ARBITRATOR DIVERSITY: CAN IT BE ACHIEVED?

• Author: Cole, Sarah Rudolph

ABSTRACT

The 2018 lawsuit Jay-Z brought against the American Arbitration Association (AAA) because the list of twelve arbitrators AAA provided in a breach of contract dispute did not include a black arbitrator highlighted ongoing concerns about the lack of diversity in the arbitrator corps. Given arbitration's already less formal structure, one method for enhancing its legitimacy among diverse disputants would be to ensure greater diversity among those empowered to make decisions. Increasing diversity of neutral rosters--and more importantly, of the arbitrators ultimately selected from those rosters--may improve the public's perception of the fairness and impartiality of the arbitration process. Increasing arbitrator diversity will have other benefits as well, including enhancing equal protection, equal opportunity, and complete participation norms.

This Article suggests approaches that arbitration providers and participants in the arbitral process might adopt to enhance diversity in arbitrator selection. In particular, this Article posits that, while party control over arbitrator selection is a hallmark of arbitration, unbridled party selection may play an integral role in reducing diversity in the arbitrators selected. Among other things, winnowing to a single arbitrator, which the parties often undertake with relatively little information, may lead parties to rely on heuristics that incorporate explicit or implicit biases. One way to combat such concerns may be to reduce--at least at the margins--the extent of party control over the selection process. More specifically, adjusting the selection process to include a limited appointment aspect, rather than the traditional strike and rank approach, may substantially promote diversity while still preserving a strong role for party participation in arbitrator selection. In addition to direct arbitrator appointment, this Article explores other approaches that might enhance diversity in the arbitrator corps, including creating permanent panels of arbitrators, publicizing information about individual arbitrators, and implementing arbitrator evaluation processes. The proposed approaches would retain a strong role for party autonomy in the selection process while also providing a greater likelihood for diversity in the outcome of that selection process, in turn enhancing public perceptions of the fairness of arbitration as a dispute resolution mechanism.

TABLE OF CONTENTS INTRODUCTION I. THE IMPORTANCE OF DIVERSITY IN IMPROVING PUBLIC PERCEPTIONS OF ARBITRATION AS A LEGITIMATE DISPUTE RESOLUTION PROCESS II. ARBITRATOR SELECTION PROCESSES III. CURRENT EFFORTS TO DIVERSIFY THE ARBITRATOR CORPS IV. IN LIGHT OF THESE EFFORTS, WHY ISN'T THE ARBITRATOR CORPS MORE DIVERSE? V. ORGANIZATIONAL EFFORTS TO DIVERSIFY THE ARBITRATOR ROSTER DO NOT RESULT IN SELECTION OF ARBITRATORS WITH DIVERSE CHARACTERISTICS VI. POTENTIAL SOLUTIONS A. Alternative Appointment Approaches B. Increased Implementation of Permanent Panels C. Consolidated Information About Diverse Arbitrators D. Published Arbitrator Evaluations CONCLUSION INTRODUCTION

In 2018, Jay-Z and his company Rocawear sued the American Arbitration Association (AAA) because the list (1) of twelve arbitrators AAA provided in a breach of contract dispute did not include a black arbitrator. (2) After an unsatisfactory e-mail exchange with AAA, Jay-Z and his counsel argued that the lack of black arbitrators on AAA's complex commercial arbitration roster was a violation of the artist's constitutional rights to equal protection of the laws and equal access to public accommodations. Jay-Z also contended that this absence of diversity violated consumer protection laws by misleading consumers into believing they would be able to receive a fair and impartial adjudication in arbitration. Putting aside the merits of Jay-Z's constitutional and consumer protection claims, as well as the validity of his contention that a non-black arbitrator could not provide him a fair hearing, the underlying concern Jay-Z expressed about the lack of diversity in the arbitrator corps resonates with the public as well as with minority disputants and one-shot players--such as consumers or employees--and their representatives. Many commentators believe that the lack of diversity among arbitrators undermines the integrity of the alternative dispute resolution ("ADR") process. (3) Given arbitration's already less formal structure, (4) one method for enhancing its legitimacy among minority disputants would be to ensure greater diversity among those empowered to make decisions. (5) Increasing the diversity rates of arbitrators on neutral rosters--and more importantly, of the arbitrators ultimately selected from those rosters--will likely improve the public's perception of the fairness and impartiality of the arbitration process. (6) Increasing arbitrator diversity will have other benefits as well, including enhancing equal protection, equal opportunity, and complete participation norms.

