Agencies and Arbitration

Abstract

This Essay examines the roles federal administrative agencies can and might yet play in response to the rise of mandatory bilateral arbitration. In recent years, scholars of regulation and civil procedure have noted the extent to which companies can erode their legal obligations by inserting binding arbitration provisions coupled with class arbitration bans into their contracts. Although scholars have expressed concern about what arbitration means for certain areas of substantive law — particularly those areas that have historically relied on private aggregation mechanisms for enforcement — less has been said about how public regulatory bodies should respond.Drawing on the insight that private enforcement and public regulation often work in tandem to produce regulatory outcomes, I argue that administrative agencies can, using existing tools, make compensating adjustments to partially offset some of the potentially ill effects of class arbitration bans. Most obviously, administrative agencies can use disgorgement remedies that mimic class actions to make companies internalize the costs of their statutory violations and, in some cases, to compensate those harmed. Agencies can also take on individual cases in order to set important precedents and contribute to the development of the law.Apart from these enforcement strategies, agencies have also started regulating arbitration agreements directly, using both explicitly and impliedly delegated authority. I argue that such area-specific regulation of arbitration by administrative agencies is superior to the current system, which involves a system in which the courts — led by the Supreme Court — set the rules, often by employing contestable assumptions about the role of litigation, including class litigation, in various regulatory regimes. The Essay also provides a novel doctrinal argument for why agencies should receive Chevron deference when they reasonably interpret ambiguous provisions of statutes they administer in order to ban or otherwise regulate arbitration.