Diffusing disputes: the public in the private of arbitration, the private in courts, and the erasure of rights.

• Author: Resnik, Judith
• Position: Introduction into II. The Creation and Erasure of Rights, p. 2804-2849 - Arbitration, Transparency, and Privatization: Contextualizing and Analyzing Recent Developments in U.S. Arbitration Regimes

FEATURE CONTENTS INTRODUCTION: DISPUTE DIFFUSION I. THE PUBLIC IN COURTS II. THE CREATION AND ERASURE OF RIGHTS III. LOCATING THE PRIVATE AND THE PUBLIC IN ARBITRATION A. The Paradigm of Merchants, Contracts, and Consent B. From Waffles to Cheerios: Employees, Consumers, and Obligations To Arbitrate IV. METRICS OF EFFECTIVE VINDICATION, ADEQUACY, AND UNCONSCIONABILITY A. Gateways to Judging Arbitration's Legitimacy B. Effective Vindication's Genesis in an "International Commercial Transaction" and Under the Supervision of the Securities and Exchange Commission C. Judicial Cost-Benefit Analyses and the Question of Collective Actions D. "Mass" Arbitration Clauses Without a Mass of Claims 1. Public Access to, and Confidentiality in, Arbitration 2. Accounting for Individual Consumer and Employee Arbitrations a. Finding the Filings b. Locating the Rules and Fee Structures c. Concerns about Compliance E. Contracting for Judges in a Market for Courts F. Regulated Arbitrations: Court-Annexed Arbitration in Federal Courts, Agency Supervision, and European Directives CONCLUSION: "NIGHTMARISH" SCENARIOS AND THE CONSTITUTION OF COURTS INTRODUCTION: DISPUTE DIFFUSION

"To avoid the expense and delay of having a trial, judges encourage the litigants to try to reach an agreement resolving their dispute."

--"Understanding the Federal Courts/How Courts Work," website of the U.S. Courts, 20151

"We may change any terms, conditions, rates, fees, expenses, or charges regarding your Services at any time."

--Wireless Provider "Customer Agreement," 2015 (2)

Courts are equated with public processes, and arbitration with private consensual agreements. Yet that convention misses the degree to which public law has come to regulate the contours of arbitration, and the ways in which courts have incorporated privatizing practices. While public and private--in various senses of those words--have long co-mingled in courts and in arbitration, the balance has shifted, reconfiguring the field of dispute resolution and diminishing distinctions between the work of courts and of other dispute resolution providers.

One reason to care about the changing mix of the public and the private in both venues is that the political authority and the moral legitimacy of courts and arbitration have depended on distinctions between public and private spheres. In theory, judges are agents of the state, charged with implementing its law through public decision making; arbitrators are creatures of contracts, obliged to effectuate the intent of the parties. The distinction is presumed to be constitutionally respectful and welfare-maximizing, enabling the enforcement of public rights and protecting the autonomy of contractual relationships.

Yet the two practices--adjudication and arbitration--are coming to be styled as fungible options on a "dispute resolution" (DR) spectrum. An increasingly common parlance (crisscrossing the globe) replaces the phrase "alternative dispute resolution" (ADR) with DR, so as to put courts--now deemed "Judicial Dispute Resolution" (JDR) or "Judicial Conflict Resolution" (JCR) (3)--on a continuum of mechanisms responding to conflicts. This formulation aligns courts with a range of options that clouds courts' identity as a unique constitutionally obliged mode of decision making.

The reasons for and the goals of this homogenization vary, as the field of DR is capacious. Among its proponents are those seeking to respond to the high demand for adjudicatory services by augmenting "paths to justice" so as to enhance access, (4) reformers aspiring to shape more collegial problem-solving processes, (5) entrepreneurs looking for business, (6) and potential defendants hoping to avoid the publicity and regulation that courts entail. (7) The methods include expanding the forms of process, increasing the power of private providers to issue binding judgments, and broadening the repertoire of providers. The shared aim is to produce resolutions enforceable by law.

