Academic journal article Jones Law Review

Green Tree V. Randolph: Will This Court's Decision Lessen the Effect of the FAA in Consumer Arbitration?

Academic journal article Jones Law Review

Green Tree V. Randolph: Will This Court's Decision Lessen the Effect of the FAA in Consumer Arbitration?

Article excerpt

The signs and billboards along Alabama highways claiming that Arbitration is the equivalent to a "License to Steal" leaves little room for doubt that Alabama is a political battlefield for consumer arbitration law. Although arbitration is a forum that has been around for a long time, (1) Alabama citizens and visitors alike who see the signs will likely conclude that arbitration is the latest legal creation designed to deprive individuals of their constitutional right to a trial by jury. Very few individuals, or attorneys for that matter, concern themselves with issues surrounding consumer arbitration. Quite probably, the ones who are most informed of arbitration issues are those who are in the heat of the battle.

One study of Alabama Supreme Court's decisions describes just how political the issues of arbitration have become in Alabama. This study reveals a significant correlation between Alabama judges' views and decisions concerning arbitration issues and the views of their major campaign contributors. The study indicates that judges supported by plaintiffs' attorneys are most likely to vote unfavorably on issues of arbitration enforcement, while judges supported by business campaign contributions are most likely to render votes favoring the enforcement of arbitration agreements. (2)

Because arbitration will be pursued as an alternative dispute resolution for many years to come, (3) and because arbitration issues are being pushed to the political forefront, (4) it is important for attorneys and consumers alike to be knowledgeable about arbitration issues and new developments in arbitration law. Consumer protection laws, freedom to contract, and states' policing powers are important matters that require vigilant scrutiny by both federal and state courts to ensure that individual freedom and state sovereignty are not jeopardized.

The conflict between federal powers mandating enforcement of arbitration agreements and a state's right to invalidate pre-dispute arbitration agreements did not intensify in Alabama until 1995. Prior to Allied-Bruce Terminix Companies, Inc. v. Dobson (5) in 1995, federal courts in Alabama gave considerable weight to the Alabama anti-arbitration statute (6), which provides that pre-dispute arbitration agreements are not enforceable. Since the decision in Terminix, the federal courts in Alabama are required to "rigorously enforce" the mandates of the Federal Arbitration Act (FAA). (7) Pursuant to the FAA, a written provision to arbitrate within a contract involving interstate commerce "shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation of any contract." (8)

The Terminix decision provides that the constitutionality of arbitration agreement provisions within contracts that involve interstate commerce will be upheld and the FAA will be applicable to the contracts. (9) So long as interstate commerce is involved with the contract, this decision serves as encouragement for product sellers, services providers, and insurers to include an arbitration provision in consumer contracts. (10)

It is important for consumers and attorneys to be aware of the decision because, in many cases, the arbitration process has adverse consequences for consumers. Those consequences may include limited discovery, inability to obtain effective appellate review, and stifling of the law's development. (11) Repeat corporate players will have the benefit of previous experience with arbitrators and that factor alone may prevent consumers from having competent, conscientious, and impartial arbitrators. (12) Notwithstanding views in the legal community, the return to state autonomy in the enforcement of arbitration agreements will only occur when Congress or the Supreme Court limits the scope of the FAA and gives greater weight to state autonomy in deciding issues of consumer arbitration. (13)

The Supreme Court's dicta in Green Tree v. …

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