I learned contract law in the late 1980s from Professor Daniel Collins, who enthralled his first-year classes with his love of Karl Llewellyn and legal realism. He taught us the elements of contract—an offer, an acceptance, and consideration—and emphasized that the legal system resolves disputes through the principles of efficiency and equity when things go wrong. His insistence that his students attend to both power differentials and reasonableness in thinking through contracts problems likely came from his background as a labor arbitrator. He would have been a huge fan of Sarah Staszak’s arresting book Privatizing Justice, though he likely would have been frustrated by her findings.
Staszak tells the story of how arbitration in the United States, which had roots in settling labor unrest and in Progressive-era commitments to making dispute resolution easier, more accessible, and fairer, became a powerful tool in the hands of corporate actors who now use it to protect their interests, impose their will, and evade accountability. More than a simple story of institutional capture, the book explains how arbitration’s emergence as a practical solution in multiple policy contexts created space for interventions by private actors to shift its orientations and uses.
For much of American history, courts, both state and federal, have been conservative institutions that confer structural advantages on wealthy and established interests who use them frequently enough to become repeat players. In Marc Galanter’s classic formulation, repeat playing enables the litigator to shape the rules of the game to their advantage. These dynamics are particularly pronounced and problematic in the United States because of litigation’s significant role; as Staszak observes, it has often stood in for “bureaucratic solutions for addressing pervasive social and political issues,” and bureaucratic solutions in the United States often incorporate private litigation as an enforcement mechanism (p. 5). Knowledgeable and well resourced disputants are both advantaged and reinforce these advantages within this system.
Alternative dispute resolution (ADR) mechanisms like arbitration, mediation, and neutral factfinding, have existed alongside the courts for centuries. Even before US independence, they already had a place in the legal system. Advocates for ADR have promoted these techniques as faster, cheaper, and fairer for decades. Advocacy persists today, including calls for the expansion of online dispute resolution from its early home in addressing digital marketplace disputes to its expanding status as a widely used and tailored supplement to the conventional legal system. While Staszak does not contest the critique of the conventional legal system as a means of addressing individual private wrongs, she explains in stark terms how mandatory, binding, pre-dispute arbitration in particular has become a powerful driver of consumer and laborer disempowerment and how it has supplanted and privatized dispute resolution in problematic ways. Its rapid acceleration into dominance in the private sphere was fueled in part by “tort tales,” or egregious stories about greedy trial lawyers’ manipulation of the legal system to secure massive payouts in personal injury and medical malpractice cases. Yet now pre-dispute arbitration has become fodder for outraged headlines, as in a recent episode in which the Disney Corporation sought to foreclose a lawsuit brought by the husband of a woman who died from an allergic reaction to food she consumed at a Disney property. Disney claimed that the dispute was subject to binding arbitration on the basis of a long-forgotten click he made to sign up for a free trial of Disney Plus’s streaming service, a click with which he agreed to forego his access to the legal system.
While Staszak’s project resonates with the law and society literature evaluating ADR, she uses the tools of American political development (APD) to execute her analysis. Historical in its sensibility, APD encourages scholars to trace policy development through institutional orders and illustrate how these orders contribute to change and attend to interactions among institutions and across institutional domains. Using this approach enables her to pinpoint the shift in arbitration’s function and meaning. As her analysis of institutions and their relationships illustrates, it expanded in the 1960s and 1970s through bipartisan support as a supplement to manage an overwhelming workload for the judiciary and the administrative state. By the early 2000s, however, conservative and corporate advocates invested in it as a means of advancing their interest in deregulation and curbing corporate liability for private wrongs.
Staszak’s analysis illustrates how institutions arising from a particular set of ideological and practical sensibilities may shift in their political orientation over time. Looking to arbitration’s roots in Progressive-era commitments to transparency, efficiency, accountability, and democracy, one might identify other such innovations of that period to see where they stand after a century of evolution. Carol Nackenoff and Kathleen Sullivan’s work on the development of juvenile courts in Chicago and the spread of the movement nationally in the early 20th century provides an interesting counterpoint. Staszak identifies the national Arbitration Act of 1888, passed in the wake of state-level innovations and responding to disruptive railway labor disputes, as the “first federal labor relations law” (33). Juvenile courts came out of much more localized concerns and became established through private reform efforts and networks that encouraged collaboration with the state. Yet both sets of reforms relied on creating new systems of dispute resolution to address problems that existing administrative capacity and state oversight proved ineffective in addressing. They also, albeit in very different ways, involved “buil[ding] an institution to deal with a newly defined public problem” (172).
Both the growth of arbitration and the juvenile court movement involved actors dissatisfied with existing institutions who wanted to create alternative systems that would rely on deep and specific expertise to manage disputes more effectively while reinforcing broader policy mandates. Dispute resolution, for both, was a useful site to address government interests. While early juvenile courts were more clearly hybrid public-private institutions that relied heavily on the expertise and investment of advocates, both innovations established systems that could facilitate bargaining outside of the narrow constraints of a passive conventional judge’s oversight role. And both ultimately expanded the scope of state work. In the case of juvenile courts, the new institution relied on the older doctrine of parens patriae to ground more comprehensive authority to intervene when parents proved unable “to guard [children] from risky behavior and habits” (176). In the case of Progressive-era labor arbitration, the innovation dealt the state into conflicts between labor and capital as a force to conciliate, subverting the judiciary’s role as an additional resource for capital to suppress strikes.
