abstract. This Note responds to the dominant critique of today’s arbitration doctrine—the access-to-justice critique—and articulates a novel intervention from the perspective of political economy. By developing a new periodization of the Supreme Court’s arbitration jurisprudence, the Note categorizes and recounts the normative positions on arbitration law that predominate in the literature. This Note identifies a gap in existing critiques and borrows from critical analyses of antitrust to contend that arbitration law suppresses the coordination rights of the market’s small players—workers, consumers, contractors, and small merchants—to the benefit of large players like corporations. This suppression facilitates the kinds of economic production and corporate organization that characterize gig-economy firms. Evaluating arbitration law through this lens provides a novel application of, and further develops, the insights of law and political economy, ultimately suggesting reform pathways that might retrench mandatory arbitration.

author. J.D. 2024, Yale Law School; B.A. 2017, Northwestern University. I thank Professor Amy Kapczynski, who oversaw several early drafts of this project and shaped its overall direction. I also thank Professor Sanjukta Paul, Professor Alvin K. Klevorick, Professor Zephyr Teachout, Eamon Coburn, Sachin Holdheim, Zac Krislov, and my colleagues in the 2022 Law and Political Economy Directed Research seminar for their insightful comments across various drafts. I also thank Christine Webber and Stacy Cammarano, attorneys under whose supervision I was first exposed to arbitration and its legal regime in action. Lastly, I especially thank Ami Ishikawa, Lily Moore-Eissenberg, Shreya Minama Reddy, Beatrice L. Brown, Deja R. Morehead, and the staff of the Yale Law Journal, whose efforts immensely improved this Note. Without their thorough commentary and editorial assistance, this Note would not have accomplished its aims. All errors are my own.

Introduction

Workers and consumers are often subject to contract provisions mandating that they bring any dispute to arbitration and renounce the use of any class or collective procedures in that arbitration. These provisions are typically nonnegotiable, part of adhesive contracts between one party with immense market and bargaining power (such as a large firm) and an individual (often a worker, consumer, or contractor working for that firm). Yet this restrictive regime is not yet a half-century old: the underlying legal framework allowing arbitration’s proliferation arose from the Supreme Court’s zealous expansion of the Federal Arbitration Act (FAA)1 since the 1980s. The Court has distorted the FAA’s original scope to include transactions between parties of vastly unequal bargaining power, prompting justifications and vociferous criticism alike from scholars and policymakers.

This Note builds on the dominant normative critique of arbitration—what might be termed the access-to-justice critique—from a political-economy perspective. The access-to-justice view holds that arbitration, widely imposed as part of adhesive employment and consumer contracts, erodes or even forecloses workers’ and consumers’ ability to bring meritorious claims against firms that harm them. This harm can look like stolen tips or wages, or hidden fees to which a consumer did not agree. The critique argues that when workers and consumers do bring these claims, they are less likely to prevail and more likely to recover smaller sums than might be available in the traditional civil-litigation system.2

But the access-to-justice view, while certainly useful, insufficiently addresses a key aspect of arbitration’s effects, which this Note seeks to chart: arbitration influences how firms organize themselves, and, in turn, what kind of economic production they undertake. Investigating arbitration through a political-economy lens reveals these effects and further counsels that arbitration law must be understood as a field of law that allocates coordination rights. Borrowing a concept from contemporary critiques of antitrust law, my political-economy critique of arbitration holds that the current doctrine allocates coordination rights away from small players by disallowing horizontal coordination among workers, consumers, contractors, and small merchants. This political-economy critique, in turn, provides a theoretical framework for conceptualizing the flaws of our arbitration regime and the ways in which it might be reformed.

This Note proceeds as follows. Part I begins with a description of how arbitration mandates work, followed by a new categorization of FAA jurisprudence that demarcates and explains three jurisprudential phases. While most scholars pay attention solely to the so-called “national policy” favoring arbitration, Part I characterizes the development of arbitration jurisprudence in two additional ways. First, the “national policy” interpretation was a reaction to an earlier approach that was not uniformly deferential to arbitration—what I call the contextual understanding of arbitration. Second, the national-policy era was an antecedent to our current, highly restrictive arbitration jurisprudence. Part II then summarizes the literature on arbitration, dividing it into three groups of critiques. It argues that the access-to-justice critique’s primary shortfalls are its narrow focus on an arbitration mandate’s preclusive effect on individual claims against a firm, as well as its inattention to arbitration’s broader systemic role in influencing firm behavior and structure. Part III extends those themes and builds on the contextual understanding to introduce a political-economy account of arbitration. This framework centers arbitration’s systemic effects on political economy, emphasizing the ways in which arbitration disallows certain kinds of horizontal coordination and incentivizes certain forms of economic production. Lastly, Part III takes up the development of mass-arbitration tactics and suggests that, while mass arbitration may promote access to justice, it does not address the problems identified by the political-economy critique.

The evolution of arbitration law, as this account will show, has been complex and contested. But the main point of this critique is a simple one: arbitration law prevents small players in the economy from coordinating against large firms, which allows such firms to engage in behaviors that may violate substantive laws.