Freedom Line Blog

Private arbitration and other forms of alternative dispute resolution provide important alternatives to traditional court litigation, and this week the U.S. Supreme Court delivered an important and welcome victory against trial lawyers and liberals who seek to undermine them.  The ruling is particularly notable for the fact that even liberal justices Breyer and Kagan joined in the 6-3 majority.

The case originated from an agreement between DirecTV and customers under which the parties agreed to a class action waiver and to resolve any disputes through private arbitration.  Although pro-trial lawyer California state law made class action waivers unenforceable, the Supreme Court had rightfully ruled in 2011 that the Federal Arbitration Act preempts such such state laws.  In the instant case, the California courts nevertheless attempted to circumvent that 2011 ruling, but the Supreme Court was having none of it.

For their part, liberal justices Ginsburg and Sotomayor did their best Bernie Sanders and Occupy Wall Street impression.  Their dissent is worth citing simply because of its self-evident reliance upon class warfare and leftist economic policy over objective, sober legal analysis:

It has become routine, in large part due to this Court’s decisions, for powerful economic enterprises to write into their form contracts with consumers and employees no-class-action arbitration clauses…  I would read it, as the California court did, to give the consumer, not the drafter, the benefit of the doubt.  Acknowledging the precedent so far set by the Court, I would take no further step to disarm consumers, leaving them without effective access to justice.”

First and foremost, Justice Ginsburg’s claim is incorrect as a matter of fact.  Arbitration and alternative dispute resolution don’t deprive anyone of justice.  They simply move the parties away from more expensive and tedious traditional litigation in overcrowded court system, and toward fair, speedier and less-burdensome resolution by an arbiter (usually an experienced judge) selected by both parties.  Second, Justice Ginsburg’s argument rests on sentiment and her own policy preference rather than law.

Accordingly, the Court’s ruling constitutes a critical loss for the powerful trial lawyers’ lobby, which essentially by definition makes it a critical victory for Americans more broadly.