In both cases, advocates for these systems designed them to advance broader state interests. For the juvenile court system, managing wayward children served the interests of democracy by placing them on a path toward development into good citizens who would contribute to the health and welfare of the nation. For labor arbitration, quelling labor unrest through the settlement of strikes and disputes would advance the national interest in a smoothly functioning economy. It would also stave off threats of more radical and political labor organization as well as reining in the most rapacious elements of capitalism. In each case, these benefits provided further justification to encourage the state to invest in the development of new institutional structures.
However, juvenile courts and arbitration then developed in their own rights in different directions. Juvenile courts grounded the development of a juvenile justice system that is now different from but absorbed within the criminal legal system. The juvenile justice system has retained the rehabilitative orientation evident in its earlier iterations, and even though it has similar processes to the criminal legal system that addresses adult disputes, juvenile justice personnel often have access to a broader set of tools for dispute resolution and service organizations (although the vision does not always pan out in reality). In contrast, arbitration, as Staszak explains, has in some policy spheres become an exclusive alternative to the judicial resolution of private wrongs. Binding arbitration has not only separated private individuals from the broader network of rights and privileges associated with judicial dispute resolution but has also sharply limited the capacity for individual cases to influence broader outcomes or principles. This is not to say that the juvenile court system has universally served the public interest and provided a positive, equitable, and flexible alternative to conventional courts’ dispute. Nor has it been immune from private capture and associated serious trespasses on participants’ rights, evidenced most recently by the scandal that erupted around two Pennsylvania judges’ funneling of children to for-profit jails in exchange for kickbacks. Overall, however, the imbrication of corporate interests into arbitration has been far more totalizing and transformative.
If these two systems suggest the current existence of a broad continuum, what else might lie along the line and what might we learn by tracing the development of other targeted systems of dispute resolution? And what elements might render a system of dispute resolution more or less subject to the problematic dynamics that Staszak identifies? Beyond juvenile justice, the criminal legal system relies on a wide range of therapeutic and problem-solving courts. Modern drug courts, for instance, began as an experiment in Miami in 1989 and by 2003, more than 1000 were operating across the United States. Joining these courts are “mental health courts, veterans courts, human trafficking courts, re-entry courts, and opioid intervention courts,” to note just a few of the 4000 specialized courts that expand and modify the scope of the criminal legal system by diverting participants to a different pathway for dispute resolution (1575). Many states offer or in some cases mandate mediation in disputed divorces and child custody cases. Bankruptcy proceedings increasingly incorporate non-presiding judges to mediate and encourage settlements. A few recent prominent examples include addressing sexual abuse claims against individual Catholic dioceses and the Purdue Pharma bankruptcy settlement (just unsettled by the Supreme Court).
None of these systems are perfect, though none seems to have reached the level of unfairness that Staszak describes. Most were developed and expanded to take pressure off overloaded conventional court systems in addition to serving specific policy goals. This pressure continues to encourage the adaptation and expansion of different models of alternative dispute resolution both under the direct supervision of judges and, as in the case of binding arbitration and mediation, outside of this supervision. Staszak’s work urges caution and a slowdown in the race forward. Her developmental analysis clearly warns about the risks when such approaches become tools of powerful repeat players with strong incentives to shift them to their benefit. Her analysis of current concerns about arbitration in employment and consumer contexts vividly highlights some additional major tripwires that institution-builders should consider when proposing or expanding alternative dispute resolution. In the employment context, binding arbitration as a term of employment contracts has trapped employees in private dispute resolution mechanisms that directly counter existing law and policy and close off access to enforcement of rights through litigation, which statutory and administrative regulatory design had intended as a means of augmenting compliance. In the consumer context, modern-day adhesion contracts trade away rights not only to enforcement of contract terms, but also to protection against a breathtaking array of risks and injuries, in exchange for access to the offered service. Dispute resolution mechanisms that foreclose access to the courts, circumvent enforcement of public policy concerns, or can compel adhesion to unreasonable and disproportionate bargains for access to goods or services should raise serious questions for policymakers.
Even if policy designers are careful, Staszak’s work also warns that continued vigilance is needed. Galanter’s caution from a half century ago still rings true: repeat players will work within systems of dispute resolution to turn them to their advantage. If a system, like that of both employment and consumer disputes, is populated by both repeat players and one-shotters who tend to be adversely aligned, balance will prevail only as long as those managing the system are attending to equity and to the broader policy goals they want that system to achieve. Certainly policymakers should design effective guardrails to prevent capture, but they must also exercise vigilance to ensure that these guardrails are not breached when they are—as they certainly will be—tried. And finally, this troubling book raises serious questions about the extent to which relying on courts, and more broadly on systems of dispute resolution, should continue as a primary strategy for augmenting governmental attempts to implement policy and ensure compliance.
