Private Enforcement of Consumer Rights

Question 1

What is the FAA

Answer 1

to promote faster and cheaper alternatives to the judiciary

1. “an agreement in writing to submit to arbitration… shall be valid, irrevocable, and enforceable, save upon grounds as exist at law or in equity for the revocation of any contract. ( 9 USC §2)
   a. FAA is Limited to WRITTEN agreements
   b. FAA enforces arbitration agreements to be treated as any other K
2. Generally much more relaxed –> arbitrator not required to follow precedent
   a. Parties generally decide who the arbitrator is
3. Take place in virtual secrecy –> transcripts not required… reasoning for decision not required
4. Is a product of Contractual agreement between the parties
   a. As a result, they are not only bound to arbitrate if they agree… they are also bound to obey procedures that are in that K

Question 2

advantages and disadvantages of mandatory arbitration

Answer 2

5. Disadvantages to consumers of mandatory arbitration clauses:
   a. Cost
   b. No jury, no appeal
   c. Lack of class actions (may discourage small claims)
   d. No public record of outcomes
   e. Repeat players seem more likely to win controversies
6. Advantages
   a. Reduces litigation delays, less time consuming
   b. Cheap (biggest advantage) –> if ADR is cheap… costs to consumers might be cheaper too
   c. Agreed upon by parties
   d. Reduced litigation costs could lead to lower prices of consumer products

Question 3

Vindication of Rights Doctrine

Answer 3

1. SC has held that federal statutory rights can only be arbitrated if the prospective litigant may vindicate his statutorily rights in arbitral form.
2. Arbitration has to be effective mechanism for vindicating federal statutory rights (caveat to FAA)
3. These federal rights are unwaivable… so if D prevents P from claiming statutory action bc arbitration is a barrier according to public policy, that should not be allowed
4. Because these statutory laws are created for congress for the benefit of the public.
5. P has the burden to show that the cost of litigation is too burdensome