Rule‐Intermediaries in Action: How State and Business Stakeholders Influence the Meaning of Consumer Rights in Regulatory Governance Arrangements

• Published date: 01 January 2015
• DOI: http://doi.org/10.1111/lapo.12031
• Date: 01 January 2015
• Author: Shauhin Talesh

Rule-Intermediaries in Action: How State and

Business Stakeholders Influence the Meaning

of Consumer Rights in Regulatory

Governance Arrangements

SHAUHIN TALESH

The boundaries between public and private actors are increasingly blurred via

regulatory governance arrangements and the contracting out of rights enforce-

ment to private organizations. Regulation and governance scholars have not

gained enough empirical leverage on how state actors, private organizations, and

civil society groups influence the meaning of legal rules in regulatory governance

arrangements that they participate in. Drawing from participant observation at

consumer law conferences and interviews with stakeholders, my empirical data

suggest that consumer rights and, in fact, consumer law, mean different things to

different stakeholders tasked with adjudicating consumer rights. Rights afforded

consumers who purchase warranties are now largely contingent on first using

alternative dispute resolution structures, some created and operated by private

organizations with soft state oversight and others run by stakeholders but with

greater state oversight and involvement. Using new institutional sociology and

regulatory governance theories, I find that stakeholders involved in overseeing and

administering these dispute resolution systems filter the meaning of consumer

rights through competing business and consumer logics. Because consumer laws

mean different things to stakeholders tasked with adjudicating consumer rights,

two different rights regimes simultaneously exist in this field. I conclude that how

rule-intermediaries administering private and state-run dispute resolution systems

conceptualize what consumer laws mean in action may have implications for

regulatory governance and more broadly, consumers’ access to justice.

Thanks to Kenneth Abbott, Catherine Albiston, Alex Camacho, Lauren Edelman, David Levi-

Faur, Malcolm Feeley, Stephen Lee, David Min, Martin Shapiro, Duncan Snidal, Doug

Spencer, Robin Stryker, Susan Sturm, Paul Verbruggen, Chris Tomlins, and anonymous review-

ers for helpful feedback or advice, including sometimes reading earlier drafts. I thank the

National Science Foundation (SES-091874) and the UC Irvine School of Law for providing

funding for data collection and analysis. An earlier version of this article was presented at the

University of Wisconsin Law School, Rogers College of Law, University of Arizona Law

School, the University of Pacific, McGeorge School of Law, the 2014 American Association of

Law Schools Conference, Socio-Economics Section, the 2014 Jerusalem Workshop on Regula-

tory Intermediaries and Trans-National Governance, and the 5th ECPR Regulatory Gover-

nance Conference in Barcelona, Spain.

Address correspondence to Shauhin Talesh, University of California, Irvine—School of Law,

401 E. Peltason Drive, Ste. 4800L, Irvine, CA 92697, USA. Telephone (949) 824-9214;

E-mail: stalesh@law.uci.edu.

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LAW & POLICY, Vol. 37, Nos 1–2, January–April 2015 ISSN 0265–8240

© 2015 The Author

Law & Policy © 2015 The University of Denver/Colorado Seminary

doi: 10.1111/lapo.12031

INTRODUCTION

Increased involvement, delegation, and deference to nonstate actors is prob-

ably the most significant change to the regulatory state in the past three

decades (Shamir 2010; Jordana and Levi-Faur 2004). Whereas previously

command-and-control government regulation structured civil society

responses, governance frameworks allow private organizations, experts, pro-

fessional associations, and civil society actors greater involvement and voice

in how they will be regulated (Ansell and Gash 2008; Lobel 2004; Braithwaite

2002; Sturm 2001; Freeman 1997, 2000; Majone 1997). Since the 1980s,

governance through regulation is the central reform across the United States

(Ansell and Gash 2008), European Union (Majone 1994, 1997), Latin

America (Jordana and Levi-Faur 2004; Manzetti 2000), East Asia

(Jayasuriya 2001), and developing countries (Cook et al. 2004). “Hard” laws

and directives coming with the coercive backing of the state decline as states

move toward a broader conception that establishes legally nonbinding “soft”

rules such as standards and guidelines (Djelic and Sahlin-Andersson 2006).

Countries increasingly contract out government services, streamline govern-

ment functions, cut the delivery of many services and benefits traditionally

run by public institutions, and devolve power to lower levels of government

who in turn look to private actors to help execute their new responsibilities

(Salman 1995).

Although regulation and governance scholars have captured the theoreti-

cal foundations of governance and empirical studies highlight the new instru-

ments and techniques involved in regulatory governance frameworks, there

has been less empirical research directed toward how regulatory governance

stakeholders act as rule-intermediaries and influence the meaning of law

(Gilad 2014; cf. Schneiberg and Bartley 2008).1In particular, how do state

actors, private organizations, and civil society actors mediate the meaning of

legal rules in regulatory governance arrangements that they participate in?

I use consumer warranty laws to specifically explore this question because

consumer rights are now contingent on using different disputing systems

operating outside the court system, some operated by private organizations

and others run by the state. In response to automobile manufacturers not

standing behind their warranties and making repairs, all fifty states in the

1970s and 1980s passed consumer warranty laws affording consumers strong

legal rights and remedies in court such as the ability to seek a full refund or

replacement car, attorneys’ fees, and sometimes a civil penalty if they can

show that they gave the manufacturer a reasonable number of attempts to fix

the problem.

Manufacturers, in turn, created dispute resolution structures to resolve

these grievances outside courts. These disputes are now, through legislation

and accompanying regulatory oversight, largely contingent on first using

alternative dispute resolution structures where no attorneys’ fees or civil

penalties are available and arbitrators have discretion to award an

2LAW & POLICY January–April 2015

© 2015 The Author

Law & Policy © 2015 The University of Denver/Colorado Seminary