Arbitration as delegation

New York University Law Review

Volumn 86, Issue 2, 2011, Pages 437-499

  David, Horton ^a  

^a NEW YORK UNIVERSITY SCHOOL OF LAW   (United States)

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EID: 79955821352     PISSN: 00287881     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Note

References (515)

1. Pub.L. No. 73-415, 48 Stat. 1064 (1934) (codified as amended at 28 U.S.C. 2072 (2006)).
2. Stephen N. Subrin, The New Era in American Civil Procedure, 67 A.B.A. J. 1648, 1651 (1981) (The federal rules ultimately were passed as New Deal legislation.);
3. Laurens Walker, The End of the New Deal and the Federal Rules of Civil Procedure, 82 IOWA L. REV. 1269, 1272-80 (1997) (describing influence of New Deal principles such as nationalism, expertise, and social reform on REA).
4. Appointment of Committee To Draft Unified System of Equity and Law Rules, 295 U.S. 774, 774-775 (1935).
5. Robert L. Carter, The Federal Rules of Civil Procedure as a Vindicator of Civil Rights, 137 U. PA. L. REV. 2179, 2179 (1989) (quoting Rules of Civil Procedure for the District Courts of the United States: Hearings on H.R. 8892 Before the H. Comm. on the Judiciary, 75th Cong. 24 (1938) (statement of William D. Mitchell, Chairman, Advisory Committee));
6. Charles E. Clark, The Influence of Federal Procedural Reform, 13 LAW & CONTEMP. PROBS. 144, 154 (1948) (arguing that proper role of procedure is an aid to the understanding of a case, rather than a series of restrictions on the parties or the court).
7. Rules of Civil Procedure for the Dist. Courts of the U.S., 308 U.S. 645 (1937) (transmitting Federal Rules of Civil Procedure to Congress).
8. Pub. L. No. 68-401, 43 Stat. 883 (1925) (codified as amended at 9 U.S.C. 1-14 (2006)).
9. Amy J. Schmitz, Ending a Mud Bowl: Defining Arbitration's Finality Through Functional Analysis, 37 GA. L. REV. 123, 135 (2002) (describing rise of arbitration among merchant and trade groups).
10. See infra Part I (tracing this development).
11. Thomas J. Stipanowich, Arbitration: The New Litigation, 2010 U. ILL. L. REV. 1, 8. 10 For example, in a recent petition for a writ of certiorari, AT&T acknowledged that its arbitration clauses were embedded in tens (if not hundreds) of millions of wireless service agreements. Reply Brief for the Petitioner at 1, AT&T Mobility LLC v. Concepcion, No. 09-893 (U.S. May 3, 2010), 2010 WL 1787380.
12. See infra notes 132-41 and accompanying text.
13. For instance, in Southland Corp. V. Keating, 465 U.S. 1, 15-16 (1984), the Court held that the FAA preempts state law. Chief Justice Burger's majority opinion won support from two other Nixon appointees (Justices Powell and Blackmun), a moderate Kennedy appointee (Justice White), and two liberal icons (Justices Marshall and Brennan).
14. Sec. Indus. Ass'n V. Connolly, 883 F.2d 1114, 1116 (1st Cir. 1989) (describing FAA as therapy for the ailment of the crowded docket);
15. Chief Justice Urges Greater Use of Arbitration, N.Y. TIMES, Aug. 22, 1985, at A21 (quoting then-Chief Justice Warren Burger as saying [a] host of new kinds of cases have flooded the courts: students seeking to litigate a failing mark, professors litigating denial of academic tenure and another great load on the courts, welfare recipients).
16. Allied-Bruce Terminix Cos. V. Dobson, 513 U.S. 265, 280 (1995) ([A]rbitration... is usually cheaper and faster than litigation... . (quoting H.R. REP. NO. 97-542, at 13 (1982))). Under basic economic theory, both contractual partners can benefit from arbitration.
17. Steven Shavell, Alternative Dispute Resolution: An Economic Analysis, 24 J. LEGAL STUD. 1, 5-7 (1995) (describing benefits that parties might derive from ex ante alternative dispute resolution agreements). Accordingly, individuals may be better off agreeing even to one-sided arbitration clauses instead of retaining their right to go to court, if the resulting cost savings are passed on to consumers through reductions in the price of goods and services [or] to employees through higher wages.
18. Christopher R. Drahozal, Unfair Arbitration Clauses, 2001 U. ILL. L. REV. 695, 741;
19. Stephen J. Ware, The Case for Enforcing Adhesive Arbitration Agreements-with Particular Consideration of Class Actions and Arbitration Fees, 5 J. AM. ARB. 251, 255 (2006) ([W]hatever lowers costs to businesses tends over time to lower prices to consumers.);
20. Stephen J. Ware, Paying the Price of Process: Judicial Regulation of Consumer Arbitration Agreements, 2001 J. DISP. RESOL. 89, 89 ([C]ompetition forces businesses to pass their cost-savings on to consumers.).
21. Allied-Bruce, 513 U.S. at 283 (O'Connor, J., concurring) ([T]he Court has abandoned all pretense of ascertaining congressional intent with respect to the Federal Arbitration Act, building instead, case by case, an edifice of its own creation.);
22. David S. Schwartz, Enforcing Small Print To Protect Big Business: Employee and Consumer Rights Claims in an Age of Compelled Arbitration, 1997 WIS. L. REV. 33, 36 (The Supreme Court has created a monster.).
23. Paul D. Carrington & Paul H. Haagen, Contract and Jurisdiction, 1996 SUP. CT. REV. 331, 401 ([A]rbitration and forum selection clauses in contracts of adhesion are sometimes a method for stripping people of their rights. (emphasis omitted));
24. David S. Schwartz, Mandatory Arbitration and Fairness, 84 NOTRE DAME L. REV. 1247, 1248 (2009) (calling arbitration do-it-yourself tort reform);
25. Jeff Sovern, Toward a New Model of Consumer Protection: The Problem of Inflated Transaction Costs, 47 WM. & MARY L. REV. 1635, 1657-58 (2006) ([S]ome firms... plac[e] unfavorable terms in small print, or per- haps in the middle of a sea of fine print, to reduce the likelihood that consumers will read the terms....);
26. Jean R. Sternlight, Creeping Mandatory Arbitration: Is It Just?, 57 STAN. L. REV. 1631, 1648 (2005) (Empirical studies have shown that only a minute percentage of consumers read form agreements, and of these, only a smaller number understand what they read.).
27. 130 S. Ct. 1758, 1776, 1775 (2010).
28. 130 S. Ct. 2772 (2010).
29. 130 S. Ct. 3322 (2010) (granting certiorari);
30. Supreme Court of the U.S.,
31. Hearing List for Session Beginning October 2010, SUPREME COURT OF THE UNITED STATES 4 (2010), http://www.supremecourt.gov/oral_arguments/hearinglists/HearingListOctob er2010.pdf (scheduling oral argument for November 9, 2010).
32. U.S. CONST. art. I,1.
33. J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394, 409 (1928).
34. Carter V. Carter Coal Co., 298 U.S. 238, 311 (1936) (striking down statute for permitting some coal producers and miners to set working conditions for all coal pro- ducers and miners in their region);
35. Gillian E. Metzger, Privatization as Delegation, 103 COLUM. L. REV. 1367, 1437-40 (2003) (arguing that cases subsequent to Carter continued to emphasize significance of government review with respect to private delegation).
36. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
37. Larry Alexander & Saikrishna Prakash, Delegation Really Running Riot, 93 VA. L. REV. 1035, 1036 (2007).
38. Sibbach V. Wilson & Co., 312 U.S. 1, 10 (1941) (upholding REA as constitu-tional);
39. Robert G. Bone, The Process of Making Process: Court Rulemaking, Democratic Legitimacy, and Procedural Efficacy, 87 GEO. L.J. 887, 907 (1999) (explaining that Sibbach's holding is not up for grabs).
40. Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989) (Arbitration... is a matter of consent, not coercion....).
41. Sunshine Anthracite Coal Co. V. Adkins, 310 U.S. 381, 400-01 (1940) (upholding delegation on grounds that government was actively involved in creation of rules).
42. 9 U.S.C. 2, 9-11 (2006).
43. Jean R. Sternlight, Rethinking the Constitutionality of the Supreme Court's Preference for Binding Arbitration: A Fresh Assessment of Jury Trial, Separation of Powers, and Due Process Concerns, 72 TUL. L. REV. 1, 13 n.38 (1997) (noting possibility of nondelegation problem only in passing). The relationship between arbitration and delega- tion is not completely foreign terrain. Outside of the FAA context, state and federal stat- utes sometimes raise nondelegation issues by creating rights that can be enforced only through arbitration.
44. Harold H. Bruff, Public Programs, Private Deciders: The Constitutionality of Arbitration in Federal Programs, 67 TEX. L. REV. 441, 444-45 (1989) (describing three broad categories of disputes in which federal agencies are authorized or required by statute to employ arbitration);
45. Thomas V. Union Carbide Agric. Prod. Co., 473 U.S. 568, 592-93 (1985) (holding that statute requiring arbitration in administra- tive proceedings does not violate Article III, but declining to analyze Article I nondelega- tion issue because parties did not brief it). In addition, plaintiffs have occasionally brought nondelegation challenges against statutes that require arbitration of labor disputes.
46. Int'l Bhd. of Elec. Workers, Local Union No. 53 v. City Power & Light Dep't, 129 S.W.3d 384, 391 (Mo. Ct. App. 2003) (reading collective bargaining agreement narrowly to avoid interpretation that would raise nondelegation concerns);
47. Hays Cnty. Appraisal Dist. v. Mayo Kirby Springs, Inc., 903 S.W.2d 394, 397 (Tex. App. 1995) (recog- nizing that statute requiring specialized arbitration of property tax valuation without allowing for effective judicial review raised nondelegation concerns under state constitution).
48. Rent-A-Center, W., Inc. V. Jackson, 130 S. Ct. 2772, 2779-81 (2010);
49. Part II.C.3 (conceptualizing delegation clauses as freestanding miniarbitration clauses within larger arbitration clauses that can be challenged on only extraordinarily narrow grounds).
50. Part II.B.1 (describing importance of neutrality and transparency values in nondelegation jurisprudence).
51. Julius Henry Cohen & Kenneth Dayton, The New Federal Arbitration Law, 12 VA. L. REV. 265, 281 (1926) ([The FAA] is a remedy peculiarly suited to the disposi- tion of the ordinary disputes between merchants as to questions of fact-quantity, quality, time of delivery, compliance with terms of payment, excuses for non-performance, and the like.).
52. Richard C. Reuben, Public Justice: Toward a State Action Theory of Alternative Dispute Resolution, 85 CAL. L. REV. 577, 599-600 (1997) (noting that judges were either wary of quality of justice available in arbitration or-because they were paid on per case basis-protective of their own pocketbooks).
53. Under the ouster doctrine, courts refused to enforce arbitration clauses on the grounds that they improperly ousted courts of their jurisdiction.
