Seven years can see the Supreme Court travel a long way. In 1935 the Court invalidated the National Industrial Recovery Act, a centerpiece of the New Deal’s efforts to combat the Depression. This was but one of a series of cases in which the Court sought to entrench old notions about government’s role in regulating the nation’s economy. Seven years later, the Court (seven of whose members had been appointed since 1935), decided Wickard v. Filburn, upholding the Agricultural Adjustment Act’s penalty imposed on a farmer who grew wheat for consumption on his own farm. In seven years, the Court had gone from close judicial oversight of Congress’s decisions about the national economy to something close to complete deference.
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The Mandatory Core of Section 4 of the Federal Arbitration Act
IN April 2010, the U.S. Supreme Court will hear oral arguments in Rent-a-Center v. Jackson, a case that has profound implications for the future of American dispute resolution. The issue before the Court is not the merits of Antonio Jackson’s civil rights lawsuit against his former employer, nor even the validity of the mandatory arbitration contract that he was required to sign before he could begin work. Instead, the Court must decide whether Jackson—and the hundreds of millions of other employees, consumers, and franchisees who are subject to mandatory arbitration clauses—have a non-waivable right to challenge the fairness of such provisions in federal court. Because the Federal Arbitration Act (“FAA”) allows courts to nullify one-sided arbitration clauses under the unconscionability doctrine, the judiciary has traditionally served as a bulwark against harsh dispute resolution terms. Yet the contract at issue in Rent-a-Center expressly gives the arbitrator, not courts, the sole authority to decide whether “any part of this Agreement is void.” If the Court enforces this clause, it will quickly become boilerplate in many standard form contracts, giving arbitrators the exclusive right to determine whether an arbitration clause is unconscionable, and limiting the judiciary’s role to little more than rubber-stamping motions to compel arbitration.
Every court that has grappled with a similar clause, including the Ninth Circuit in Rent-a-Center, has assumed that parties can delegate the issue of an arbitration clause’s validity to the arbitrator as long as there is “clear and unmistakable” evidence that they wanted to do so. The source of the “clear and unmistakable” criterion is based on dicta in several Supreme Court decisions. These cases begin by noting that because arbitration is, first and foremost, a matter of contract, parties enjoy the freedom to customize the process. Thus parties can agree to arbitrate arbitrability: that is, they can make a contract that entrusts the arbitrator with defining the scope or rules of arbitration. Finally, even though there is a presumption that parties want courts, not arbitrators, to resolve these issues, this presumption will yield to a strong indication to the contrary.
Rent-to-Own Unionism?
In Information and the Market for Union Representation, Professor Matthew Bodie provides an instructive framework for addressing information deficiencies in union elections. His consumer or “purchase of services” paradigm is apt and well illustrates the shortcomings of the more dominant approaches to elections. The extent to which this paradigm should drive the National Labor Relations Board’s (NLRB) regulation of union elections is less obvious. The best fit with Bodie’s consumer paradigm appears to be a system in which employees can easily designate a union as their representative, yet can just as easily get rid of the union. In other words, employees, like many other consumers, could purchase union services with the knowledge that they can easily change their mind later. It is not clear, however, whether the benefits associated with that model are worth its costs.
Bodie rightly decries the NLRB’s failure to ensure that employees have access to the information needed to make a fully informed decision whether to unionize. In particular, his criticism of the NLRB’s “laboratory conditions” and “political elections” models provides valuable insights into the nature of the union election process and raises important questions about the governance of elections. Yet his consumer paradigm is no panacea. For example, employees’ collective decision whether to unionize differs from a typical consumer decision, which generally does not face concerns from a group of dissenting members. Moreover, even if employees are acting as consumers when voting on union representation, there is a real danger of taking that model too far. The informational concerns that Bodie emphasizes may lead to changes with significant costs of their own. Thus, I am not convinced that the gains from a consumer approach to union elections are large enough to warrant the regulatory response it demands.