WSJ: Is Arbitration The New Litigation?

h/t The Laconic Law Blog (Eric A. Welter)

The Wall Street Journal‘s law blog asks “Is Arbitration The New Litigation?” itself citing to a Financial Times article which highly touts arbitration.  The key quote, to me, is this:

As the incidence of court trial has decreased, some trial lawyers have moved into arbitration,” he says, adding that they have “brought more and more of the tools they used in court into the arbitration process”. That has helped make arbitrations longer, more complex and more costly, leading to a situation where “arbitration is the new litigation”, he says.

First, yes, arbitration can be in fact just as costly, and in some cases may take longer.  You have to compare it to the forum you’re in.  Where I practice, the courts are busy, of course, but you can get a trial in a year.  That is not the case in many, many other forums.  Second, in California, at least, arbitration only really gets you the benefit of no jury, which employers often feel are intrinsically biased against them.  Again, in my opinion, the benefit of that varies by forum and issue.  I do not give a blanket pro-arbitration recommendation, as the FT appears to.

The question I can never seem to find the answer to is simply this: given established law, is it worth it for companies to go to the Supreme Court(s) to defend their arbitration clauses (at least in California)?  I could have told Circuit City they had a snowball’s chance in Gentry.  Clearly, that’s–as they say in the service–above my pay grade–they may have some non-checkers chess strategy I’m not privy to or incapable of understanding, but just in dollars, I don’t see it.

As expanded as the FAA has become over the years, and leaving aside questions about arbitration firms allegedly being afraid to piss off big corporate clients, the fact is that in our Constitutional system, there are limits on what these arbitrations will ever be able to achieve.  That goes double in California.

The English legal system, for example, has been able to adapt to these inefficiencies because the Supremacy of Parliament allows their Constitution to be modified with the times more easily.  I’m not saying we should abandon our Constitution, by any means–but I am saying that if that’s our playing field, there are limits.

Within the scope of employment law, we do have some models.  We have the WCAB, which is probably as universally loathed as the DLSE, but that’s probably because employers have no memory of being sued in civil court for worker injuries.  And, then there is the DLSE.

I would contend that all of these problems–delays in the courts, problems with the administrative agencies–are because of understaffing and underfunding, and neglect by the Legislature.  Employees need their wages; employers don’t want to be targeted by class actions for good faith mistakes–everyone seems to have an interest in efficiency, and arbitration is no longer a panacea for that problem.

With the snow-balling arbitration blow back in full effect, and with no signs of not turning into an avalanche, people should start at least thinking about alternatives.

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