54. Kill V. Hollister, (1746) 95 Eng. Rep. 532 (K.B.) 532;
55. 1 Wils. K.B. 129 ([T]he agreement of the parties cannot oust this Court.). In a similar vein, under the revocability doctrine, agreements to arbitrate were of [their] own nature countermandable. This feature allowed parties to ignore otherwise binding language and withdraw their consent to arbitrate at any time. Vynior's Case, (1609) 77 Eng. Rep. 597 (K.B.) 599;
56. 8 Co. Rep. 81 b.
57. Ins. Co. v. Morse, 87 U.S. 445, 451 (1874) ([A]greements to oust the courts of the jurisdiction conferred by law are illegal and void.).
58. Michael H. LeRoy, Crowning the New King: The Statutory Arbitrator and the Demise of Judicial Review, 2009 J. DISP. RESOL. 1, 20 (2009) (surveying treatises and concluding that English and American colonial courts were neither hostile nor blindly deferential to arbitration).
59. Pub. L. No. 68-401, 43 Stat. 883 (1925) (codified as amended at 9 U.S.C. 1-14 (2006));
60. IAN R. MACNEIL, AMERICAN ARBITRATION LAW 84-91 (1992) (describing how American Bar Association officials and businessmen successfully lobbied for FAA's enactment).
61. 9 U.S.C. 2 (2006).
62. Id. 4.
63. MACNEIL, supra note 36, at 145 (Congress[] limit[ed] the applicability of the statute both to federal court procedurally and interstate commerce substantively.);
64. Margaret L. Moses, Statutory Misconstruction: How the Supreme Court Created a Federal Arbitration Law Never Enacted by Congress, 34 FLA. ST. U. L. REV. 99, 127-31 (2006) (arguing that Congress intended FAA to be procedural only and to apply only in federal courts);
65. David S. Schwartz, Correcting Federalism Mistakes in Statutory Interpretation: The Supreme Court and the Federal Arbitration Act, 67 LAW & CONTEMP. PROBS. 5, 23-25 (2004) (asserting that Congress did not intend to preempt state law with FAA);
66. David H. Taylor & Sara M. Cliffe, Civil Procedure by Contract: A Convoluted Confluence of Private Contract and Public Procedure in Need of Congressional Control, 35 U. RICH. L. REV. 1085, 1154-57 (2002) (arguing that Supreme Court misinterpreted FAA when it held that FAA preempted state law).
67. 9 U.S.C. 4 (describing mechanics of petitioning to compel arbitration in any United States district court);
68. id. 3 (allowing any of the courts of the United States to stay cases pending outcome of arbitration);
69. id. 7 (allowing parties to file peti- tion in a United States district court to compel attendance at arbitration);
70. id. 9-11 (authorizing parties to enforce or challenge arbitral awards in United States court).
71. Arbitration of Interstate Commercial Disputes: Joint Hearings on S. 1005 and H.R. 646 Before the Subcomms. of the Comms. on the Judiciary, 68th Cong. 37 (1924) [hereinafter Joint Hearings] (brief of Julius Henry Cohen, Member, American Bar Association);
72. id. at 40 (There is no disposition... by means of the [f]ederal bludgeon to force an individual State into an unwilling submission to arbitration enforcement.);
73. H.R. REP. NO. 68-96, at 1 (1924) (The bill declares that [arbitration] agreements shall be recognized and enforced by the courts of the United States.).
74. MACNEIL, supra note 36, at 115-16. In a thoughtful critique, Christopher Drahozal argues that because Congress lacked power to regulate wholly intrastate transactions under the Commerce Clause in 1925, the FAA could not have applied to the states at the time of passage-which might explain the lack of opposition even if Congress understood the statute as applying in state court.
75. Christopher R. Drahozal, In Defense of Southland: Reexamining the Legislative History of the Federal Arbitration Act, 78 NOTRE DAME L. REV. 101, 127-30 (2002). Even under this view, however, it is apparent that Congress assumed that the FAA would not apply broadly and thus set out to give arbitration only a modest foothold in a narrow band of transactions.
76. U.S.C. 1 (2006).
77. See Sales and Contracts To Sell in Interstate and Foreign Commerce, and Federal Commercial Arbitration: Hearing on S. 4213 and S. 4214 Before a Subcomm. of the S. Comm. on the Judiciary, 67th Cong. 9 (1923) [hereinafter Sales and Contracts] (statement of W.H.H. Piatt, Chairman, Comm. of Commerce, Trade and Commercial Law, American Bar Association) (suggesting addition of language excluding seamen and workers in inter- state and foreign commerce).
78. Id. at 14.
79. Compare id. (reporting Hoover's proposal that Congress add words but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce), with 9 U.S.C. 1 ([B]ut nothing herein contained shall apply to contracts of employment of seamen, rail- road employees, or any other class of workers engaged in foreign or interstate commerce.).
80. Joint Hearings, supra note 43, at 15.
81. Sales and Contracts, supra note 46, at 9.
82. Id. at 10 (correction in original);
83. see also 65 CONG. REC. 1931 (1924) (statement of Rep. George S. Graham) (describing bill as applying only to an agreement to arbitrate, when voluntarily placed in the document by the parties to it).
84. Sales and Contracts, supra note 46, at 10.
85. See MACNEIL, supra note 36, at 105.
86. KATHLEEN DROWNE & PATRICK HUBER, THE 1920S, at 245 (2004) (noting price of Model T Ford in 1925).
87. 9 U.S.C. 2 (2006). Compare Drahozal, supra note 44, at 163-64 (arguing that
88. Congress enacted FAA under both its Article III and Commerce Clause powers), with Moses, supra note 41, at 120-21 (arguing that Congress acted primarily under its Article III authority and that references to Commerce Clause were merely fall-back justification).
89. Hammer V. Dagenhart, 247 U.S. 251, 272-73 (1918) (invalidating statute that prohibited child labor on ground that labor was not commerce).
90. Wickard V. Filburn, 317 U.S. 111, 127-29 (1942) (finding that cumulative effect of purely intrastate activity can affect interstate commerce and trigger Congress's Commerce Clause power).
91. Bernhardt V. Polygraphic Co. of Am., 350 U.S. 198, 200-02 (1956) (finding that employment contract between Vermont citizen and New York corporation did not involv[e] commerce and thus did not fall under FAA).
92. John W. Johnson, Inc. v. 2500 Wis. Ave., Inc., 231 F.2d 761, 764 (D.C. Cir. 1956) (holding that FAA was not applicable to contract to paint building);
93. Livingston V. Shreveport-Tex. League Baseball Corp., 128 F. Supp. 191, 202 (W.D. La. 1955) (holding that FAA did not apply to minor league baseball manager's contract even though it was clear that he would travel from state to state);
94. Coles V. Redskin Realty Co., 184 A.2d 923, 927 (D.C. 1962) (ruling that FAA did not apply to settlement agreement stemming from sophisticated real estate deal).
95. 388 U.S. 395 (1967).
96. Id. at 398.
97. 9 U.S.C. 4 (2006).
98. Prima Paint, 388 U.S. at 395.
99. Id. at 402 (describing and ultimately affirming Second Circuit's approach).
100. Id. at 406-07.
101. Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 629 (6th Cir. 2004) ([M]utual mistake... amounts to an attack on the underlying liability, and only deriva- tively on the obligation to arbitrate.). Although the separability doctrine requires parties to arbitrate the issue of whether a traditional contract defense like fraud nullifies the container contract, it does not require parties to arbitrate the claim that the arbitration clause does not apply to them.
102. First Options of Chi., Inc. V. Kaplan, 514 U.S. 938, 945-47 (1995) (explaining that court, not arbitrator, must decide whether arbitration clause applied to stock trader in his personal capacity after it had been executed by company he owned);
103. Chastain V. Robinson-Humphrey Co., 957 F.2d 851, 854 (11th Cir. 1992) (The calculus changes when it is undisputed that the party seeking to avoid arbitration has not signed any contract requiring arbitration.). For excellent discussions of the difficulties inherent in precisely defining the scope of the separability doctrine,
104. Richard C. Reuben, First Options, Consent to Arbitration, and the Demise of Separability: Restoring Access to Justice for Contracts with Arbitration Provisions, 56 SMU L. REV. 819, 861-71 (2003),
105. Stephen J. Ware, Arbitration Law's Separability Doctrine After Buckeye Check Cashing, Inc. v. Cardegna, 8 NEV. L.J. 107, 114-17 (2007).
106. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 448-49 (2006) (holding that allegation that loan contract was usurious and thus illegal was for arbitrator to decide).
107. Sternlight, supra note 29, at 24 n.87 (If a party wants to defraud or use duress on its opponent, why not go after something big like the price or quality of the goods or services at issue?).
108. See supra text accompanying notes 59-61 (describing Court's disinterest in expanding reach of FAA or in enforcing arbitration clauses for decades after New Deal).
109. David S. Clark, Adjudication to Administration: A Statistical Analysis of Federal District Courts in the Twentieth Century, 55 S. CAL. L. REV. 65, 144 (1981) (The current dominance of the civil docket in federal district courts dates from 1961: [C]ivil cases filed and terminated from that point have increased 190%.).
110. Marc Galanter, Reading the Landscape of Disputes: What We Know and Don't Know (and Think We Know) About Our Allegedly Contentious and Litigious Society, 31 UCLA L. REV. 4, 8 (1983) (quoting The Chilling Impact of Litigation, BUS. WK., June 6, 1977, at 58, 58).
111. Id. (quoting David F. Pike, Why Everybody Is Suing Everybody, U.S. NEWS & WORLD REP., Dec. 4, 1978, at 50, 50).
112. Id. at 7 (quoting LOIS G. FORER, THE DEATH OF THE LAW 133 (1975)).
113. Id. (quoting Jerold S. Auerbach, A Plague of Lawyers, HARPER'S, Oct. 1976, at 37, 42).
114. In fact, a year after Congress passed the FAA, Henry Julius Cohen and Kenneth Dayton strongly implied that statutory claims were not amenable to arbitration.
115. Cohen & Dayton, supra note 32, at 281.
116. Wilko V. Swan, 346 U.S. 427, 434-35 (1953) (holding that Securities Act prohibits waivers of right to select judicial forum).
117. Barrentine V. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 745 (1981) (holding that Fair Labor Standards Act preserves workers' right to bring claims in court).
118. Applied Digital Tech., Inc. v. Cont'l Cas. Co., 576 F.2d 116, 117 (7th Cir. 1978) (stating that arbitration is inappropriate for antitrust claims);
119. Am. Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 828 (2d Cir. 1968) (concluding that antitrust claim cannot be arbitrated).
120. Hanes Corp. V. Millard, 531 F.2d 585, 593 (D.C. Cir. 1976) (reasoning that patent issues may be unfamiliar to arbitrators).
121. Lewis V. Merrill Lynch, Pierce, Fenner & Smith, Inc., 431 F. Supp. 271, 277-78 (E.D. Pa. 1977) ([A]greements to arbitrate ERISA claims [are] invalid.).