"Dispute Diffusion" is the term I offer to capture these new commitments to the eclipse of court-based adjudication as the primary paradigm for government-authorized dispute resolution. Implementation in the United States comes through a mix of policymaking through statutes, rules, regulations, and court-made doctrines, which press trial-level judges to become conciliators, to deploy other individuals as "neutrals" to mediate or to arbitrate in courts, and to outsource decision making to the private market. Much of the work seeks to quiet conflict by relying on confidential interactions among disputants and decision makers. The claims filed, the methods used by decision makers, and the results are often outside the public's purview. An array of provisions--forming what I term "Alternative Civil Procedural Rules" (ACPR)--reflect the developing deregulatory norms. While conferring adjudicatory license on a variety of private processes, the ACPR rarely address the needs of indigent users, the independence of the decision makers, and the rights of the public to participate.

Some aspects of Dispute Diffusion can be attributed to private ordering, (8) but the focus in my discussion is not on international sovereign debt or trade arbitrations. Rather, my concerns are about mandates applied to hundreds of millions of consumers and employees, obliged to arbitrate not because of choice but because public laws have constructed requirements to use private decision making in lieu of adjudication. The United States Supreme Court opened the floodgates during the last three decades, as it reinterpreted 1925 congressional legislation, now known as the Federal Arbitration Act (FAA), to require courts to enforce a myriad of arbitration provisions, promulgated by issuers of consumer credit, manufacturers of products, and employers.

The result has been the mass production of arbitration clauses requiring that claimants, alleging violations of federal and state statutory and common law wrongs, proceed single-file to decision makers designated by the clauses' providers. To assume the result is "mass arbitration" is to misunderstand how the provisions function; few who are cut off from using the courts and required (rather than choosing) to arbitrate do so, thereby erasing as well as diffusing disputes.

Procedural change is synonymous with the history of courts, as transnational exchanges shape and reshape both adjudication and arbitration. The development of new modes for responding to disputes and the proliferation of sites for resolution are not problems, per se. An important example is the growth of administrative adjudication, through which many (but not all) powers of courts are delegated to other kinds of judges who work under rules crafted through public exchanges and subjected to constitutional limitations. (9) In doctrinal terms, as long as the Court determines that the "process due" suffices, delegation to an alternative forum is permissible. (10)

But in the context of mandated arbitration, the Court has not exercised its obligation to analyze the alternatives and assess their quality. Rather, the Court has spun off decision making without imposing structured safeguards. The result is a system that ought to be seen as unconstitutional, in which state-enforced dispute resolution is outsourced to hundreds of unregulated providers whose rules are hard to find, processes generally closed, and outcomes difficult to know.

The burden of my discussion is to understand why and how new dispute resolution institutions are being constructed, to map their contours and values, and to analyze their constitutional and normative implications. The recent Supreme Court FAA case law has garnered a good deal of criticism for cutting off the production of law, (11) for undermining the role of Article III courts, (12) for limiting associational rights, (13) and for constricting access to law by enforcing bans on the collective pursuit of claims. (14) The reallocation of disputes through the FAA to non-public service providers should also be understood as a shadow conflict over public subsidies for litigants. Justices who object to reading the federal Constitution as imposing positive obligations to support civil litigants and who are leery of court-based class actions can avoid debates about the scope of such rights by obliging disputants to use single-file arbitration. (15) The consequence, as one researcher of arbitration provisions for employees has concluded, is a system that exacerbates inequalities. (16)

The FAA case law has also troubled contract and arbitration scholars, (17) because obligations to arbitrate arise not from negotiation but by signing (or clicking on) documents, some of which stipulate that the drafter of the provisions "may change any terms" unilaterally. (18) Deeming an obligation to proceed (almost always on an "individual basis" (19)) through a designated dispute resolution system to be an enforceable "contract" undervalues private law, (20) rightly admired for facilitating cooperative agreements, reflecting the will of the participants able to tailor obligations to their particular needs.

My argument is that the cumulative impact of recent Supreme Court decisions on arbitration also produces an unconstitutional system, providing insufficient oversight of the processes it has mandated as a substitute for adjudication and shifting control over third-party access away from courts and to the organizations conducting arbitrations and the commercial enterprises drafting arbitration clauses. Legal claims are a species of property, and open courts are the venues designated under constitutions to respond to claimed deprivations of those property rights. Limitations on rights--and new procedures for their vindication--are readily permissible but cannot, constitutionally, be imposed arbitrarily or be insulated from tests of fairness and lawfulness.

The Court's own explanations of its decisions...