agreements Between Employers and Employees, 64 UMKC L. REV. 449, 466-67 (1996) (arguing that “[t]he unrebutted legislative history created prior to the FAA's passage establishes that only disputes arising out of commercial contracts were to be arbitrable.”). 8. See Margaret L. Moses, Statutory Misconstruction: How the Supreme Court Has Created a Federal Arbitration Law Never Enacted by Congress, 34 FLA. ST. U. L. REV. 99, 100 (2006) (arguing that the Court has interpreted the FAA “to cover worker agreements, which had been expressly excluded by Congress.”). 9. Katherine Van Wezel Stone, Rustic Justice: Community and Coercion Under the Federal Arbitration Act, 77 N.C. L. REV. 931, 942 (1999). =A@
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Act applies to the arbitration of employment and consumer disputes, even where these disputes implicate statutory rights. On the issue of appropriate safeguards, the “savings clause” of the FAA allows the invalidation of arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract.”10 To a large extent, state courts have used the unconscionability doctrine for ensuring the fairness of the arbitral process in these transactions. Recognizing that class actions are sometimes the only effective means of prosecuting low-value claims by consumers and employees, some state courts have used unconscionability to regulate the enforceability of class action waivers in arbi (...truncated)