122. McDonald V. City of W. Branch, Mich., 466 U.S. 284, 292 (1984) ( 1983 claims);
123. Alexander V. Gardner-Denver Co., 415 U.S. 36, 56 (1974) (Title VII claims);
124. Criswell V. W. Airlines, Inc., 709 F.2d 544, 548 (9th Cir. 1983) (ADEA claims).
125. Alexander, 415 U.S. at 57;
126. Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 222-23 (1985) ([A]rbitration cannot provide an adequate substitute for a judicial proceeding in protecting... federal statutory and constitutional rights....).
127. Bernhardt V. Polygraphic Co. of Am., 350 U.S. 198, 203 (1956)
128. 473 U.S. 614 (1985).
129. See id. at 627 (stating that courts will depend on Congress's expressed intent when deciding whether statutory claims are arbitrable).
130. Id. at 628.
131. id. at 637 (recognizing remedial function of statute through its ability to vindicate claimant's rights).
132. 500 U.S. 20, 35 (1991).
133. Id. at 30-32.
134. Id. at 30 (quoting Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 481 (1989)).
135. 531 U.S. 79, 92 (2000) (finding that plaintiff failed to prove that arbitration would be prohibitively expensive).
136. id. at 90 (noting plaintiff's claim that loan agreement's silence about costs and fees made arbitration potentially prohibitively expensive).
137. id. at 91 & n.6 (finding that plaintiff failed sufficiently to support her claim).
138. 9 U.S.C. 2 (2006).
139. 465 U.S. 1, 10-11 (1984). The Court had sown the seeds of Southland a year earlier by opining that the FAA expresses a liberal federal policy favoring arbitration agree-ments, notwithstanding any state substantive or procedural policies to the contrary.
140. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
141. Southland, 465 U.S. at 16 (noting that Congress intended FAA to prevent states from undermining validity of arbitration agreements).
142. id. (holding that California statute violates Supremacy Clause).
143. 482 U.S. 483 (1987).
144. Id. at 486, 492 n.9.
145. id. at 489-91 (finding that California statute was in clear conflict with FAA and thus was invalid).
146. id. at 492 n.9.
147. Id. at 493 n.9.
148. The watershed case of Williams V. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965), the D.C. Circuit acknowledged that a cross-collateralization clause that permitted a company to repossess all of the furniture it had sold over the years to a customer if she missed one installment payment could be unconscionable. The fact that few consumers could understand the practical effect of this rather obscure provision was key to the court's analysis.
149. Id. at 447.
150. Perry, 482 U.S. at 493 n.9.
151. Adkins V. Labor Ready, Inc., 303 F.3d 496, 501 (4th Cir. 2002), the Fourth Circuit summarily belittled the relevance of the plaintiffs' evidence that they did not complete high school... and did not know what arbitration was when they signed the employment application. In addition, the Supreme Court held that the FAA preempts state laws that seek to ensure that agreements to arbitrate are consensual.
152. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 684, 687 (1996) (invalidating Montana statute that required '[n]otice that [the] contract is subject to arbitration... in underlined capital letters on the first page of the contract' because it conditions the enforceability of arbitration agreements on compliance with a special notice requirement not applicable to contracts generally (quoting MONT. CODE ANN. 27-5-114(4) (1995) (amended 2009)
153. Allied-Bruce Terminix Cos. V. Dobson, 513 U.S. 265, 268 (1995) (upholding arbitration clause in homeowner's contract with termite inspection company).
154. Circuit City Stores, Inc. V. Adams, 532 U.S. 105, 119 (2001) (finding that only transportation workers are exempt from FAA and upholding arbitration clause in application for employment at electronics retail store).
155. supra notes 51-61 and accompanying text (arguing that Congress did not intend FAA to apply to adhesion contracts). The term adhesion contract refers to preprinted form agreements that are drafted by economically powerful parties and offered on a takeit-or-leave-it basis.
156. Izzy V. Mesquite Country Club, 231 Cal. Rptr. 315, 318 (Ct. App. 1986) (A contract of adhesion has been defined as a 'standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.' (quoting Neal v. State Farm Ins. Cos., 10 Cal. Rptr. 781, 784 (Ct. App. 1961)).
157. Brief for Petitioners at 2, 46, Rodriguez de Quijas V. Shearson/Am. Express, Inc., 490 U.S. 477 (1989) (No. 88-385), 1989 WL 1127804.
158. Rodriguez de Quijas, 490 U.S. at 484. Investors in a similar case had argued that their broker contract was a contract of adhesion and thus its purported arbitration clause should not be enforced routinely without close scrutiny by the courts.
159. Brief for Respondents at 14 n.8, Shearson/Am. Express Inc. V. McMahon, 482 U.S. 220 (1987) (No. 86-44), 1987 WL 880930. The Court acknowledged that broker overreaching could be grounds for revoking the contract under ordinary principles of contract law but did not discuss the issue further. Shearson/Am. Express Inc., 482 U.S. at 230-31.
160. Mark Curriden, A Weapon Against Liability: Fine Print Often Removes Jury Resolution as Option for Complaints, DALL. MORNING NEWS, May 7, 2000, at 25A (noting American Bar Association estimate that more than one thousand companies employ arbitration clauses);
161. Tom Lowry, Bill Would Ban Mandatory Wall Street Arbitration, USA TODAY, Mar. 7, 1997, at 2B (noting spread of arbitration clauses in employment agreements);
162. Michelle Quinn, Firms Try Pre-hiring, Pre-firing Accord, PHILA. INQUIRER, June 25, 1996, at F2 (In an informal survey of a dozen Silicon Valley companies, most said they had recently enacted a mandatory arbitration policy.).
163. Badie V. Bank of Am., 79 Cal. Rptr. 2d 273, 277 (Ct. App. 1998);
164. Bank of America Is Sued over Arbitration Policy, WALL ST. J., Aug. 5, 1992, at A1 (describing claims by consumer and public interest groups that Bank of America's unilaterally added arbitration clause was illegal).
165. Joan Lowy, Consumers Losing Right To Sue Without Knowing It, CLEVELAND PLAIN DEALER, May 14, 2000, at 5L (In January, MBNA Corp. sent a dense notice in small type to its 40 million credit card customers informing them that they were giving up their right to go to court in favor of arbitration unless customers responded in writing within the next three weeks.);
166. Caroline E. Mayer, Customers Often Are Losing Rights To Sue in the Fine Print, HOUS. CHRON., May 30, 1999, at 7 (Last month's notice from American Express seemed routine, even innocuous.... But card holders who read the 'F.Y.I.' update closely would have discovered that simply by using their card after June 1, they will give up their right to sue the company.).
167. David Horton, The Shadow Terms: Contract Procedure and Unilateral Amendments, 57 UCLA L. REV. 605, 665-66 (2010) (listing reasons why giving drafters the power to revise terms unilaterally is more of a subsidy to drafters than an appendage of contract doctrine).
168. McCallum Highlands, Ltd. v. Wash. Capital Dus, Inc., 66 F.3d 89, 93 (5th Cir. 1995) (applying preexisting duty rule);
169. U.C.C. 2-209 cmt. 2 (2005) (barring drafters from modifying contracts to escape performance on the original contract terms);
170. RESTATEMENT (SECOND) OF CONTRACTS 89 (1981) (stating that unilateral modifications are enforceable in only specific contexts not applicable here).
171. RESTATEMENT (SECOND) OF CONTRACTS 69 cmt. a (1981) (Acceptance by silence is exceptional.). For a vivid illustration of why unilateral amendments should be invalid under traditional contract principles,
172. Thompson V. Chase Bank USA, No. H-07- 1642, 2009 WL 290186, at *2 (S.D. Tex. Feb. 5, 2009), which held that a consumer could not unilaterally modify terms of his credit card agreement by writing a letter to the bank because modifications to an agreement can occur only with the consent of both parties and consideration.»
173. Badie, 79 Cal. Rptr. 2d at 280 (discussing Bank of America's argument that its unilaterally added arbitration clause is not really a modification at all because, by entering the original account agreements, the customers agreed ahead of time to be bound by any term the Bank might choose to impose in the future).
174. id. at 281 (interpreting modification clause to authorize only changes, subject matter of which was anticipated by parties at formation).
175. Although the meaning of bad faith can fluctuate with the context, most commenta-tors agree that it centers on action that one party takes to gain from the other party what the parties should have understood to be precluded by the contract at issue. CHARLES L. KNAPP ET AL., PROBLEMS IN CONTRACT LAW 449-50 (6th ed. 2007). In addition, if the implied covenant of good faith did not restrict a drafter's exercise of a change-of-terms clause, then the clause would be an invalid illusory promise.
176. RESTATEMENT (SECOND) OF CONTRACTS 77 (1981) (A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances.).
177. Badie, 79 Cal. Rptr. 2d at 291.
178. Id. at 278 (capitalization altered).
179. Id. at 284.
180. Stone V. Golden Wexler & Sarnese P.C., 341 F. Supp. 2d 189, 197-98 (E.D.N.Y. 2004);
181. Perry V. FleetBoston Fin. Corp., No. 4-507, 2004 WL 1508518, at *4 (E.D. Pa. July 6, 2004);
182. Long V. Fid. Water Sys., No. C-97-20118, 2000 WL 989914, at *3 (N.D. Cal. May 26, 2000);
183. DirecTV, Inc. v. Mattingly, 829 A.2d 626, 634-35 (Md. 2003);
184. Sears Roebuck & Co. v. Avery, 593 S.E.2d 424, 432 (N.C. Ct. App. 2004); Martin v. Comcast, 146 P.3d 380, 389 (Or. Ct. App. 2006).
185. For instance, Herrington V. Union planters bank, north america, the southern district of mississippi allowed a bank to graft an arbitration clause onto an existing con- tract. 113 F. Supp. 2d 1026, 1029-31 (S.D. Miss. 2000). The court relied entirely on the fact that the change-of-terms clause permitted the bank to amend the contract.
186. Id. at 1031. It did not discuss the possibility that the consideration doctrine or the implied covenant of good faith might limit the bank's discretion to invoke the change-of-terms clause to graft an arbitration clause onto a contract that said nothing about alternative dispute resolution. Likewise, in Beneficial National Bank, U.S.A. v. Payton, another judge in the Southern District of Mississippi relied on Herrington to reach the same result. 214 F. Supp. 2d 679, 687 n.9 (S.D. Miss. 2001).
187. UNIF. CONSUMER CREDIT CODE 3.205 (1974) (allowing creditors to change the terms of an open-end credit account but requiring creditors to give notice before revising finance charges and interest rates). A number of states have adopted this provision.
