Volume 70, Winter 2018, Issue 2
Dvid L. Noll
In April 2017, the Rutgers University Law Review held a symposium entitled “Resolving the Arbitration Dispute in Today’s Legal Landscape” which examined a wide range of issues related to the law and practice of arbitration. The symposium came at an opportune time, as three broad trends were converging to move arbitration in new directions. The first of these trends was the United States Supreme Court’s continued strong support for arbitration as a substitute for litigation in public courts. Since 1925, federal law has provided through the Federal Arbitration Act (FAA) that certain arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”‘ But for many years, the FAA was interpreted in ways that limited the scope of arbitration.
Samuel Estreicher, Michael Heise & David S. Sherwyn
Since at least 1991, issues surrounding mandatory arbitration of employment and other disputes’ have intrigued, perplexed, angered, gratified, and confounded academics, politicians, lawyers, and others. Similar to many legal issues, the first wave of scholarly work centered on the law. As the law has pretty much settled, academics have turned to empirical work, focusing on how employment arbitration works, and how it compares to employment litigation. In part due to pressure from California legislation, 2 the American Arbitration Association (“AAA”), the nation’s leading provider of arbitration services, opened access to its data base. Owing to inevitable data limitations, most analyses have focused on outcomes-comparisons between litigation verdicts/judgments and arbitration awards. We wholeheartedly endorse good empirical work as an important means of understanding and addressing controversial policy issues, especially in the arbitration arena, and tried our hand at such work a decade ago. 3 We have written this paper to encourage research that goes beyond evaluating awards within the AAA data set and to engage in a longitudinal study of the history of claims-from when they are initially filed with administrative agencies or arbitration organizations to when they are settled or adjudicated.
Timothy P. Glynn & Charles A. Sullivan
In 2012, the National Labor Relations Board (the NLRB or “Board”) held in In re D.R. Horton, Inc.,’ that employers may not compel employees to sign mandatory arbitration agreements waiving their National Labor Relations Act (NLRA)2 right to concerted pursuit of legal redress of employment claims. 3 It did not strike down arbitration as such; rather, it mandated that any agreements required of covered workers leave open an avenue for collective pursuit of claims, either in arbitration or through the court system.4 The Board noted, but did not stress, that a similar result would follow under the Norris LaGuardia Act.5 In 2013, we weighed in on the issue in an article in the Alabama Law Review,6 arguing essentially that, under either statute, arbitration clauses prohibiting employees from all avenues for collective pursuit of legal relief-whether in court or in arbitration-were unenforceable.
In September 2016, regulators charged Wells Fargo Bank, N.A. (‘Wells Fargo” or ‘Wells’) with opening millions of unauthorized accounts on behalf of its customers. When some of those customers filed class actions against Wells, the bank initially responded by moving to compel arbitration on the ground that the consumers had agreed to arbitrate disputes and waive their class action rights. Because most customers with claims in small amounts would probably have foregone filing an arbitration claim, the effect would have been to leave their damages uncompensated except for the refunding of fees, which Wells agreed to in the consent order it entered into with regulators. The Consumer Financial Protection Bureau (“CFPB” or the “Bureau’) has promulgated a regulation which, if it had been in effect at the relevant time, would have enabled the injured Wells customers to obtain class action relief. But Congress blocked the rule, partly because of free-market economic theory. This Article argues that free-market economics is not sufficient to protect consumers from the type of problem present in the Wells Fargo case for two reasons. First, free-market economics assumes that consumers have complete information while empirical evidence shows that consumers do not understand arbitration clauses, much less that consumers realize that such clauses would bar class actions as to fraudulent accounts of which the consumers had no knowledge. Second, the number of primary checking accounts at Wells consistently increased as the fraud became public, suggesting that the free market did not discipline Wells for its misconduct until regulators intervened, and did so only modestly at that point. It is even possible that by enforcing arbitration clauses as written, free-market economics prolonged the Wells fraud, thus enabling more consumers to be injured. In short, some device beyond the free market is necessary to prevent financial institutions from cheating many consumers out of small amounts. Class actions are one such device, but arbitration clauses, as currently enforced, enable financial institutions to prevent their use, thus reducing their incentive to comply with the law.
Elizabeth C. Tippett & Bridgett Schaaff
This study examines whether companies in the gig economy altered their contract terms following two landmark Supreme Court decisions affirming the enforceability of class action waivers in arbitration agreements: AT&T Mobility, LLC v. Concepcion and American Express v. Italian Colors Restaurant. A number of the companies in the study appear to have been influenced by the decisions. The study analyzes Terms of Service contracts from 38 gig companies between 2009 and 2016. Prior to 2012, only about one third of companies used arbitration agreements, and few such agreements contained a class action waiver. By 2016, however, nearly two thirds of gig companies included an arbitration agreement, and almost all included a class action waiver. These class action waivers remove the future threat of aggregate liability for claims brought by workers and consumers alike. The addition of such waivers could also explain in part why gig companies have not reclassified their workers, even after experiencing substantial litigation.
In 2005, the United States Court of Appeals for the Sixth Circuit controversially held in Bridgeport Music, Inc. v. Dimension Films that the de minimis exception-the doctrine that a small use of a copyrighted work does not constitute copyright infringement-did not apply to copyrighted sound recordings. The decision was the only federal court of appeals decision to rule directly on this discrete issue until the United States Court of Appeals for the Ninth Circuit decided VMG Salsoul, LLC v. Ciccone in 2016. The Ninth Circuit held, in direct contravention to the Sixth Circuit, that the de minimis exception did apply to copyrighted sound recordings. This Note will analyze the Bridgeport and VMG Salsoul decisions, conclude that the VMG Salsoul decision is correct, and offer some potential solutions to the issue of digital sampling in today’s music industry.