How the Supreme Court Thwarted the Purpose of the Federal Arbitration Act

Jodi Wilson, Assistant Professor of Law and Director of Legal Methods at the University of Memphis’ Cecil C. Humphreys School of Law, has published a timely article entitled How the Supreme Court Thwarted the Purpose of the Federal Arbitration Act, Case Western Reserve Law Review, Vol. 63, No. 1, 2012; University of Memphis Legal Studies Research Paper No. 122. In the article, Professor Wilson discusses the policy behind the Federal Arbitration Act and critiques the high court’s decision in AT&T Mobility LLC v. Concepcion.

Here is the abstract:

When the Federal Arbitration Act (“FAA”) was enacted in 1925, its purpose was to place arbitration agreements on the “same footing as other contracts” and thereby overcome judicial hostility to arbitration. Almost thirty years ago, however, the United States Supreme Court declared that the FAA reflected a policy favoring arbitration. Since first announcing the favoritism policy, the policy has taken on increasing importance in the Court’s arbitration jurisprudence. Indeed, in 2011, this favoritism policy was the cornerstone of the Court’s decision in AT&T Mobility LLC v. Concepcion. In Concepcion, a divided Court expanded the preemptive effect of the FAA by holding that the FAA preempted a generally applicable state law doctrine despite a “savings clause” that should have protected the doctrine from preemption. This Article critiques Concepcion and argues that the Court improperly preempted state law by relying on a flawed purpose focused on facilitating streamlined arbitration proceedings, rather than the policy of equal footing. Part I of this article describes the judicial hostility that led to the enactment of the FAA, the equal footing policy reflected in the legislative history of the FAA, and the Court’s progression from hostility to favoritism. Part II examines the conflict between the policy favoring arbitration and the FAA’s savings clause, with particular focus on the unconscionability doctrine at issue in Concepcion and the Court’s resolution of the conflict in Concepcion. Part III provides a critique of Concepcion arguing that the Court gave insufficient weight to the FAA’s equal footing purpose, placed undue weight on the judicially created policy favoring arbitration, and reframed the favoritism policy to incorporate a vision of arbitration that is not reflected in the FAA. Had the Court premised its analysis on the stated legislative purpose of equal footing, it could not have expanded the preemptive effect of the FAA to include a generally applicable state contract doctrine. Concepcion demonstrates the Court’s willingness to thwart the stated legislative purpose of equal footing in favor of the judicially created policy of favoritism. Legislative reform should reaffirm the FAA’s historical purpose within the text of the statute so that the Court can no longer find a policy favoring arbitration in the shadows of the FAA and, thus, can no longer allow that policy to influence its interpretation and application of the FAA.

This scholarly paper is available for download (without charge) from the Social Sciences Research Network.