188. ALA. CODE 5-20-5 (LexisNexis 1996);
189. FLA. STAT. ANN. 658.995(4) (West 2004);
190. GA. CODE ANN. 7-5-4(c) (2004);
191. IOWA CODE ANN. 537.3205(1) (West 1997);
192. KAN. STAT. ANN. 16a-3-204(2) (2007);
193. ME. REV. STAT. ANN. tit. 9-A, 3-204(2) (2009);
194. NEV. REV. STAT. 97A.140(4) (2009);
195. N.D. CENT. CODE 51-14-02 (2007);
196. OHIO REV. CODE ANN. 1109.20 (West 2010);
197. S.D. CODIFIED LAWS 54-11-10 (Supp. 2010);
198. TENN. CODE ANN. 45-2-1907(a) (2007).
199. Section 3.205 of the Uniform Consumer Credit Code was drafted long before the rise of arbitration hegemony and explicitly references finance charge and additional charges, which suggests that its drafters did not imagine that companies would invoke it to add or amend private dispute resolution provisions. UNIF. CONSUMER CREDIT CODE 3.205 (1974). However, Delaware, Rhode Island, Virginia, and Utah expressly permit lenders to include or change provisions relating to arbitration or other forms of alternative dispute resolution. DEL. CODE ANN. tit. 5, 952(a) (2001);
200. R.I. GEN. LAWS 6-26.1-11(a) (Supp. 2009);
201. UTAH CODE ANN. 70C-4-102(2)(b) (LexisNexis 2009);
202. VA. CODE ANN. 6.2-433 (2010).
203. Courts have been quite receptive to these arguments.
204. Fields v. Howe, No. IP-01-1036-C-B/S, 2002 WL 418011, at *5 (S.D. Ind. Mar. 14, 2002);
205. Bank One, N.A. v. Harris, No. 3:00CV665LN, 2001 U.S. Dist. LEXIS 9615, at *36 (S.D. Miss. Jan. 2, 2001);
206. Marsh V. First USA Bank, N.A., 103 F. Supp. 2d 909, 915 (N.D. Tex. 2000);
207. Stiles V. Home Cable Concepts, Inc., 994 F. Supp. 1413, 1418 (M.D. Ala. 1998);
208. SouthTrust Bank v. Williams, 775 So. 2d 184, 191 (Ala. 2000);
209. Joseph V. M.B.N.A. Am. Bank, N.A., 775 N.E.2d 550, 553 (Ohio Ct. App. 2002).
210. Kristian V. Comcast Corp., 446 F.3d 25, 30 (1st Cir. 2006) (compelling arbitration despite fact that [w]hen Plaintiffs first subscribed for cable services, none of their service agreements contained an arbitration provision);
211. In re Universal Serv. Fund Tel. Billing Practices Litig., 300 F. Supp. 2d 1107, 1122-26, 1136 (D. Kan. 2003) (rejecting claim that arbitration clauses unilaterally added by AT&T and Sprint were unconscionable and not addressing threshold issue of whether either company enjoyed power to add clauses unilaterally in first place).
212. Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 894-95 (9th Cir. 2002) (involving arbitration agreement that imposes a strict one year statute of limitations);
213. Stirlen V. Supercuts, Inc., 60 Cal. Rptr. 2d 138, 152 (Ct. App. 1997) (similar).
214. Estate of Ruszala V. Brookdale Living Cmtys., Inc., 1 A.3d 806, 821 (N.J. Super. Ct. App. Div. 2010) (noting that discovery limitations in nursing home contract were clearly intended to thwart plaintiffs' ability to prosecute a case).
215. Ting V. AT&T, 319 F.3d 1126, 1152 (9th Cir. 2003) (featuring confidentiality clause that allowed drafter to ensur[e] that none of its potential opponents have access to precedent while, at the same time,... accumulat[ing] a wealth of knowledge on how to negotiate the terms of its own unilaterally crafted contract).
216. Nagrampa V. MailCoups, Inc., 469 F.3d 1257, 1285 (9th Cir. 2006) (en banc) (involving arbitration clause that required arbitration to be conducted in Boston, a location considerably more advantageous to [the drafter]).
217. Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938 (4th Cir. 1999) ([The] mechanism for selecting a panel of three arbitrators... [was] crafted to ensure a biased decisionmaker.).
218. McNulty V. H R. Block, Inc., 843 A.2d 1267, 1274 (Pa. Super. Ct. 2004) ([T]his arbitration clause requires a consumer to pay $50.00 in the hopes of receiving, at most[,] $37.00.).
219. Ferguson V. Countrywide Credit Indus., 298 F.3d 778, 785 (9th Cir. 2002) ([T]he [arbitration] agreement 'compels arbitration of the claims employees are most likely to bring against Countrywide [but] exempts from arbitration the claims Countrywide is most likely to bring against its employees.' (alterations in original) (quoting Mercuro v. Superior Court, 116 Cal. Rptr. 2d 671, 677 (Ct. App. 2002))).
220. Kristian V. Comcast Corp., 446 F.3d 25, 45, 52 (1st Cir. 2006) (featuring arbitration clause that stripped plaintiffs of certain damages remedies and burdened them with costs and attorney's fees);
221. David S. Schwartz, Understanding Remedy-Stripping Arbitration Clauses: Validity, Arbitrability, and Preclusion Principles, 38 U.S.F. L. REV. 49, 56-59 (2003) (collecting more examples).
222. Hooters, 173 F.3d at 938 (nullifying arbitration clause that contained private procedural rules that were so one-sided that their only possible purpose is to undermine the neutrality of the proceeding);
223. Stirlen V. Supercuts, Inc., 60 Cal. Rptr. 2d 138, 150 (Ct. App. 1997) (striking down arbitration clause that deprived employer of no common law or statutory remedies, but severely curtailed employees' remedies).
224. Carter V. Countrywide Credit Indus., 362 F.3d 294, 298-99 (5th Cir. 2004) (upholding potentially onerous discovery and forum selection provisions);
225. Adkins V. Labor Ready, Inc., 303 F.3d 496, 501 (4th Cir. 2002) (rejecting argument that arbitration clause was invalid because plaintiffs could not afford to pay arbitral fees despite plaintiffs' showing that they were paid at or near the minimum wage... [and] live in low-income neighborhoods)
226. We Care Hair Dev., Inc. v. Engen, 180 F.3d 838, 843 (7th Cir. 1999) (upholding asymmetrical clause that required franchisees to arbitrate their claims while permitting the franchisor to litigate its claims).
227. Some arbitration clauses expressly prohibited class actions in any event. Margaret Mannix, No Suits for You, U.S. NEWS & WORLD REP., June 7, 1999, at 58, 60.
228. Panel To Consider Changing Rules on Class Action Suits, BOS. GLOBE, Oct. 12, 1996, at A12. Some judges echoed these views.
229. In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1299 (7th Cir. 1995) (Judge Friendly, who was not given to hyperbole, called settlements induced by a small probability of an immense judgment in a class action 'black- mail settlements.' (quoting HENRY J. FRIENDLY, FEDERAL JURISDICTION: A GENERAL VIEW 120 (1973))).
230. Champ V. Siegel Trading Co., 55 F.3d 269, 275 (7th Cir. 1995);
231. Herrington V. Union Planters Bank, N.A., 113 F. Supp. 2d 1026, 1034 (S.D. Miss. 2000);
232. Howard V. Klynveld Peat Marwick Goerdeler, 977 F. Supp. 654, 665 n.7 (S.D.N.Y. 1997);
233. Gammaro V. Thorp Consumer Disc. Co., 828 F. Supp. 673, 674 (D. Minn. 1993);
234. Med Ctr. Cars, Inc. v. Smith, 727 So. 2d 9, 20 (Ala. 1998).
235. Blue Cross V. Superior Court, 78 Cal. Rptr. 2d 779, 790 (Ct. App. 1998) (permitting class-wide arbitration);
236. Dickler V. Shearson Lehman Hutton, Inc., 596 A.2d 860, 867 (Pa. Super. Ct. 1991) (same).
237. Alan S. Kaplinsky & Mark J. Levin, Excuse Me, but Who's the Predator? Banks Can Use Arbitration Clauses as a Defense, BUS. L. TODAY, May/June 1998, at 24, 24.
238. 539 U.S. 444 (2003).
239. Id. at 447.
240. Id. at 451-53 (plurality opinion).
241. id. at 454-55 (Stevens, J., concurring in judgment) (arguing that FAA con- tained nothing to override state court's allowance of class arbitration).
242. Nora Lockwood Tooher, Plaintiffs Wrestle with Class Action Arbitration Bans, LAWYERS USA, Nov. 19, 2007, at 1, available at http://www.allbusiness.com/legal/legal-services- litigation/8921629-1.html (noting that after Bazzle, [e]very big company rewrote their arbitration clauses to ban class actions).
243. Snowden V. CheckPoint Check Cashing, 290 F.3d 631, 638 (4th Cir. 2002) (rejecting argument that agreement was unenforceable because of lack of class relief)
244. Randolph V. Green Tree Fin. Corporation-Alabama, 244 F.3d 814, 818-819 (11th Cir. 2001) (enforcing arbitration agreement so long as statute's substantive goals could be vindicated through arbitration)
245. Johnson V. W. Suburban Bank, 225 F.3d 366, 373 (3d Cir. 2000) (enforcing arbitration agreement and characterizing class action relief as procedural right)
246. Arnold V. Goldstar Fin. Sys., Inc., No. 01 2002 WL 1941546, 9 (N.D. Ill. Aug. 22, 2002) (As a general matter, the right to bring a class action in federal court is a procedural right.)
247. Sagal V. First USA Bank, 69 F. Supp. 2d 627, 631 (D. Del. 1999) (holding that availability of other enforcement mechanisms can obviate right to proceed by class action).
248. 113 P.3d 1100 (Cal. 2005).
249. Id. at 1107-08.
250. Id. at 1108-09 (alteration in original) (quoting Linder v. Thrifty Oil Co., 2 P.3d 27, 38 (Cal. 2000)).
251. Homa V. Am. Express Co., 558 F.3d 225, 231 & n.2, 233 (3d Cir. 2009) (holding class arbitration waiver invalid when the claims at issue are of such a low value as effectively to preclude relief if decided individually)
252. Lowden V. T-Mobile USA, Inc., 512 F.3d 1213, 1218-19 (9th Cir. 2008) (holding class action waiver substantively unconscionable and thus unenforceable)
253. Dale V. Comcast Corp., 498 F.3d 1216, 1224 (11th Cir. 2007) (similar)
254. Kinkel V. Cingular Wireless LLC, 857 N.E.2d 250, 274-275 (Ill. 2006) (holding class action waiver unenforceable after concluding that litigation costs were too high)
255. Scott V. Cingular Wireless, 161 P.3d 1000, 1007-08 (Wash. 2007) (en banc) (holding class action waiver unenforceable because it effectively prevents one party. From pursuing valid claims).
256. Delta Funding Corp. V. Harris, 912 A.2d 104, 115 (N.J. 2006) (Harris's claim is not the type of low-value suit that would not be litigated absent the availability of a class proceeding. Harris has adequate incentive to bring her claim as an individual action.).
257. Muhammad V. Cnty. Bank of Rehoboth Beach, Del., 912 A.2d 88, 99, 100-01 (N.J. 2006) ([Because plaintiff's] individual consumer-fraud case involves a small amount of damages, a class-action waiver can act effectively as an exculpatory clause.).
258. Exhibit E Attached to Supplemental Declaration of Scott M. Johnson in Support of Motion To Compel Arbitration and Dismiss Action in Favor of Arbitration, or Alternatively, Stay Action Pending Arbitration at 8, Halprin v. Verizon Wireless Servs., No. 3:07-CV-04015 (D.N.J. Jan. 9, 2008), 2008 WL 7739538 (providing 2007 customer agreement).
