Political divide over consumer and employment arbitration agreement. Analysis of law and history. Presented at American Bar Ass'n Section on Dispute Resolution Annual Meeting 2021

1. Politics of
Arbitration Law
Stephen J. Ware
Frank Edwards Tyler Distinguished Professor of Law
University of Kansas ware@ku.edu, 785.864.9209

2. FAA, originally drafted by counsel to
the NY Chamber of Commerce,
enacted 1925—same year Republican
President Calvin Coolidge proclaimed:
“The business of America is business.”
Pro-Contract: Enforce arbitration
agreements “save upon such grounds
as exist at law or in equity for the
revocation of any contract.”

3. 1923 FAA hearings, Montana
Democratic Senator Thomas Walsh:
“The trouble about the matter is that a
great many of these contracts that are
entered into are really not voluntarily
[sic] things at all. Take an insurance
policy. ... You can take that or you can
leave it. ... It is the same with a good
many contracts of employment.”

4. Ideological and partisan divides on
adhesive arbitration agreements from
the start.

5. Progressives win protections of
employees and consumers by
regulating terms of adhesion
contracts.
• Labor Law 1930s anti-union
“yellow dog” contracts
• Employment & Consumer Law
• grew 1960s-70s
Wilko v. Swan (1953)
Alexander v. Gardner-Denver Co. (1974)

6. Conservatives win Reagan-Bush-
Clinton-Bush era “Civil Justice
Reform.”
Some SCT decisions supported, and
even written, by justices appointed
by Democrats:
• Allied-Bruce (1995, Breyer)
• Casarotto (1996 Ginsburg)

8. Ware, The Politics of Arbitration Law and
Centrist Proposals for Reform, 53 Harvard J.
on Legislation 711 (2016)

9. Proposed FAIR Act:
“no predispute arbitration agreement or
predispute joint-action waiver shall be
valid or enforceable with respect to an
employment dispute, consumer dispute,
antitrust dispute, or civil rights dispute.”

10. March 2021, House passed the
Protecting the Right to Organize Act:
“Notwithstanding [FAA] it shall be an
unfair labor practice…for any employer”
“to enter into … any agreement…
whereby prior to a dispute…an employee
…promises not to pursue, bring, join,
litigate, or support any kind of joint,
class, or collective claim”

11. 50/50 Senate
Filibuster reform?

12. SCT seems unlikely to change
arbitration law much in next year
or two
Biden administration may change
arbitration rules by agencies.

13. Politics of
Arbitration Law
Stephen J. Ware
Frank Edwards Tyler Distinguished Professor of Law
University of Kansas ware@ku.edu, 785.864.9209

14. “Holy war” over class actions
transcends battle over arbitral class
waivers.
As Professor Deborah Hensler et al. explain,
whether the benefits of class actions outweigh
their costs “is a deeply political question,
implicating fundamental beliefs about the
structure of the political system, the nature of
society, and the roles of courts and law in
society. . . . [T]his political question is . . .
unlikely to be resolved soon.”
DEBORAH HENSLER ET AL., CLASS ACTION DILEMMAS 471 (2000).

15. Left (Progressive) Right (Conservative)
Don’t enforce consumers’
adhesive arbitration
agreements.
Enforce consumers’
adhesive arbitration
agreements.
But if they are enforced,
courts should hear
defenses to enforcement
like fraud, duress &
unconscionability.
Arbitrators, rather than
courts, should hear
defenses. (Separability
doctrine.)
Don’t enforce class
waivers.*
Enforce class waivers.
Courts should vacate
legally-erroneous
arbitration awards.
Courts should confirm
legally-erroneous
arbitration awards.