Consumer Rights When Wronged: Private Arbitration in the U.S.

• In Event: Organizing With and Against the State

Abstract

This paper examines the institutional, political, and legal development of consumer arbitration in the U.S., as it shifted from a process for resolving disputes between corporations to one which primarily protects corporations from litigation on behalf of individual consumers. While arbitration has a long history in the U.S., the expanding use of forced consumer arbitration has dramatically expanded since the 2000s. In examining the nature of this shift, this paper argues that it has occurred through the process of "conversion" in three institutional realms: 1) legislative conversion; 2) private sector conversion of public regulation; and 3) judicial conversion.

Specifically, consumer arbitration evolved from 19th century commercial arbitration which, at its origins, was considered a particularly valuable mechanism for resolving minor disputes between businesses and trade associations. This conception of arbitration, bolstered by support from both progressives in the Democratic party and the legal community, culminated in the passage of the Federal Arbitration Act in 1925, which required judicial deference to private arbitration between businesses. The uncontroversial and ultimately vague law--which does not designate an administrative agency for its implementation or oversight--remained relatively dormant for nearly half a century.

However, with the advent of the "litigation explosion"--particularly in the context of consumer protection laws and a growth in medical malpractice and product liability cases--corporations and their conservative allies in government began to redefine and expand commercial arbitration to new ends. I argue that they did so by converting the institutional infrastructures of commercial arbitration and the litigation reform agenda, a process continued by the private sector and the Supreme Court. This papers argues that this conversion was the product of multiple actors targeting multiple institutions over decades, and that it has had profound consequences for consumer protection in the U.S.

Author

• Sarah Staszak, Princeton University