> The Invasion of Arbitration
> Another emblematic case of neo-feudalism is the use of compulsory arbitration to move consumer and employment disputes from the public courts to a rigged process of private systems of adjudication. This privatization of justice deprives workers and consumers of the benefits of many of the statutory rights that they achieved in the 1960s and ’70s. It is the result of new, radical judicial interpretations of the Federal Arbitration Act (FAA).
> The FAA was enacted in 1925 at the behest of the business community, which wanted to bolster trade associations by giving them the ability to compel their members to submit disputes to arbitration rather than to the courts. But since the 1980s, the Supreme Court has ruled that the statute could be used by corporations to require arbitration in virtually all settings. Companies began inserting arbitration clauses in their employment and consumer contracts. By the 2000s, large corporations made arbitration mandatory for most employment discrimination disputes, federal and state wage and hour disputes, disputes over alleged violations of state employment protective laws, consumer breach of warranty claims, allegations of consumer fraud, and most other cases involving workers and consumers.
> With the approval of the courts, corporations now require arbitration for allegations of lethal negligence by nursing homes, allegations of identity theft, instances of sexual assault of students by teachers in private schools, claims of antitrust conspiracies by large corporations against small businesses, and efforts by on-demand workers to obtain fair working conditions. The corporation picks the arbitrator and defines the rules of the proceedings. It can insist on limited discovery and impose confidentiality gags so that plaintiffs with similar cases cannot share evidence or information about the outcome of their cases. It can also exclude certain types of evidence in advance, and limit the types of remedies a successful claimant can recover. It is common to also impose fee-sharing so that an employee or a consumer has to pay a significant sum just to have their case heard.
> In a recent trend, some employers require the losing party to pay all of the cost of an arbitration—typically several thousands or tens of thousands of dollars—as well as the winning party’s attorney fees. These clauses are designed to discourage workers and consumers from asserting claims altogether. When disputes go to arbitration and an award is issued, the losing party has virtually no right to appeal.
> Moreover, arbitration proceedings lack the due process protections we expect of courts. An arbitration hearing has no transparency—there is almost never a transcript of the proceeding; there is often no written opinion; and there is seldom a public record that reveals the names of the parties, the nature of the dispute, or the outcome. Hence large corporations, who as repeat players have amassed experience with many different arbitrators and seen many similar cases, have a substantial advantage.
> Arbitration has seriously undermined workers’ and consumers’ rights to use class actions. With class action suits, individuals with common claims—such as Walmart workers who were denied legally mandated overtime payments—are able to consolidate their claims, obtain a lawyer, and get into court. In the 1990s and early 2000s, employment-related class actions proliferated; some corporations were forced to pay multimillion-dollar awards.
> But in 2011, the Supreme Court gave its blessing to arbitration provisions that ban the use of class actions, either in court or in an arbitration proceeding. The case involved tens of thousands of consumers, each of whom had been cheated out of approximately $30 by AT&T. Without the vehicle of the class action, such a large number of small-value claims would never be pursued in any tribunal, giving corporations a license to cheat customers with impunity. Today, the vast majority of arbitration clauses written by corporations include a class action ban.