Tilting the Justice System: from Adr as Idealistic Movement to a Segmented Market in Dispute Resolution

• Citation: Vol. 18 No. 4
• Publication year: 2010

Tilting the Justice System: From ADR as Idealistic Movement to a Segmented Market in Dispute Resolution

Bryant G. Garth

Introduction

This conference is evidence that one form of the Alternative Dispute Resolution (ADR) movement is under some attack—the movement toward mandatory arbitration created through take-it-or-leave-it employee/employer or consumer/business contracts.^[1] The major concerns in the literature include the fairness of the processes and the relationship of the processes to consumer protection and to the enforcement of various statutory rights—securities laws, anti-discrimination, and antitrust.^[2] The attack is mainly on contractual arbitration, but it has spilled over into court-required arbitration and mediation programs,^[3] although the concerns are somewhat different.^[4] The attack has to some extent put mandatory ADR on the defensive. While ADR continues to get very strong backing from the courts, there are increasing numbers of cases challenging some aspects of an ADR procedure—especially a mandatory ADR or one where one party in effect has no choice.^[5] From this perspective, the future appears to be a trend toward the further formalization of ADR. The debates tend to concern how far to go toward "legalizing" the processes of the various forms of ADR.

This Article seeks to place those developments in a larger context. The Article begins with the premise that both arbitration and mediation can be explored as a tale of "legal innovation co-opted," or "an ironic tale of the unintended consequences of social change and legal reform."^[6] Menkel-Meadow suggests that the therapeutic and relatively informal processes envisioned by the early ADR proponents have mutated into more formal and even adversarial proceedings. A similar argument can be made about mandatory arbitration, which also gained support from idealistic academic studies—here promoting "procedural justice."^[7] The idea was that arbitration allows individuals to tell their stories, and therefore litigants perceive the process as a more legitimate form of justice than the usual result of litigation—a negotiated settlement. Both mediation and arbitration contain a tradition—now seemingly muted—that the results are supposed to be better than strict enforcement of the law.^[8] We can therefore suggest two ways to go for reform—a return to the roots of the pure alternative processes, or an effort to infuse more law and due process into the "alternatives." As suggested above, the latter approach is gaining momentum.

Both potential directions for reform ignore the profound changes that have taken place in the private and public justice systems over the past twenty-five years. Many of the arguments appear almost timeless—law enforcement versus ADR, public rights versus private justice. Some of those leading the charge to formalize are indeed the same people who resisted the movement to ADR in the first place.^[9] But it is not a matter of rolling back the clock to an earlier era. The entire system has been transformed. Therefore, I want to try to get behind a history buried in legal and ADR terminology—and questions about the purity of ADR—and look instead at what actually happened both in terms of the players and the processes found in the various kinds of dispute resolution.

My main argument, which I offer as a hypothesis that requires more research, is that we have created a very segmented and hierarchical system of justice as outlined roughly in Figure 1. There is a very special elite group of judges, retired judges, commercial courts, mediators, and arbitrators who provide tailor-made justice geared specifically to large business disputes—a category that includes the new wave of large class actions. This elite has its own sets of lawyers as well, and this relatively small group dominates the agenda for federal court reform as well as the elite ADR market.^[10] If we look closely at the Federal Rules Advisory Committee or the groups that come together to discuss discovery abuse or class actions, we will see this elite—most of whom know each other even as they fight in court. This group helps to negotiate rules that favor their clients and themselves, such as the tobacco industry settlements on the one hand, and on the other hand, ADR that holds down conflict and expense. In this sense it resembles and parallels the system of transnational commercial arbitration—a small world of elite and cosmopolitan arbitrators—and helps to put in place a deluxe lex mercatoria to serve the needs of merchants and those who live off of them.^[11]

This legal system of lex mercatoria for high-stakes business cases is also a means for those with market value as high-end dispute professionals—including judges—to cash in on that market value. The private and the public are very close in this domain, even though the cases handled "privately"—by people whose careers and status frequently have come from their public positions—are often kept
secret from the general public. In contrast to some of the literature, therefore, my point is not that the courts are losing important cases and left with those clients who cannot afford luxury ADR. It is that the elite have a full array of alternatives, including the federal courts, which they can use for tactical and other reasons.^[12] This elite sphere is difficult to enter as a lawyer or as a neutral; the sphere is relatively small, but the impact on the rest of the system is quite strong. With justice now rationed according to the market, much of the system is allocated to this group, and those occupying lower rungs typically aspire to move up to this higher stakes, higher status, higher rewards level (and often act accordingly).^[13]

We have also, therefore, created a low-end justice for the rank and file. It is no longer evidenced only by the fact that the typical state court judge is not as qualified as a federal judge, but now also through processes that push ordinary litigants into settlement-oriented ADR processes dominated by quick-and-dirty arbitration and by mediation conducted by private individuals accountable neither through review processes nor appeal. I have divided these low and middle stakes claims into two rough categories—repeat players and one-shotters—since the system appears very different depending on familiarity with the players—the "neutrals"—and the need for the players to satisfy a knowledgeable constituency of lawyers, and to some extent, clients. The repeat players clearly dominate and create the market for the leading neutrals and provider organizations. For the rest, the system provides essentially a parallel (and rather sloppy) justice system dominated by a potluck of court-appointed neutrals. This "ADR" has very little in common with anything described in the ADR textbooks.^[14]

Finally, and as I will suggest later, this highly segmented system operates with a built-in tilt toward those with the highest stakes cases in the first instance and those who are the repeat players in the second. It is not the simplistic bias of decision-making structured for the employers or companies to win. Instead, the bias is found in a system in which only a few constituencies are comfortable making their arguments and confident that their concerns will be understood, even if they lose some cases. The bias is also in a process that selects neutrals who will be safe for the leading lawyers and clients—whoever controls the selection—and rejects those who appear too political, too unreliable, or too risky even on the basis of cultural stereotypes. The process also encourages ambitious neutrals or even public judges who want to gain the rewards of ADR to position themselves so that leading lawyers and clients will see them as safe and legitimate.

This characterization of a highly segmented process is meant to be provocative. Before trying to justify my perspective, however, it is useful to examine the current wave of criticisms more closely. My analysis will seek to place the current wave in a context that shows just what it accepts and what it chooses to attack.

I. Criticizing Mandatory ADR and Especially Arbitration

The issues that surface most vehemently in the critical literature and cases involve fairness of the processes and the extent to which they provide access to enforce legal rights and, especially, important federal rights. As noted before, these criticisms are often combined with a challenge to the voluntariness of any consent to such proceedings. Presumably the more voluntary the process, the lesser the need for procedural formalities.

Much of the literature, for example, has taken up the issue raised in a very different social context by Marc Galanter in 1974—the advantages of "repeat players" versus "one-shot" parties to the process.^[15] One argument is that regular users of arbitration have greater familiarity with the arbitrators and their respective points of view, aiding in arbitrator selection—thereby gaining an advantage over one-shot parties who typically lack access to that kind of information. Further, arbitrators themselves have an interest in pleasing the repeat players in order to gain future appointments as arbitrators. Put in the most extreme form, the arbitrators are charged with favoring the side that pays them. On the other hand, if there are repeat players on both sides, as in disputes between labor unions and management, there is no great concern.^[16] The key issue, moreover, is less the parties and more the lawyers, who are the ones that typically select the neutrals. To the extent that specialized groups of lawyers develop on both sides, as they may have at least in the securities and labor arenas, the force of this criticism is diminished. The neutrals must prove their worth to both sides.

A variation of this argument that potentially applies to mediation as well as arbitration involves contractual arrangements that give the dispute resolution business to one...