Tag Archives: ARBITRATION AGREEMENTS

CONSUMER ARBITRATION AGREEMENTS AND COLLECTIVE ACTION WAIVERS: WHY THE SUPREME COURT’S DEFENSE OF ARBITRATION HAS GONE TOO FAR

ALEXANDER HYDER

ABRITRATION AGREEMENTS – COLLECTIVE ACTION WAIVERS –FEDERAL ARBITRATION ACT –Over the last two decades, the Supreme Court of the United States has been attempting to shrink lower court dockets with decisions both protecting and promoting the use of arbitration.  What seems commendable in the abstract, however, has come at a steep price in reality.  Consumers and other small-dollar claimants are kept from effectively vindicating their rights under consumer and anti-trust law, thereby permitting injurious conduct to go undeterred, unnoticed, and unsettled.  The problem appears to have climaxed following the Court’s decision in American Express Co. v. Italian Colors Restaurant, in which the Court cemented the enforceability of arbitration clauses with collective action waivers once held to be unconscionable under state contract law.  These provisions, increasingly found in standard form adhesion contracts, bind parties of grossly unequal bargaining power to bilateral arbitration without the ability of cost sharing, collaboration, or class actions.  In effect, these provisions operate to immunize the larger drafting party from liability for violations of consumer and anti-trust law.  This paper explores the underlying cause of the issue, as well as the effects of the Court’s jurisprudence on both corporations and would be claimants.   It also analyzes the diminished, if not eviscerated, ability to privately enforce consumer and anti-trust law, and explores who is in the best position to fill the enforcement void left by the now powerless private actor.

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Filed under Volume 16-1