259. Customer Agreement, VERIZON WIRELESS, http://www.verizonwireless.com/ customer-agreement.shtml (last visited Jan. 15, 2010) (setting forth dispute resolution terms).
260. See supra notes 97-105 and accompanying text (discussing Court's decisions forbidding states from targeting arbitration contracts specifically).
261. 584 F.3d 849 (9th Cir. 2009), cert. granted, 78 U.S.L.W. 3687 (U.S. May 24, 2010) (No. 09-893)
262. Petition for Writ of Certiorari at (i), AT&T Mobility LLC v. Concepcion, No. 09-893 (Jan. 25, 2010), 2010 WL 304265.
263. Stolt-Neilsen V. AnimalFeeds Int'l Corp., 130 S. Ct. 1758, 1775 (2010) ([A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.).
264. AT&T Mobility LLC's Motion To Compel Arbitration and To Dismiss Action at 3, Francis V. AT&T Inc., No. 2:07-CV-14921 (E.D. Mich. Jan. 25, 2008), 2008 WL 393982 (The revised arbitration provision is, to [AT&T's] knowledge, the most pro-consumer arbitration provision in the country.).
265. 2.2 Arbitration Agreement, AT&T WIRELESS, at section 4, http://www.wireless.att. com/cell-phone-service/legal/index.jsp?q_termsKey=wirelessCustomerAgreem ent&q_ termsName=Wireless+Customer+Agreement&subSection=arbAgreement (last visited Feb. 4, 2011).
266. Myriam Gilles, Opting Out of Liability: The Forthcoming, Near-Total Demise of the Modern Class Action, 104 MICH. L. REV. 373, 375-77 (2005) (hypothesizing that widespread adoption of class arbitration waivers, coupled with judicial acceptance of them, may lead to end of class action device).
267. 130 S. Ct. 2772 (2010).
268. See supra note 140 and accompanying text (noting that some courts invalidated onesided arbitration clauses).
269. 9 U.S.C. 4 (2006). In addition, as I have argued elsewhere, section 4 appears to be a mandatory rule that parties cannot override by contract. David Horton, The Mandatory Core of Section 4 of the Federal Arbitration Act, 96 VA. L. REV. IN BRIEF 1, 4-5 (2010), http://www.virginialawreview.org/inbrief/2010/04/02/horton.pdf.
270. For cases discussing delegation clauses and upholding the ability of the arbitrator to determine the validity of an arbitration clause
271. Terminix International Co. v. Palmer Ranch Ltd., 432 F.3d 1327, 1332-33 (11th Cir. 2005), Contec Corp. v. Remote Solution Co., 398 F.3d 205, 205, 211 (2d Cir. 2005),
272. Apollo Computer, Inc. v. Berg, 886 F.2d 469, 472-74 (1st Cir. 1989).
273. Petitioner's Reply Brief at 21, Rent-A-Center, W., Inc. V. Jackson, 130 S. Ct. 2772 (2010) (No. 09-497), 2010 WL 1554408
274. Brief for Respondent at 54, Rent-A-Center, 130 S. Ct. 2772 (No. 09-497), 2010 WL 1186482
275. Karen Halverson Cross, Letting the Arbitrator Decide Unconscionability Challenges, 26 OHIO ST. J. ON DISP. RESOL. (forthcoming 2011) (manuscript at 61-68), available at http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1552966 (citing other cases that rested on this assumption).
276. Jackson V. Rent-A-Center W., Inc., 581 F.3d 912, 917 (9th Cir. 2009) (holding that employee did not clearly and unmistakably assent to delegation clause even though he signed arbitration clause in which delegation clause was embedded), rev'd, 130 S. Ct. 2772 (2010)
277. Awuah V., overall N. Am., Inc., 554 F.3d 7, 12-13 (1st Cir. 2009) (holding that courts must review delegation clause for fairness before enforcing).
278. Rent-A-Center, W., Inc. V. Jackson, 130 S. Ct. 2722, 2777-78 (2010).
279. Id. at 2777.
280. Justice Stevens's dissent analogized this approach to «Russian nesting dolls.»Id. at 2786 (Stevens, J., dissenting).
281. id. at 2779 (Application of the severability rule does not depend on the substance of the remainder of the contract.).
282. See supra text accompanying notes 65-70.
283. Rent-A-Center, 130 S. Ct. at 2779 (stating that unless specifically challenged, delegation provisions are treated as valid).
284. Id. at 2780.
285. Id. at 2780-81.
286. Id. at 2780.
287. If judges push back, drafters can always contract around these rulings as well. For instance, firms could create double-decker arbitration clauses: (1) offering to pay all costs and fees associated with arbitrating the issue of whether the arbitration clause is enforceable, but (2) requiring plaintiffs to pay for arbitrating substantive claims. Under Rent-A-Center, the arbitrator would end up deciding whether this arrangement is fair: Courts can focus on only how onerous it would be for the plaintiff to arbitrate whether the arbitration clause is valid, not how onerous it would be for the plaintiff to arbitrate substantive claims. Similarly, firms could embed a delegation clause within a delegation clause and task the arbitrator with deciding whether it would be unconscionable to have the arbitrator decide whether it would be unconscionable to have the arbitrator decide whether the arbitration clause is unconscionable.
288. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
289. U.S. CONST. art. I, .
290. Larry Alexander & Saikrishna Prakash, Reports of the Nondelegation Doctrine's Death Are Greatly Exaggerated, 70 U. CHI. L. REV. 1297, 1298 (2003)
291. Loving V. United States, 517 U.S. 748, 758 (1996) (The fundamental precept of the delegation doctrine is that the lawmaking function belongs to Congress and may not be conveyed to another branch or entity.)
292. Eric A. Posner & Adrian Vermeule, Interring the Nondelegation Doctrine, 69 U. CHI. L. REV. 1721, 1723 (2002) (arguing that legislative power means only literal authority to vote on federal statutes).
293. Whitman V. Am. Trucking Ass'ns, 531 U.S. 457, 472 (2001) ([The] text [of Article I, section 1] permits no delegation of [legislative] powers.)
294. Gary Lawson, Delegation and Original Meaning, 88 VA. L. REV. 327, 350-51 (2002) (arguing that although Constitution does not contain express nondelegation clause, nondelegation principle arises from text and structure of Constitution). This principle can be traced to John Locke.
295. John Locke, TWO TREATISES OF GOVERNMENT 141, at 381 (Peter Laslett ed., Cambridge Univ. Press 1967) (1690) (claiming that state power being derived from the People[,]... the Legislative can have no power to transfer their Authority of making Laws, and place it in other hands). Not all authorities agree that Article I, section 1 constrains congressional delegation, however.
296. Whitman, 531 U.S. at 489 (Stevens, J., concurring) (noting that Article I, section 1 does not facially purport to limit Congress'spower to delegate authority)
297. Thomas W. Merrill, Rethinking Article I, Section 1: From Nondelegation to Exclusive Delegation, 104 COLUM. L. REV. 2097, 2109 (2004) (proposing understanding of Article I, section 1 that focuses not on fact that Congress cannot delegate lawmaking power, but on fact that agencies lack right to promulgate regulations in absence of congressional transfer of power).
298. Touby V. United States, 500 U.S. 160, 165 (1991).
299. J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394, 409 (1928) (formulating intelligible principle test).
300. Wayman V. Southard, 23 U.S. (10 Wheat.) 1, 42-43 (1825) (It will not be contended that Congress can delegate to the Courts, or to any other tribunals, powers which are strictly and exclusively legislative.).
301. A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 541-42 (1935)
302. Panama Rfg. Co. v. Ryan, 293 U.S. 388, 420-30 (1935). As I discuss, Schecter's elusive holding can also be seen as applying the private nondelegation doctrine
303. See infra notes 214-16.
304. Even Justices who might naturally be inclined to resist delegations acknowledge the practical difficulties of barring delegations completely.
305. Mistretta V. United States, 488 U.S. 361, 415 (1989) (Scalia, J., dissenting) ([N]o statute can be entirely precise, and some judgments, even some judgments involving policy considerations, must be left to the officers executing the law and to the judges applying it.).
306. Touby, 500 U.S. at 163 (quoting 21 U.S.C. § 811(h) (1988)).
307. Whitman V. Am. Trucking Ass'ns, 531 U.S. 457, 472 (2001) (quoting 42 U.S.C. § 7409(b)(1) (2000)).
308. Gary Lawson, Discretion as Delegation: The Proper Understanding of the Nondelegation Doctrine, 73 GEO. WASH. L. REV. 235, 237 (2005) ([T]he Constitution contains some limitation on the extent to which Congress can grant discretion to other actors.)
309. David Schoenbrod, The Delegation Doctrine: Could the Court Give It Substance?, 83 MICH. L. REV. 1223, 1254 (1985) (claiming that nondelegation rule should be understood as prohibiting Congress from enacting abstract goals statute[s], which empower[] the agency to complete the job by making rules of conduct).
310. Indus. Union Dep't v. Am. Petroleum Inst., 448 U.S. 607, 685 (1980) (Rehnquist, J., concurring) ([T]he nondelegation doctrine... ensures to the extent consistent with orderly governmental administration that important choices of social policy are made by Congress, the branch of our Government most responsive to the popular will.)
311. John Hart Ely, DEMOCRACY AND DISTRUST 132 (1980) ([B]y refusing to legislate, our legislators are escaping the sort of accountability that is crucial to the intelligible functioning of a democratic republic.)
312. Cass R. Sunstein, Is the Clean Air Act Unconstitutional?, 98 MICH. L. REV. 303, 335-36 (1999) (The [nondelegation] doctrine is designed to promote a distinctive kind of accountability-the kind of accountability that comes from requiring specific decisions from a deliberative body reflecting the views of representatives from various states of the union.).
313. David Schoenbrod, POWER WITHOUT RESPONSIBILITY: HOW CONGRESS ABUSES THE PEOPLE THROUGH DELEGATION 10 (1993) ([D]elegation allows legislators to claim credit for the benefits which a regulatory statute promises, yet escape the blame for the burdens it will impose.).
314. Jerry L. Mashaw, GREED, CHAOS, AND GOVERNANCE 139-140 (1997) (arguing that because voters can penalize their representatives for enacting vague statutes, [the] notion that vague statutory language somehow severs the electoral connection is deeply puzzling).
315. Elena Kagan, Presidential Administration, 114 HARV. L. REV. 2245, 2331-32 (2001). Similarly, others argue that Congress can bring agencies in line through ex ante and ex post oversight mechanisms, such as imposing hard deadlines for agency action and prescribing substantive criteria to guide agency choices
316. Sidney A. Shapiro & Robert L. Glicksman, Congress, the Supreme Court, and the Quiet Revolution in Administrative Law, 1998 DUKE L.J. 819, 827-28 (discussing how perceived problems with EPA in 1980s spurred Congress to reduce its discretion).
