Boilerplate Symposium IV: David Horton on Mass Arbitration and Democratic Degradation

This is the fourth in a series of posts reviewing Margaret Jane Radin’s Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.

David Horton is Acting Professor of Law at the UC Davis School of Law.

One of Boilerplate’s mostprovocative claims is that mass contracting causes “democraticdegradation.”  To be sure, this idea isnot entirely new.  In 1931, KarlLlewellyn called standard forms “theexercise of unofficial government”; forty years later, W. David Slawson analogizedto administrative law and argued that adhesive terms, like rules promulgated byunelected bureaucrats, sufferfrom a democracy deficit.  However,with the rise of public choice theory—which blurs the line between public andprivate lawmaking by conceptualizing statutes as “deals” between politiciansand interest groups—these critiques have all but vanished.  Professor Radin seeks to reinvigoratethem.  She contends that boilerplate replaces“the law of the state with the ‘law’ of the firm” and therefore undermines ourcommitment to representative democracy (p. 16). 

I’m particularly interested in how Professor Radin’s democraticdegradation thesis plays out in the field of consumer and employmentarbitration.  (For whatever it’s worth,I’ve explored similar issues here and here, andin my forthcoming review ofBoilerplate).  Of course, unlike other controversial fineprint terms, arbitration clauses can claim to have a democratic pedigree:Congress passed the Federal Arbitration Act in 1925 to encourage the use ofprivate dispute resolution. Nevertheless, it is widely accepted—even among the Justices—that theFAA’s current musculature is “anedifice of [the Court’s] own creation.” In addition, the saturation ofmandatory pre-dispute arbitration clauses—at leastamong major companies in certain industries—rivals traditional lawmaking inits scale.  For instance, the classarbitration waiver in AT&T’s wireless service contract binds more customersthan the combined populations of California, Texas, New York, and Florida.  Thus, to borrow from Professor Slawson, if bymaking “law” wemean creating or altering enforceable rights or duties, then companies makemore law in a day by projecting arbitration across the economy than Congressmakes in a year.

Is this spectacular display of private power legitimate?  Professor Radin suggests that it’s not.  She notes that “most people don’t know whatarbitration is” and that arbitrators “are widely believed to be more favorableto businesses” (p. 4).  Yet a skepticalreader might push back.  What if, as theCourt has repeatedly declared, the bare decision to resolve a dispute in thearbitral forum doesnot affect its outcome?  Arguably,then mass arbitration is an elegant shortcut to the meandering path of litigation.  Moreover, there are safeguards againstdrafter overreaching.  Courts caninvalidate one-sided arbitration clauses under the contract defense ofunconscionability.  Likewise, the vindicationof rights doctrine entitles plaintiffs to a judicial forum if they prove thatthey can’t effectively vindicate federal statutory claims in arbitration.  Before we condemn mass arbitration asdo-it-yourself law reform, shouldn’t we insist on evidence that it deprivesconsumers and employees of substantive rights?      

The rejoinder to thisrejoinder can be found in the Court’s recent jurisprudence.  In AT&T MobilityLLC v. Concepcion, the Court held that class arbitration waivers mustbe enforced even if small-value consumer protection claims will “slip throughthe legal system.”  Thus, in perhaps the most fraught context in all civillitigation—the class action—the Court has disavowed the principle that theswitch to an arbitral forum is outcome-neutral. It has allowed drafters to engage in aggregate contracting—a practicethat Professor Radin persuasively argues is not “contracting” at all—whiledenying adherents the ability to aggregate claims.  And in the pending case of AmericanExpress Co. v. Italian Colors Restaurant,the Court is expected to extend Concepcionand mandate bilateral arbitration of federal antitrust claims even though thecost of expert fees alone greatly exceeds any individual plaintiff’s potentialrecovery.  Just as Professor Radincontends, the casualties of this quiet revolution will be “rights thatare granted through democratic processes” (pg. 16). 

[Posted, on David Horton’s behalf, by JT]