Mandatory Arbitration: Privatizing Justice, and the Quiet Displacement of the Civil Jury Trial

Leo Clarke

For most Americans, the right to a jury trial seems foundational: something guaranteed, immutable, and distinctly public. But for tens of millions of workers and consumers, that right has quietly disappeared.[1] Not through constitutional amendment or legislation, but through boilerplate contract language few ever read and none can negotiate. In a sharp dissent, Justice Ruth Bader Ginsburg once warned that the Supreme Court had transformed the Federal Arbitration Act (“FAA”) into a regime that “subordinates employee-protective labor legislation” and forces workers to “go it alone.”[2]

Justice Ginsburg’s warning was prophetic. Mandatory arbitration clauses—now standard in employment contracts, consumer agreements, and online terms of service—require individuals to waive their right to bring disputes before a judge or jury.[3] Instead, claims are resolved in private, confidential proceedings before arbitrators whose decisions are effectively final.[4] What was once a voluntary mechanism for resolving disputes between sophisticated commercial parties has metastasized into a structural feature of everyday economic life.

A.    From Commercial Convenience to Private Justice

Arbitration was never designed to replace public courts. When Congress enacted the FAA in 1925, its goal was modest: to allow merchants of roughly equal bargaining power to enforce voluntary arbitration agreements in federal court.[5] The Act’s legislative history confirms that it was not intended to govern employment or consumer contracts, and § 1 explicitly excluded certain classes of workers.[6] For decades, courts treated arbitration accordingly: as a matter of contract, not federal policy. That understanding changed in the late twentieth century. Beginning in the 1980s, the Supreme Court reinterpreted the FAA as embodying a “liberal federal policy favoring arbitration,” extending its reach into state courts and using it to preempt state laws designed to protect workers and consumers.[7]

The result is a legal regime in which arbitration is no longer an alternative to litigation, but rather, the default. In 1992, only about 2% of private-sector, nonunion employees were subject to mandatory arbitration.[8] By 2017, that number exceeded 55%, covering more than sixty million workers.[9] Many of those agreements also include class-action waivers, preventing collective lawsuits even when individual claims are too small to pursue alone.[10]

B.    Why Mandatory Arbitration Matters

Supporters of arbitration emphasize efficiency. Arbitration is faster, less formal, and often cheaper than litigation.[11] In commercial disputes between equals, the judicial economy rationale is obvious and logical. But in the context of employment or basic consumer contracts, efficiency comes at an untenable constitutional cost. Empirical evidence shows that workers and consumers fare worse in arbitration than in court.[12] Employees prevail less often, recover smaller awards, and face procedural disadvantages not otherwise present in public litigation.[13] Repeat-player corporations—who appear frequently before the same arbitration providers—enjoy structural advantages that individual claimants cannot match.[14]

Confidentiality compounds the problem. Arbitration proceedings are private by design: awards are rarely published, settlements are often subject to nondisclosure clauses, and outcomes create no precedent.[15] This secrecy eliminates deterrence. A company can resolve hundreds of similar claims through arbitration without public scrutiny, regulatory attention, or reputational consequences. Misconduct becomes a cost of doing business rather than a violation that demands correction.

C.    The Vanishing Jury

The most troubling consequence of mandatory arbitration is its effect on the jury-trial right. The Seventh Amendment guarantees that “[i]n Suits at common law,” the right to trial by jury “shall be preserved.”[16] Yet through the enforcement of pre-dispute arbitration clauses, private contracts now accomplish what neither Congress nor the states are empowered to do: eliminate jury trials for entire categories of civil claims.

Juries are not merely fact-finders; they are a democratic institution. Alexis de Tocqueville describes the jury as a political institution that brings citizens into the administration of justice.[17] Arbitration replaces that civic function with private decision-making driven by efficiency, confidentiality, and market incentives. Arbitrators are typically paid by the case, selected from a small professional pool, and dependent on repeat business from corporate parties.[18] Judicial review of their decisions is extraordinarily limited; even serious legal errors rarely justify vacatur.[19] Over time, this system shifts the enforcement of anti-discrimination statutes, wage protections, and consumer safeguards from public courts into private markets.