317. Glen Staszewski, Reason-Giving and Accountability, 93 MINN. L. REV. 1253, 1284 (2009) (Reason-giving can certainly be understood as a viable alternative to elections for purposes of holding public officials democratically accountable for their specific policy choices.)
318. Cass R. Sunstein, Beyond the Republican Revival, 97 YALE L.J. 1539, 1545 (1988) (The requirement of appeal to public-regarding reasons may make it more likely that public-regarding legislation will actually be enacted.).
319. The opinions of Justice Thomas and Justice Stevens illustrate the sharp divide over the viability of the public nondelegation doctrine. Compare Whitman V. Am. Trucking Ass'ns, 531 U.S. 457, 487 (2001) (Thomas, J., concurring) (arguing that Article I, section 1 flatly forbids delegations of legislative power whether Congress has supplied intelligible principle or not), with id. at 489 (Stevens, J., concurring) (arguing that Article I, section 1 do[es] not purport to limit the authority of [Congress]. to delegate authority to others).
320. Tex. Boll Weevil Eradication Found., Inc. V. Lewellen, 952 S.W.2d 454, 469 (Tex. 1997)
321. United Chiropractors of Wash., Inc. v. State, 578 P.2d 38, 40 (Wash. 1978) (Delegation to a private organization raises concerns not present in the ordinary delegation of authority to a governmental administrative agency.).
322. 5 U.S.C. § 553(b)-(c) (2006).
323. Hetherington V. McHale, 329 A.2d 250, 254 (Pa. 1974)
324. Boll Weevil, 952 S.W.2d at 469 (The basic concept of democratic rule under a republican form of government is compromised when public powers are abandoned to those who are neither elected by the people, appointed by a public official or entity, nor employed by the government.).
325. David M. Lawrence, Private Exercise of Governmental Power, 61 IND. L.J. 647, 659 (1986).
326. Lisa Schultz Bressman, Schechter Poultry at the Millennium: A Delegation Doctrine for the Administrative State, 109 YALE L.J. 1399, 1428 (2000)
327. A. Michael Froomkin, Wrong Turn in Cyberspace: Using ICANN To Route Around the APA and the Constitution, 50 DUKE L.J. 17, 146 (2000) (The private nondelegation doctrine focuses on the dangers of arbitrariness, lack of due process, and self-dealing when private parties are given the use of public power without being subjected to the shackles of proper administrative procedure.)
328. Metzger, supra note 22, at 1445 (noting that delegation allows private parties to wield... government powers in ways that raise serious abuse of power concerns)
329. Paul R. Verkuil, Public Law Limitations on Privatization of Government Functions, 84 N.C. L. REV. 397, 468 (2006) (When private contractors perform inherent government functions, they jeopardize core values of public law and weaken government's capacity to do the common good.).
330. Crain V. First Nat'l Bank of Or., Portland, 324 F.2d 532, 537 (9th Cir. 1963) (reasoning that, under Article I, section 1, Congress cannot delegate to private corporationsor anyone else the power to enact laws)
331. Metro Med. Supply, Inc. V. Shalala, 959 F. Supp. 799, 801 (M.D. Tenn. 1996) (considering plaintiff's claim that private nondelegation doctrine comes from Article I, section 1)
332. Hornell Ice & Cold Storage Co. v. United States, 32 F. Supp. 468, 469 (W.D.N.Y. 1940) (same)
333. David N. Wecht, Note, Breaking the Code of Deference: Judicial Review of Private Prisons, 96 YALE L.J. 815, 823-24 (1987) (linking private nondelegation doctrine to Article I, section 1);
334. Merrill, supra note 185, at 2168 (arguing that although text of Article I, section 1 does not speak to private delegations, private nondelegation doctrine stems from the Constitution's implicit design principle limiting the federal government to three branches). Similarly, state courts often hold that private delegations violate vesting clauses in state constitutions that mirror Article I, section 1.
335. Proctor V. Andrews, 972 S.W.2d 729, 733 (Tex. 1998) (holding that Texas Constitution's legislative vesting clause is the proper constitutional source for a prohibition of delegations to private entities)
336. Newport Int'l Univ., Inc. v. Dep't of Educ., 186 P.3d 382, 388 (Wyo. 2008) (State constitutional vesting clauses, which entrust certain branches of government with specified functions and powers, are the primary source of limitations on delegations.).
337. Carter V. Carter Coal Co., 298 U.S. 238, 311 (1936) (determining that statute which allowed some miners and coal producers to set terms of labor agreements binding on all miners and coal producers in region was clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment)
338. Donald A. Dripps, Delegation and Due Process, 1998 DUKE L.J. 657, 659 ([D]ue process cases are an enforcement tool for the nondelegation doctrine.). Some courts apply the Due Process Clause of the Fourteenth Amendment to private delegations at the state level
339. Tucson Woman's Clinic v. Eden, 379 F.3d 531, 555 (9th Cir. 2004) (When a State delegates its licensing authority to a third party, the delegated authority must satisfy the requirements of due process.)
340. McGuire V. Reilly, 260 F.3d 36, 50 (1st Cir. 2001) (The Due Process Clause forbids standardless delegations of governmental authority, especially to private parties.).
341. Santa Fe Natural Tobacco Co. v. Judge, 963 F. Supp. 437, 440 (M.D. Pa. 1997) (noting that private delegations violate both due process and separation of powers principles)
342. Chester C. Fosgate Co. v. Kirkland, 19 F. Supp. 152, 163 (S.D. Fla. 1937) (holding that Agricultural Adjustment Act was contrary to [A]rticle [I] of the Federal Constitution, and contrary to the Fifth Amendment to that instrument).
343. Santaniello V. N.J. Dep't of Health & Senior Servs., 5 A.3d 804, 810 (N.J. Super. Ct. App. Div. 2010).
344. Tex. Boll Weevil Eradication Found., Inc. V. Lewellen, 952 S.W.2d 454, 472 (Tex. 1997) (surveying literature and federal and state case law and noting that important variables include breadth of delegation, powers given to private delegate, and whether the Legislature [has] provided sufficient standards to constrain delegate).
345. id. (noting importance of whether delegate has a pecuniary or other personal interest that may conflict with his or her public function).
346. 226 U.S. 137, 141 (1912).
347. Id. at 144.
348. Washington V. Roberge, 298 U.S. 116, 121-22 (1928) (invalidating ordinance that allowed convalescent home to be established in first district where two-thirds of property owners consented).
349. 295 U.S. 495, 521-23 (1935).
350. Id. at 553 (Cardozo, J., concurring).
351. Id. at 537. Despite this condemnation of private parties' exercising lawmaking power, Schechter's holding remains notoriously elusive.
352. Bruff, supra note 29, at 456-57 (noting that Court failed to distinguish clearly between three possible grounds for objecting to the NIRA: that the delegation was too broad to be exercised by anyone, that arbigovernment should have retained discretion granted to private parties, or that government supervision of private decision making was insufficient)
353. Mistretta V. United States, 488 U.S. 361, 374 n.7 (1989) (describing Schechter as case where Congress delegate[d] regulatory power to private individuals).
354. 298 U.S. 238 (1936).
355. Id. at 281-84.
356. Id. at 311. The Court went on to conclude that the statute denied the dissenting miners and coal producers due process. Id. As noted above, however, it has never been clear whether Carter simply applied due process principles to private delegation or recognized a freestanding doctrine against private delegations with roots in Article I, section 1.
357. See supra notes 205-07 and accompanying text (discussing potential constitutional foundations of private nondelegation doctrine). A year after Carter, the Court considered a challenge to a Virginia statute that permitted a majority of milk producers to reject minimum prices set by a marketing board in Highland Farms Dairy, Inc. v. Agnew, 300 U.S. 608 (1937). The Court held that it did not need to determine whether this private veto power was unconstitutional, noting that the milk producers had not threatened to invoke it. Id. at 614. However, the Court remarked in dicta that the statute might violate due process because [d]elegation to official agencies is one thing,... [but] delegation to private interests or unofficial groups with arbitrary capacity to make their will prevail as law may be something very different. Id.
358. 936 F.2d 1448 (2d Cir. 1991).
359. Id. at 1457.
360. Id. at 1457-58
361. Beary Landscaping Inc. V. Shannon, No. 05 C 5697, 2008 WL 4951189, at *1, *3 (N.D. Ill. Nov. 18, 2008) (denying motion to dismiss similar nondelegation challenge to Illinois Prevailing Wage Act).
362. 361 F.3d 206 (3d Cir. 2004).
363. Id. at 216.
364. Id. at 216-17.
365. Id. at 217.
366. Tex. Boll Weevil Eradication Found., Inc. V. Lewellen, 952 S.W.2d 454, 472 (Tex. 1997) (listing as critical variable whether the persons affected by the private delegate's actions [are] adequately represented in the decision-making process»)
367. Lawrence, supra note 203, at 689 (noting that private delegations are not troubling if they are to groups that arguably contain all those importantly affected by the set of rules made by the group).
368. Carter V. Carter Coal Co., 298 U.S. 238, 311 (1936) (One person may not be entrusted with the power to regulate the business... of a competitor.).
369. Galaxy Fireworks, Inc. v. City of Orlando, 842 So. 2d 160, 166 (Fla. Dist. Ct. App. 2003) (noting that state statute adopts NFPA guidelines as amended by NFPA from time to time»)
370. Lawrence, supra note 203, at 689.
371. People V. Shore Realty Corp., 486 N.Y.S.2d 124, 127 (Dist. Ct. 1984) (rejecting nondelegation challenge to fire safety code promulgated by NFPA).
372. 5 U.S.C. §§ 561-570 (2006) (authorizing agencies to regulate by negotiation)
373. Philip J. Harter, Negotiating Regulations: A Cure for Malaise, 71 GEO. L.J. 1, 42-112 (1982) (proposing that agencies experiment with regulation by negotiation).
374. William Funk, Bargaining Toward the New Millenium: Regulatory Negotiation and the Subversion of the Public Interest, 46 DUKE L.J. 1351, 1351 (1997) (Rather than conducting arm's length, adversarial undertakings loaded down with procedural requirements to protect everyone's interests, affected persons and the agency would sit together and cooperatively seek agreement.).
375. Susan Rose-Ackerman, Consensus Versus Incentives: A Skeptical Look at Regulatory Negotiation, 43 DUKE L.J. 1206, 1216 (1994) (noting that regulation by negotiation may trigger private nondelegation concerns).
376. Henry H. Perritt, Jr., Negotiated Rulemaking Before Federal Agencies: Evaluation of Recommendations by the Administrative Conference of the United States, 74 GEO. L.J. 1625, 1695 (1986).
377. Tex. Boll Weevil Eradication Found., Inc. V. Lewellen, 952 S.W.2d 454, 472 (Tex. 1997) (noting importance of whether the private delegate's actions [are] subject to meaningful review by a state agency or other branch of state government»)
378. George W. Liebmann, Delegation to Private Parties in American Constitutional Law, 50 IND. L.J. 650, 717-18 (1975) (listing whether the actions of private delegates [are] subject to no further public or judicial review, or to review only upon attenuated standards such as the substantial evidence rule, as relevant factor in nondelegation analysis). The precise degree ofstate oversight necessary to ameliorate nondelegation concerns remains unclear. For instance, in Schechter, the Court struck down section 3 of the National Industrial Recovery Act despite the fact that the President enjoyed the power to veto the privately made codes of fair competition.
