Judge Young Speaks His Mind About Arbitration

It could have been a routine order directing arbitration in a commercial dispute no one beyond the parties would likely care about. Instead, Judge William Young of the U.S. District Court for the District of Massachusetts used the occasion of a dispute between two companies about the meaning of their arbitration agreement to deliver an opinion with some firmly stated critiques of arbitration as well as informative asides about a number of other aspects of litigation, including some stinging comments about affidavits drafted by lawyers.

The parties had tied themselves in knots litigating over an arbitration agreement they had drafted but apparently didn't understand. Judge Young had to explain to them that they had actually agreed to arbitrate over an issue they had asked him to decide (namely, whether the arbitrators had authority to issue injunctive relief). In accordance with the agreement, he sent the issues to arbitration while entering a stand-still injunction stipulated to by the parties. In doing so, he had a few choice words about both consumer/employment arbitration ("forced arbitration," as he correctly called it) and commercial arbitration.

Judge Young began with the observation that "[i]t is important to note that this is not 'forced arbitration,' that one-sided species of arbitration unconscionably forced on vulnerable consumers and workers and almost universally reviled, enforceable only due to the mandate of a slim majority of the Supreme Court." (Don't hold back, Judge Young; tell us how you really feel!)

But even as to "the knowing mutual resort to arbitration" by "independent equals, each represented by skilled counsel," Judge Young pointed out that arbitration has serious flaws. In particular, he pointed out that in the case before him, as in many others, arbitration was likely to be much more expensive to the parties, and much slower than litigation in court (perhaps to the benefit of attorneys who lacked the stomach for a real trial of the issues, if not their clients). It would, however, allow the parties to resolve their dispute "entirely [out of] public view," and such "[s]ecret, private tribunals carry with them a host of other societal ills."

Judge Young concluded:

Which is the better approach to adjudication? I am not so self-regarding (or confident) to stake a claim. The honest answer — it depends. As regards this case, the facts are these:

The litigation costs will be roughly equivalent, though the start-up costs of arbitration are greater. So long as one party wants speed, the Massachusetts federal courts are markedly faster, 5-8 months start to finish. In arbitration, [the parties] can cloak themselves in secrecy; in federal court they cannot. At the conclusion of arbitration, the parties will receive an award but no explanation and will have virtually no appellate rights. At the end of a federal trial the parties will get a thorough written decision and award. Each will have full rights to appeal to one of the finest appellate courts in America.

Which course is better? You be the judge.

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