D.   How the Supreme Court Got Us Here.

The Supreme Court’s arbitration jurisprudence developed incrementally but decisively. In Moses H. Cone v. Mercury, the Court announced that doubts concerning arbitrability must be resolved in favor of arbitration.[20] In Southland Corp. v. Keating, it held that the FAA preempts state law, transforming a procedural statute into a substantive federal mandate.[21] Later decisions entrenched that mandate: in AT&T Mobility LLC v. Concepcion, the Court invalidated state rules protecting consumers from class-action waivers.[22] In American Express Co. v. Italian Colors Restaurant, it held that pre-agreed arbitration is compulsory, even when the cost of individual arbitration exceeds the potential recovery.[23]

Efficiency, not access to justice, became the governing value. At each step, the Court framed arbitration as merely “another forum” for dispute resolution.[24] But arbitration is not just a different forum: it is a different system. One without juries, without precedent, without transparency, and without meaningful appellate review.

E.    Restoring Public Justice

The privatization of civil justice is not inevitable. Congress has already recognized limits. In 2022, it enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, exempting such claims from mandatory arbitration.[25] But broader reforms are possible. Congress could prohibit pre-dispute arbitration clauses in employment and consumer contracts, narrow one-sided appellate provisions in the FAA, or require public reporting of arbitration outcomes. Courts could reinvigorate unconscionability doctrine and reassert constitutional limits on the displacement of jury trials. None of these reforms would abolish arbitration. They would simply return it to its proper role: a voluntary alternative chosen by informed parties, not a mandatory condition of participation in modern life.

[1] See Alexander J.S. Colvin, The Growing Use of Mandatory Arbitration: Access to the Courts Is Now Barred for More Than 60 Million American Workers, Econ. Pol’y Inst. (2018).

[2] Epic Systems Corp. v. Lewis, 138 S. Ct. 1612, 1649 (2018) (Ginsburg, J., dissenting).

[3] “Mandatory arbitration clause,” Black’s Law Dictionary (11th ed. 2019).

[4] 9 U.S.C. § 10 (listing limited grounds for vacating arbitration awards).

[5] Federal Arbitration Act, Pub. L. No. 68-401, 43 Stat. 883 (1925).

[6] See Hearing on S. 1005 Before the Subcomm. on the Judiciary, 68th Cong. (1924) (statement of Julius Henry Cohen); 9 U.S.C. § 1 (excluding “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce”).

[7] Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).

[8] Colvin, supra note 1.

[9] Id.

[10] Id.

[11] Theodore J. St. Antoine, Mandatory Arbitration: Why It’s Better Than It Looks, 41 u. Mich. J.l. reform 783 (2008).

[12] Alexander J.S. Colvin, An Empirical Study of Employment Arbitration: Case Outcomes and Processes, 8 j. Empirical legal stud. 1, 16–17 (2011) (noting that employees prevail in only about 21% of employment arbitration cases compared to 36% in litigation).

[13] See Cynthia Estlund, The Black Hole of Mandatory Arbitration, 96 N.C. L. Rev. 679, 695 (2018) (noting that § 16 of the FAA—by establishing an interlocutory appeal when a district court denies a motion to compel arbitration—creates a one-sided appellate right for defendants).

[14] Am. Arbitration Ass’n, Employment Arbitration Rules and Mediation Procedures R-23 (2013) (providing that proceedings are confidential unless the parties agree otherwise); Lisa B. Bingham, Employment Arbitration: The Repeat Player Effect, 1 Emp. Rts. & Emp. Pol’y J. 189, 214 (1997).

[15] 9 U.S.C. § 10.

[16] U.S. Const. amend. VII.

[17] Alexis de Tocqueville, Democracy in America (1835) (Phillips Bradley ed., Vintage Books 1945) at 442.

[18] Bingham, supra note 14, at 212–13.

[19] 9 U.S.C. § 10.

[20] 460 U.S. at 24-25.

[21] 465 U.S. 1, 10 (1984).

[22] 563 U.S. 333, 344 (2011) (finding that California’s prohibition of class-action waivers in consumer arbitration contracts “interfere[d] with fundamental attributes of arbitration”).

[23] 570 U.S. 228, 236 (2013).

[24] Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 27–28 (1991).

[25] Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, Pub. L. No. 117-90, 136 Stat. 26 (2022).