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Posted by: Christy Gibson on Dec 19, 2012

The Annual Seminar and “Privatization of Justice”

The TBA’s ADR Section Annual Seminar will focus on arbitration this year for several reasons.  To begin with, over the last few years the seminars have been devoted to mediation.  But also, the U.S. Supreme Court continues to render decisions interpreting the Federal Arbitration Act very broadly.  In fact, the Supreme Court has now gone beyond placing arbitration agreements on merely “equal” footing with other contracts to repeatedly maintaining that the FAA provides a “liberal federal policy favoring arbitration agreements.”

I am sure each of you is aware that most financial statements, credit card statements, commercial contracts, car dealership contracts, and the like, now routinely call for arbitration.  These common examples all contain contractual language that now substitutes a private arbitrator in place of a public forum.  Additionally, many employers are now embedding arbitration provisions in employment contracts and employee handbooks.  Simply stated, this means that contracts requiring arbitration — including provisions requiring you to arbitrate statutory claims — have proliferated.

Perhaps even more significant is the fact that these contract provisions, which are now so routinely embedded in our everyday lives, are beginning to affect other significant statutory rights.  For example, in Joe M. Ray, Jr. v. FedEx Corporate Services, Inc., 668 F. Supp. 2d 1063 (2009), an employee signed an agreement containing a provision stating:

To the extent the law allows an employee to bring legal action against FedEx Corporate Services, I agree to bring that complaint within the time prescribed by law or six months from the date of the event forming the basis of my lawsuit, whichever expires first. (emphasis added).

In dismissing the lawsuit for being untimely filed, the Court stated:

Like an arbitration agreement or a forum selection clause, an agreement to reduce a statute of limitations period is a structural provision.  If unilateral claims of material breach of contract nullified statute of limitations provisions in the contracts, such provisions would be futile.  See Org. Comm. for 1998 Goodwill Games, Inc. v. Goodwill Games, Inc., 919 F. Supp. 21, 24–25 (D.D.C. 1995) (finding that if an agreement to arbitrate disputes could be voided by a unilateral claim of material breach, arbitration provisions would be meaningless); CK DFW Partners Ltd. v. City Kitchens, Inc., 2007 WL 2381259 at *6 n. 2 (N.D. Tex. Aug. 17, 2007) (“If a material breach of a contract were deemed to excuse further performance of the contract’s forum selection clause, forum selection clauses could essentially be rendered meaningless in actions for breach of contract.”)

The Court ultimately found that the clause in the Employment Agreement limiting the statute of limitations to six-months was enforceable.

The effect of substituting private arbitrators in place of a public forum has been the privatization of justice.  Obviously, in the past few years, this issue has been increasingly a subject of public debate.  This is likely at least partly responsible for the recently proposed “Arbitration Fairness Act,” which seeks to prohibit the arbitration of certain types of disputes.  This year’s Seminar will look at some of the consequences of privatizing public rights. But the main focus will be on understanding arbitration provisions, drafting enforceable provisions, how to initiate arbitration, and how to properly advocate before an arbitrator.  The seminar is scheduled for April 11, 2013.

Stephen L. Shields, Chair