Rustic Justice: Community and Coercion under the Federal Arbitration Act

77 North Carolina Law Review 931 (1999) Arbitration clauses are appearing in a wide variety of consumer transactions, including routine product purchase forms, residential leases, housing association charters, medical consent forms, banking and credit card applications, and employment handbooks. In the past fifteen years, the Supreme Court has reinterpreted the Federal Arbitration Act (FAA) so as to grant tremendous deference to private arbitral tribunals. By doing so, it has altered the landscape of civil litigation, taking many consumer claims out of the legal system and relegating them to private tribunals. In this Article, Professor Stone assesses the recent trend toward the privatization of civil justice in light of the history of the FAA. The author finds that the FAA, when enacted in 1925, embodied a vision of voluntarism, delegation, and self-regulation within the business and commercial communities. Arbitration under the FAA was conceived as an institution that reflected and defined membership in a shared normative community. She criticizes recent judicial interpretations that condone the use of arbitration to resolve disputes between individuals and entities who, far from sharing in a common normative community, occupy vastly different positions of power vis-à-vis each other. These expansive interpretations facilitate the exercise of invisible coercion in many facets of contemporary life. To remedy the abuses of arbitration, the author proposes that courts adopt a two-tiered approach, in which the degree of deference they grant to arbitral proceedings varies depending upon whether the dispute is between insiders to a self-regulating community or between an outsider and an insider.