For the past twenty-five years, without much fanfare, arbitration law has remade the civil justice system in the United States. As now interpreted, the Federal Arbitration Act (the ‘FAA’) requires millions of consumers, workers, homeowners, credit card holders, rental car uses, hospital patients, and other ordinary people to forgo use of the courts to vindicate important rights. One development that has garnered particular attention is the tendency of corporations to include class action waivers in arbitration agreements, thereby preventing consumers and employees from aggregating small claims and litigating on a collective basis. While arbitration has become ubiquitous, it has also become controversial. This article addresses the question: how did a change of this magnitude come about over a period of three decades while escaping virtually all notice, commentary, or controversy? Moreover, how can one explain the fact that the evolving law of arbitration has not been simply the handiwork of the conservative wing of the Court. Rather, many of the key decisions were authored by the progressive wing of the Court and were, in fact, opposed by conservative justices. And many of the important decisions have been decided by a unanimous court. This essay is the first attempt to understand the trajectory of the FAA and its relationship to the civil justice system in historical perspective. It argues that the FAA has been transformed in three stages. In Phase One, which lasted from 1925 until the mid-1980s, proponents saw arbitration as an aspect of business self-regulation that the business community valued. In Phase Two, lasting from the early 1980s until about 2000, both conservatives and liberal judges, as well as lawyers, legal scholars, and outside observers, saw arbitration as an antidote to many of the perceived shortcomings of the judicial system. Arbitration was, to them, a method of dispute resolution that avoided the expense, lengthy timelines, and excessive technicality of the courts. However, in the current phase, that began in the early 2000s, many have come to see the dangers and pitfalls of the previous approaches even as the Court continues to expand arbitration’s role in the modern legal system. This essay describes each of these phases and then assess what this history can tell us about the FAA and the appropriate role of arbitration in the civil justice system going forward.
Katherine V.W. Stone,
Arbitration—From Sacred Cow to Golden Calf: Three Phases in the History of the Federal Arbitration Act,
23 Pepp. Disp. Resol. L.J.
Available at: https://digitalcommons.pepperdine.edu/drlj/vol23/iss2/1