April 3, 2008

The Legal Times Blog has a nice summary of the U.S. Chamber of Commerce's Institute for Legal Reform press conference yesterday, apropos the fight over the "Arbitration Fairness Act" pending in both houses of Congress. That bill, supported strongly by the would ban mandatory arbitration agreements from consumer and employment contracts. At the press conference, the business group made its case in triplicate:

First came anecdotal evidence in the form of a Michigan woman who took Sears to arbitration over a $288 boiler repair bill and won (she believed strongly in pre-dispute arbitration agreements).

Next came the focus group results suggesting that consumers don't support an end to mandatory arbitration. Compiled by the bipartisan polling team of Public Opinion Strategies and the Benenson Strategy Group, the study finds that consumers are averse to lawsuits "and, if given the choice, would prefer arbitration" in the words of presenter Bill McInturff of Public Opinion Strategies. ...

Finally, Catholic University professor Peter Rutledge made the academic and legal case against the legislation. Dropping mandatory arbitration, he said, "unravels the quilt of dispute resolution." Citing numerous categories of arbitration in which consumers already win a majority of cases, Rutledge suggested that allowing lawsuits would kill the incentive for businesses to respond to smaller claims. Lastly, he noted, the prohibition of pre-dispute resolution agreements would lead to a greater burden on judges' dockets by smoothing the path for class actions.

[Peter Rutledge's paper is available on SSRN; I cite it in my most recent law review article. For more on arbitration, see the Overlawyered arbitration section. – THF]