The Supreme Court’s Social Control Disguised as Freedom
Look at the contracts governing your cell phone service, credit card, home loan, and many other consumer items, and even your employment agreement: a large percentage will include a boilerplate clause saying you are bound to arbitrate any disputes that may arise, waiving any day in court. Look at many business contracts and you’ll see the same thing.
Thanks to forty years of expansionist U.S. Supreme Court precedents, those clauses will be taken literally and enforced, as a matter of federal law. That’s so even if basic principles of state contract law would otherwise invalidate the contract and the clause.
The Court led the country to this position beginning in 1984 by tortured interpretations of a 1920s federal statute making federal law on arbitration paramount. The Court compounded that error in a series of equally contorted later interpretations that nearly foreclose any contract-law objection to such clauses. The Court has been roundly rebuked for its 1984 decision but, among active Justices, all but Thomas seem agreed that there is no turning back.
The Court’s manipulation of the old statute, whose purpose was to make state law applicable in federal court not the opposite, seemed initially driven by desire to reduce the work load of federal and state courts. Arbitration was a release valve for overworked courts. Though many justices–including Black, O’Connor, Rehnquist–found that repugnant on federalism grounds, some libertarian types find it appealing as a way to privatize dispute resolution.
Though there is a vast literature on most aspects of this body of federal arbitration jurisprudence, one striking thing seems muted in the literature. The Court and its followers justify the prevailing regime by citing freedom of contract. They routinely incant that arbitration is purely a matter of contract and of contract law.
But as I plan to document in a paper I am writing, the Court’s talk and application of “contract law” in its opinions does not apply contract law as that body of doctrines exists at common law among the states. Instead, the Court has invented its own special set of federal arbitration principles that it calls contract law. It is a coercive set of doctrines, advancing what the Court has called a national policy favoring arbitration, in derogation of the country’s older, more cherished and more spontaneous policy favoring freedom of contract.
Disguising this jurisprudence in the rhetoric of freedom of contract seems to be a way to hide two things. It shrouds the parochial nature of this jurisprudence, which is highly protective of the judicial branch of government. And it obscures the price paid in federalism for the pre-emption of state law. But once the talk is revealed as talk, those insidious features, and others concerning fundamental principles of legitimacy, become clear. It is ironic that the Court uses the rhetoric of contractual freedom to assert a most powerful form of social control: concerted federal judicial activism that channels disputes into arbitraiton whether people agreed to that or not.