379. A.L.A. Schechter Poultry Corporation v. United States, 295 U.S. 495, 521-23 (1935).
380. 310 U.S. 381, 387-88 (1940).
381. Id. at 399.
382. 306 U.S. 1 (1939).
383. Id. at 15.
384. Women's Med. Prof'l Corp. v. Baird, 438 F.3d 595, 610 (6th Cir. 2006) (upholding statute that allowed private hospitals to veto abortion provider's license application because state officials possessed power to make the final decision»)
385. United States v. Frame, 885 F.2d 1119, 1128 (3d Cir. 1989) (finding that Beef Promotion and Research Act does not improperly delegate legislative power because the amount of government oversight of the program is considerable»)
386. Cospito V. Heckler, 742 F.2d 72, 88-89 (3d Cir. 1984) (rejecting private delegation challenge to Medicaid and Medicare provisions that allowed private organization to handle accreditation decisions because Secretary of Health, Education, and Welfare retains ultimate authority over decertification decisions).
387. Similarly, the Court has relied heavily on the existence of state oversight in the analogous context of an asserted delegation of the executive's power to enforce the law. In Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167 (2000), the Court upheld the citizen-suit provision of the Clean Water Act, which
388. See id. at 188 n.4 (majority opinion).
389. Businesses have accepted this invitation on a massive scale. For instance, a recent survey of leading financial services and telecommunications firms found arbitration clauses in almost ninety-three percent of employment agreements and nearly seventy-seven percent of consumer contracts.
390. Theodore Eisenberg et al., Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts, 41 U. MICH. J.L. REFORM 871, 882-83 (2008). Another study determined that all nine major wireless service providers and the vast majority of credit card companies use class arbitration waivers.
391. Amy J. Schmitz, Legislating in the Light: Considering Empirical Data in Crafting Arbitration Reforms, 15 HARV. NEGOT. L. REV. 115, 144-50 (2010). These industries provide services to hundreds of millions of customers, a fact which makes lockstep use of arbitration clauses and class arbitration waivers in these industries akin to nationwide legislation.
392. supra notes 132-39 and accompanying text (providing examples of these tactics).
393. Similarly, one might argue that Congress enjoys greater leeway to transfer its procedural rulemaking powers under Article III than its core legislative powers under Article I. Cf.
394. Posner & Vermeule, supra note 184, at 1730-31 (noting that Supreme Court has seemingly ignored intelligible principle test when determining whether Congress permissibly delegated its Article III powers under Rules Enabling Act). However, for the reasons I state in the remainder of this subsection, I see the FAA as a delegation of both Article III and Article I powers. The statute allows private parties not just to create procedural rules but to do so in a way that undermines statutes that Congress has created under Article I. The extent to which Article III imposes its own limitations on arbitration lies outside the scope of this Article. For illuminating discussions of that issue,
395. Peter B. Rutledge, Arbitration and Article III, 61 VAND. L. REV. 1189, 1201-04 (2008), which argues that the FAA strip[s] federal courts of the power to interpret the meaning of federal law and proposes that Article III requires that federal courts must have a meaningful opportunity to review arbitral awards, and Sternlight, supra note 29, at 79, which states that Congress may not use a general preference for binding arbitration in all cases to reduce the jurisdiction of federal courts.»
396. Elizabeth Chamblee Burch, Procedural Justice in Nonclass Aggregation, 44 WAKE FOREST L. REV. 1, 7 (2009). Burch goes on to argue that, [l]egal systems that thwart litigants' preferences will have trouble compelling adherence to their judgments, promoting voluntary compliance, and maintaining public confidence. Id. at 8
397. E. Allan Lind et al., THE PERCEPTION OF JUSTICE, at v (1989) ([L]itigants' satisfaction with their experiences had less to do with actual case outcomes, costs, and delay than with how the litigants' experiences with the system compared with their expectations.).
398. Janice Toran,'Tis a Gift To Be Simple: Aesthetics and Procedural Reform, 89 MICH. L. REV. 352, 376 (1990)
399. Mark Spiegel, The Rule 11 Studies and Civil Rights Cases: An Inquiry into the Neutrality of Procedural Rules, 32 CONN. L. REV. 155, 164 (1999) (When we look to the Federal Rules of Civil Procedure,. we find that the rules are designed not only to ensure an impartial decision maker and the equal treatment of thelitigants, but also to be impartial as to type of claim.).
400. In a recent study, fewer than thirty percent of customers who had arbitrated securities claims rated the arbitral panel as open-minded and impartial or found arbitration to be fair. Nancy A. Welsh, What Is (Im)Partial Enough in a World of Embedded Neutrals?, 52 ARIZ. L. REV. 395, 423-24 (2010).
401. Shady Grove Orthopedic Assocs. V. Allstate Ins. Co., 130 S. Ct. 1431, 1442 (2010) (plurality opinion) (The test is not whether the rule affects a litigant's substantive rights; most procedural rules do.»)
402. Thomas O. Main, The Procedural Foundation of Substantive Law, 87 WASH. U. L. REV. 801, 802 (2010) (The substantive implications of procedural law are well understood. Procedure is an instrument of power that can, in a very practical sense, generate or undermine substantive rights.)
403. Lawrence B. Solum, Procedural Justice, 78 S. CAL. L. REV. 181, 214 (2004) (Substance and procedure are thoroughly entangled in the actual rules of existing legal systems.).
404. 28 U.S.C. § 2072 (2006).
405. Martin H. Redish & Uma M. Amuluru, The Supreme Court, the Rules Enabling Act, and the Politicization of the Federal Rules: Constitutional and Statutory Implications, 90 MINN. L. REV. 1303, 1311-12 (2006) (noting REA was redrafted to add caveat in response to concerns about delegating legislative power to judiciary).
406. Stephen B. Burbank, The Rules Enabling Act of 1934, 130 U. PA. L. REV. 1015, 1073 & n.260 (1982) (quoting Letter from Senator Albert B. Cummins to Chief Justice William Howard Taft (Dec. 17, 1923)).
407. Redish & Amuluru, supra note 250, at 1312-13.
408. This quotation first appeared in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985).
409. The Court has repeated it in 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456, 1469 (2009),
410. Preston V. Ferrer, 552 U.S. 346, 359 (2008), Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 123-24 (2001),
411. Gilmer V. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991),
412. Rodriguez de Quijas V. Shearson/American Express, Inc., 490 U.S. 477, 481 (1989),
413. Shearson/American Express, Inc. V. McMahon, 482 U.S. 220, 229-30 (1987).
414. To be sure, because of significant variation among individual cases, it is extremely difficult to compare a consumer's or employee's actual results in arbitration with how they would have done in court. However, there is some evidence that consumers and employees-especially consumer defendants and low-level employee plaintiffs-do not fare as well in arbitration as they do in court. For an excellent collection of the nascent literature,
415. Welsh, supra note 247, at 419-22.
416. Perry V. Thomas, 482 U.S. 483, 492 n.9 (1987).
417. See supra notes 214-19 and accompanying text (discussing Schecter and Carter).
418. Because binding agreements allow private parties to summon the coercive arm of the state to enforce rights and duties that the third parties themselves designed, such agreements Represent a kind of private lawmaking.» Nathan B. Oman, A Pragmatic Defense of Contract Law, 98 GEO. L.J. 77, 100 (2009)
419. H.L.A. Hart, THE CONCEPT OF LAW 40 (1961) (noting that contracting process transforms individuals into private legislators»)
420. Joseph H. Beale, What Law Governs the Validity of a Contract, 23 HARV. L. REV. 260, 260 (1909) (opining that contracting makes a legislative body of any two persons). Thus, in 1971, David Slawson claimed that standard forms-which allow each drafter to impose unilaterally one overarching set of provisions on all of its contractual relationships-shattered the barrier between contract and statute.
421. W. David Slawson, Standard Form Contracts and Democratic Control of Lawmaking Power, 84 HARV. L. REV. 529, 530 (1971) (The privately made law imposed by standard form has not only engulfed the law of contract; it has become a considerable portion of all the law to which we are subject.).
422. FED. R. CIV. P. 23.
423. In 1995, with the Private Securities Litigation Reform Act, Congress imposed stringent new standards for pleading and lead plaintiff and class counsel selection in securities cases. Pub. L. No. 104-67, 109 Stat. 737 (1995) (codified as amended at 15 U.S.C. § 78u-4 (2006)). Then, with the Class Action Fairness Act of 2005, Congress expanded federal jurisdiction to eliminate forum shopping for favorable state courts by plaintiffs' lawyers. Pub. L. No. 109-2, 119 Stat. 4 (codified at 28 U.S.C. §§ 1332(d), 1711-1731 (2006)).
424. 9 U.S.C. 4 (2006).
425. See infra note 289 and accompanying text.
426. Leslie M. Kelleher, Taking Substantive Rights (In the Rules Enabling Act) More Seriously, 74 NOTRE DAME L. REV. 47, 61 (1998) (Congress and partisan lobbyists have discovered the usefulness of procedural provisions in effectuating substantive purposes.).
427. Lawrence, supra note 203, at 688.
428. James C. Duff, The Federal Rules of Practice and Procedure, U.S. CTS. (Oct. 2010), http://www.uscourts.gov/RulesAndPolicies/FederalRulemaking/RulemakingPro cess/ SummaryBenchBar.aspx (explaining process by which federal rules are amended including respective roles of each committee).
429. Bone, supra note 25, at 892-93 (explaining court rulemaking model)
430. Catherine T. Struve, The Paradox of Delegation: Interpreting the Federal Rules of Civil Procedure, 150 U. PA. L. REV. 1099, 1103-04 (2002) (providing overview of rulemaking process).
431. H.R. REP. NO. 99-422, at 25 (1985).
432. Duff, supra note 264.
433. Bone, supra note 25, at 954 (Indeed, rulemaking today more closely resembles a legislative process with broad public participation and interest group compromise than the process of principled deliberation it was originally conceived to be.).
434. Lori A. Johnson, Creating Rules of Procedure for Federal Courts: Administrative Prerogative or Legislative Policymaking?, 24 JUST. SYS. J. 23, 27 (2003) (noting that Advisory Committee receives comments from the American College of Trial Lawyers, numerous state bar association groups, the Federation of Insurance and Corporate Counsels, Public Citizen Litigation Group, the Lawyer's Committee for Civil Rights Under Law, the FBI, the National Association of Independent Insurers, law professors, individual attorneys, and private citizens»)
435. Struve, supra note 265, at 1111 (noting that proposed amendments to Rule 11 drew responses from more than one hundred individuals and groups).
436. Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 220 (1985).
437. RESTATEMENT (SECOND) OF CONTRACTS § 211 cmt. b (1979).
438. Karl N. Llwellyn, THE COMMON LAW TRADITION 370 (1960).
439. Lawrence, supra note 203, at 689 (arguing that promulgation of National Electric Code by National Fire Protection Association meets this requirement of private representative process).