Arbitration critics correctly observe that the arbitrator corps does not reflect the racial, ethnic, or gender diversity present in society at large. (7) Institutional efforts to alter this dynamic have historically been ineffective, although it would appear that recently redoubled efforts are gaining some ground. (8) Yet there is little question that more could be done.

This Article will begin by addressing some of the reasons why increasing diversity in the arbitrator corps may serve important objectives, such as enhancing public perceptions of the legitimacy of the arbitral process, augmenting equal protection, and improving opportunity for potential arbitrators. It then considers the various levels in the arbitrator selection process at which diversity concerns can arise--the roster level; the list-creation level, when a list of arbitrator names is provided to the parties in a particular matter; and the arbitrator-selection level, when the parties ultimately select the arbitrator who will hear their case. While arbitration providers have taken significant strides in recent years to increase roster diversity, increased roster diversity is not entirely translating into a corresponding increase in the diversity of arbitrators who are ultimately appointed. Yet, unquestionably, it is the actual selection of diverse arbitrators to hear cases that is essential for achieving the goal of legitimizing the arbitration process. (9)

The Article next considers why an increase in diversity at the roster level may not be translating into an increase in diversity of selected arbitrators and suggests approaches that arbitration providers and participants in the arbitral process might adopt to address this issue. In particular, the Article posits that, while party control over arbitrator selection is often seen as a hallmark of arbitration, unbridled party selection may play an integral role in reducing diversity in the arbitrators selected. Among other things, winnowing to a single arbitrator, which the parties often undertake with relatively little information, may lead parties to rely on heuristics that incorporate explicit or implicit biases. One way to combat such concerns may be to reduce--at least at the margins--the extent of party control over the selection process. More specifically, adjusting the selection process to include a limited appointment aspect may substantially promote diversity while still preserving a strong role for party participation in arbitrator selection. (10)

For example, in most arbitrations, each party receives an identical tenor twelve-person arbitrator list from which each party confidentially strikes unacceptable arbitrators and ranks those remaining. Upon receipt of that information from both parties, the provider appoints the arbitrator who has the best joint ranking. To achieve greater diversity in appointments, however, the parties could agree--or arbitral institutions could provide, as a default rule--a hybrid selection process. For example, parties could agree to strike six arbitrators from the typical ten-arbitrator list by using three alternate strikes each, and the arbitral provider itself could then select from the remaining four candidates.

Alternatively, rather than ranking arbitrators in strict order, the providers could request the parties to label each arbitrator on the list "acceptable" or "not acceptable," with the arbitral provider then selecting among those that both parties have identified as "acceptable." Such approaches would retain a strong role for party autonomy in the selection process while also providing a greater likelihood for diversity in the outcome of that selection process, in turn enhancing public perceptions of the fairness of arbitration as a dispute resolution mechanism.

1. THE IMPORTANCE OF DIVERSITY IN IMPROVING PUBLIC PERCEPTIONS OF ARBITRATION AS A LEGITIMATE DISPUTE RESOLUTION PROCESS

   Arbitration scholars, arbitrator providers, and arbitration advocates (11) are unified in their interest in and concern about ensuring and advancing diversity among arbitrators. (12) The interest in increasing diversity among the arbitrator corps has been heightened over the last several years--even before the Jay-Z case publicity. Arbitration providers, perhaps in response to public and media pressure and society's increased focus on the importance of diversity, have turned inward and scrutinized their own practices. Ultimately, all of the major providers have increased focus on diversity, through expanding their rosters, implementing more focused recruiting methods to bring on board more arbitrators with diverse characteristics, and influencing public policy through the creation of diversity pledges, diversity committees, and the like.

   When attempting to improve diversity, organizations that provide arbitrators and mediators typically focus on increasing diversity in many forms on neutral rosters. (13) The AAA Diversity...