Arbitration Clauses, Jury-Waiver Clauses and Other Contractual Waivers of Constitutional Rights

ARBITRATION CLAUSES, JURY-WAIVER CLAUSES AND OTHER CONTRACTUAL WAIVERS OF CONSTITUTIONAL RIGHTS

Stephen J. [email protected]

205-726-2413

Alienating the 7th Am Jury-Trial Right

• consenting to a contract containing an arbitration clause

• consenting to a contract containing a jury-waiver clause

STANDARDS OF CONSENT

Contract Law “Knowing” Consent

• arbitration clauses • jury-waiver clauses

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• objective manifestations of consent

• consent to forms w/ few exceptions

• consent to unknown is norm

• subjective “actual” consent

• no consent to formsw/ few exceptions

• sensitive to unequal

bargaining power

STANDARDS OF CONSENT

Contract Law “Knowing” Consent

• arbitration clauses • jury-waiver clauses

Federal Arbitration Act § 2

"written provision . . . to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."

- unconstitutional for 75 years?

A Reading of the FAA

• FAA covers only contracts between “two sophisticated businesses”

• such contracts always involve “knowing” consent,

• therefore, it was not until the 1980’s (with enforcement of employment and consumer arbitration agreements) that courts started to apply the FAA in an unconst. manner

A Rebuttal

• FAA covers all arbitration agreements “involving commerce” except that it carves out Ks of certain employees

• FAA has no other carve-outs,

• therefore, FAA covers nearly all arbitration agreements

• “knowing” consent is lacking even in many cases involving “two sophisticated businesses”

• therefore, FAA’s alleged unconstitutionality would have been apparent before the 1980’s

A Rebuttal (cont.)

The Supreme Court has expanded the scope of the Commerce Clause since the 1920’s

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• FAA • caselaw on jury-

waiver clauses

- Does 7th Amendment require “knowing” consent for arbitration agreements

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• FAA • caselaw on jury-

waiver clauses

• constitutional waivers in criminal context

• constitutional waivers in civil context

Prof. G. Richard ShellContracts in the

Modern Supreme Court

• Lochner-era, 1870-1937

• New Deal/Warren Court, 1937-1971

• modern Court, 1971-present

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• FAA • caselaw on jury-

waiver clauses

• constitutional waivers in criminal context

• Mitchell due process property deprivat.

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• FAA • caselaw on jury-

waiver clauses

• constitutional waivers in criminal context

• Bremen and Carnival Cruiseapplied to non-U.S. forum

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• FAA • caselaw on jury-

waiver clauses

• constitutional waivers in criminal context

• consent-to- jurisdiction clauses

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• FAA • caselaw on jury-

waiver clauses

• constitutional waivers in criminal context

• jury-waiver clauses pre-Hendrix

Flaws of Hendrix

• no precedent on point

• no authority for jury-trial right “far more fundamental” than due process right

• cites Fuentes without citing Mitchell or Bremen

STANDARDS OF CONSENT

Contract Law “Knowing” Consent• FAA

•Mitchell due process property deprivat.

•Bremen and Carnival Cruiseapplied to non-U.S. forum

•consent-to-jurisdiction clauses

•jury-wavier clauses pre-Hendrix

• caselaw on jury-waiver clauses

• constitutional waivers in criminal context

ARBITRATION CLAUSES, JURY-WAIVER CLAUSES AND OTHER CONTRACTUAL WAIVERS OF CONSTITUTIONAL RIGHTS

Stephen J. [email protected]

205-726-2413