440. For instance, even Stephen Ware-an eloquent defender of the Court's arbitration jurisprudence-has argued that Congress should abolish the separability doctrine because it deviates from traditional contract law.
441. Ware, supra note 68, at 121 («The right to litigate (like other rights) [sh]ould be alienable through an enforceable contract, but not a contract that is unenforceable due to misrepresentation, duress, illegality, or any other contract-law defense.)
442. Stephen J. Ware, Employment Arbitration and Voluntary Consent, 25 HOFSTRA L. REV. 83, 134-35 (1997) (arguing that separability doctrine violates a fundamental principle of contract law because it enforces a duty assumed through coerced, not voluntary, consent).
443. Jackson V. Rent-A-Center W., Inc., 581 F.3d 912, 917 (9th Cir. 2009), rev'd, 130 S. Ct. 2772 (2010).
444. Rent-A-Center, W., Inc. v. Jackson, 130 S. Ct. 2772, 2779 (2010).
445. Horton, supra note 116, at 650-51 (explaining that bill-stuffing gives drafter complete dominion over contractual terms).
446. Id. at 650.
447. Oren Bar-Gill, The Behavioral Economics of Consumer Contracts, 92 MINN. L. REV. 749, 779 (2008) (reporting that effective cost of switching credit cards is about $150).
448. 28 U.S.C. 2074 (2006). Unless Congress rejects the new rules or amendments, they take effect. Id.
449. 9 U.S.C. 4 (2006).
450. Id 10-11.
451. Laster V. T-Mobile USA, Inc., No. 05cv1167, 2008 WL 5216255, at *1 (S.D. Cal. 2008). Laster was the trial court opinion in the case that eventually became Concepcion.
452. Rent-A-Center, W., Inc. v. Jackson, 130 S. Ct. 2772, 2780 (2010) (describing Jackson's arbitration clause).
453. Laster, 2008 WL 5216255, at &z.ast;2-3 (describing AT&T's invocation of its changeof- terms clause).
454. Charles L. Knapp, Taking Contracts Private: The Quiet Revolution in Contract Law, 71 FORDHAM L. REV. 761, 766 (2002) (characterizing mandatory arbitration as extralegal process that is contributing to dismantling of American contract law).
455. RULES FOR CONSUMER ARBITRATION 7(a) (Am. Arbitration Ass'n 2009), available at http://www.adr.org/sp.asp?id=22440#R7.
456. 554 F.3d 7, 9 (1st Cir. 2009)
457. Preston V. Ferrer, 128 S. Ct. 978, 988 (2008) (reasoning that contract at issue incorporated Arbitration Association Rule 7(b) by reference)
458. Terminix Int'l Co. v. Palmer Ranch Ltd., 432 F.3d 1327, 1332 (11th Cir. 2005) (reaching same result for contract between sophisticated parties)
459. Apollo Computer, Inc. v. Berg, 886 F.2d 469, 473 (1st Cir. 1989) (reaching same result for contract referencing rules of International Chamber of Commerce)
460. Burlington Res. Oil & Gas Co. v. San Juan Basin Royalty Trust, 249 S.W.3d 34, 40 (Tex. App. 2007) (finding that despite the parties' reference to the AAA rules, the parties simply did not clearly and unmistakably submit the issue of arbitrability to arbitration). The language that the Awuah court found controlling is ubiquitous in consumer and employee arbitration clauses. E.g., 2.2 Arbitration Agreement, AT&T WIRELESS, at section 1, http://www.wireless.att.com/cellphone- service/legal/index.jsp?q_termsKey=wirelessCustomerAgreement&q_terms Name= Wireless+Customer+Agreement&subSection=arbAgreement (last visited Jan. 18, 2011)
461. Comcast Agreement for Residential Services, COMCAST, http://www.comcast.com/Corporate/ Customers/Policies/SubscriberAgreement.html (last visited Jan. 18, 2011).
462. Lattimer-Stevens V. United Steelworkers of Am., 913 F.2d 1166, 1169 (6th Cir. 1990).
463. Remmey V. PaineWebber, Inc., 32 F.3d 143, 146 (4th Cir. 1994) (Limited judicial review is necessary to encourage the use of arbitration as an alternative to formal litigation.»)
464. Folkways Music Publishers, Inc. v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993) («Arbitration awards are subject to very limited review in order to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation.).
465. 292 9 U.S.C. 10(a) (2006).
466. T. Cometals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339 (2d Cir. 2010) (quoting Duferco Int'l Steel Trading v. T. Klaveness Shipping, 333 F.3d 383, 389 (2d Cir. 2003) (alteration in original)).
467. Mich. Mut. Ins. Co. v. Unigard Sec. Ins. Co., 44 F.3d 826, 832 (9th Cir. 1995).
468. Armendariz V. Found. Health Psychcare Servs., Inc., 6 P.3d 669, 683-84 (Cal. 2000).
469. Discover Bank V. Superior Court, 113 P.3d 1100, 1110 (Cal. 2005) (holding that class arbitration waivers in contracts of adhesion are unenforceable when individual damage awards will be small).
470. Dotson V. Amgen, Inc., 104 Cal. Rptr. 3d 341, 349 (Ct. App. 2010) (upholding arbitration clause that purports to limit discovery to one deposition of a natural person).
471. Provencher V. Dell, Inc., 409 F. Supp. 2d 1196, 1202 (C.D. Cal. 2006)
472. Dalie V. Pulte Home Corp., 636 F. Supp. 2d 1025, 1029 (E.D. Cal. 2009) (enforcing class arbitration waiver on similar grounds).
473. The only cases of which I am aware in which a court confronted an arbitrator's assessment of unconscionability have upheld the award. Some of these cases affirmed an arbitrator's decision that a term was unconscionable.
474. Jacada (Eur.), Ltd. v. Int'l Mktg. Strategies, Inc., 401 F.3d 701, 713 (6th Cir. 2005) (affirming arbitrator's decision to strike liability-limiting clause),overruled on other grounds by Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576 (2008). Other cases affirmed an arbitrator's decision that a term was not unconscionable.
475. Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d 244, 265 (Tex. App. 2003) ([T]he failure to find that the Lawyers' fees were unconscionable is not in manifest disregard of the law.). Given the extreme pliability of unconscionability doctrine, it seems reasonable to assume that courts will continue to exhibit this level of deference to arbitrators who decline to invalidate contract terms.
476. See supra notes 253-55 and accompanying text.
477. Richard A. Nagareda, The Litigation-Arbitration Dichotomy Meets the Class Action, 86 NOTRE DAME L. REV. (forthcoming 2011) (manuscript at 17, 21), available at http:// ssrn.com/abstract_id=1670722.
478. 28 U.S.C. 2072(b) (2006)
479. Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 130 S. Ct. 1431, 1442 (2010) (plurality opinion) ([W]e have rejected every statutory challenge to a Federal Rule that has come before us.).
480. Hanna V. Plumer, 380 U.S. 460, 472 (1965). 494 NEW YORK UNIVERSITY LAW REVIEW
481. Nagareda, supra note 301 (manuscript at 17).
482. Id. (manuscript at 21) (noting modern Court's opinion that arbitration amounts to a mere change of forum that does not affect substantive rights). Nagareda notes that the similar treatment of the REA and FAA appears anomalous, as private contracts do not go through anything like the Rules Enabling Act process. Id. (manuscript at 22).
483. 531 U.S. 79, 90 (2000).
484. Id. at 92 («How detailed the showing of prohibitive expense must be before the party seeking arbitration must come forward with contrary evidence is a matter we need not discuss.).
485. 130 S. Ct. 1758 (2010).
486. Id. at 1775 (citations omitted).
487. supra note 153 and accompanying text (discussing California Supreme Court's reasoning in Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005)).
488. Carnegie V. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004) (emphasis omitted).
489. Richard A. Nagareda, Aggregation and Its Discontents: Class Settlement Pressure, Class-Wide Arbitration, and CAFA, 106 COLUM. L. REV. 1872, 1904 (2006).
490. Rent-A-Center, W., Inc. v. Jackson, 130 S. Ct. 2772, 2780-81 (2010)
491. supra Part I.D.3 (discussing Justice Scalia's analysis of Jackson's claim).
492. Rent-A-Center, 130 S. Ct. at 2780-2781.
493. See supra notes 217-22 and accompanying text (discussing Carter and its treatment by lower courts).
494. Mistretta V. United States, 488 U.S. 361, 373 n.7 (1989)
495. Indus. Union Dep't v. Am. Petroleum Inst., 448 U.S. 607, 646 (1980) (rejecting government's argument that Occupational Safety and Health Act allowed Secretary of Labor to regulate exposure to even insignificant amounts of chemical benzene in workplace on grounds that reading statute so broadly would transform it into sweeping delegation of legislative power»)
496. Nat'l Cable Television Ass'n v. United States, 415 U.S. 336, 341-42 (1974) (drawing on nondelegation principles to construe Independent Offices Appropriations Act as not allowing federal agency to impose tax on television broadcasters).
497. United States V. Hinckley, 550 F.3d 926, 948 (10th Cir. 2008) (Gorsuch, J., concurring) (Sex Offender Registration and Notification Act)
498. Sokol V. Kennedy, 210 F.3d 876, 879 & n.7 (8th Cir. 2000) (Wild and Scenic Rivers Act)
499. Smith V. Socialist People's Libyan Arab Jamahiriya, 101 F.3d 239, 247 (2d Cir. 1996) (Foreign Sovereign Immunities Act)
500. Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 559 (1976) (declining to apply doctrine of constitutional avoidance to section 232(b) of Trade Expansion Act on grounds that section 232(b) establishes clear preconditions to exercise of delegated power and thus does not raise serious constitutional issue).
501. Cass R. Sunstein, Nondelegation Canons, 67 U. CHI. L. REV. 315, 342-43 (2000) (arguing that public nondelegation doctrine consists of series of canons of statutory interpretation and reflects idea that certain decisions are ordinarily expected to be made by the national legislature, with its various institutional safeguards, and not via the executive alone»).
502. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 268-69 (1995) (holding that state statute making all predispute arbitration agreements unenforceable is preempted by FAA).
503. Doctor's Assocs., Inc. V. Casarotto, 517 U.S. 681, 688 (1996).
504. 9 U.S.C. 2 (2006).
505. Doctor's Assocs., 517 U.S. at 688 (quoting 9 U.S.C. 2).
506. CAL. CIV. CODE 1770(a) (West 2009).
507. Id. 1781(a).
508. Id 1751.
509. Ting V. AT&T, 319 F.3d 1126, 1148 (9th Cir. 2003).
510. Fisher V. DCH Temecula Imps. LLC, 114 Cal. Rptr. 3d 24, 34 (Ct. App. 2010).
511. See supra text accompanying notes 256-62.
512. Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). For cases citing this proposition
513. Stolt-Nielsen South America v. AnimalFeeds International Corp., 130 S. Ct. 1758, 1773 (2010)
514. Eeoc V. Waffle House, Inc., 534 U.S. 279, 294 (2002).
515. See cases cited supra note 253.