Another Arbitration Achievement
posted by Frank Pasquale
The arbitration revolution rolls along, freshly energized by the 2nd Circuit:
In Duran v. The J. Hass Group, a woman who is essentially on the edge of being destitute alleges . . . that she was the victim of a last-dollar scam, promised services that she didn’t receive. It probably will not surprise anyone who follows consumer law (although it would come as a surprise to nearly any actual consumer) that the defendant had an arbitration clause. What’s striking is that the clause requires consumers (including the New York resident Ms. Duran) to arbitrate their claims across the country in Arizona.
The Second Circuit required Ms. Duran to arbitrate her claim, and enforced the provision requiring it to take place in Arizona. They noted that there is a “logical flaw” and an “unusual” quality to the result, because if Ms. Duran’s only remedy is to argue to the arbitrator that it’s unfair and unconscionable to require her to arbitrate in Arizona, she first has to go to Arizona to do it. Oh well, the Court explains, this is what the Supreme Court would have wanted.
As Margaret Jane Radin observes, the US is once again an outlier: “While [boilerplate clauses grossly advantageous to one party] are validated by courts in the U.S. pretty routinely . . . they’re mostly illegal if used against consumers in the European Union and in some other places, such as Australia.” She goes on to note that many boilerplate “agreements” undermine the very normative ideals of consent, agreement, and promise that contract law is supposed to be based on:
[A] unilateral modification clause is one of the things that bothers me most as a contracts professor because none of these things are really contracts, in the sense of agreements between two parties. . . . I’ve been a law professor for 37 years or 38 maybe, and I’ve been teaching contracts for at least 15. And what the contracts books say is you come to agreement and if somebody says I can do whatever I want at will to your agreement, that contract is not really a contract, but our courts routinely ignore that. And our, you know, Justice Scalia, for our Supreme Court, has a little footnote in one of these cases saying, well, you know, the firm said they could modify at any time, so they modified, so what.
The contract is less an agreement between two parties than the acknowledgment by one of the other’s domination.