Arbitrator diversity matters for justice perceptions and realities
In a June 2021 research report, the American Association of Justice (AAJ) found that women and minorities filing legal claims are more likely to be forced into arbitration with a white male arbitrator who will decide their case.
This AAJ report notes that for the two largest providers of arbitrators in employment and consumer disputes, the arbitrators are 88 percent white and 77 percent male. The Supreme Court has repeatedly enforced agreements to arbitrate major legal disputes even when individual employees and consumers held little, if any, bargaining power to understand and challenge these efforts to circumvent court resolution by requiring a private arbitration decision.
Although the Supreme Court may view arbitration as merely a procedural substitute forum to the judicial forum, one stark difference relates to the process used in choosing the deciders in the courts versus arbitration. In the courts, the parties do not choose the judge and have the right to challenge the rejection of qualified jurors based upon race or sex. In arbitration, the arbitrator serves in the role of judge and jury and the parties select the arbitrator without any way to challenge the rejection of a qualified arbitrator based upon race or sex.
Sarah Cole has explained how perceptions of unfairness in arbitration may arise due to lack of arbitrator diversity. I have agreed by using an example. Imagine an African American female filed a Title VII employment discrimination claim alleging sexual and racial harassment by her supervisor, a white male in his 50s. After realizing some forms she signed when she first started now require her to resolve her claim in arbitration instead of federal court, she discovers the only likely persons to serve as her arbitrator may be white males. In the process of selecting the arbitrator, the employer rejects the few female and arbitrators of color offered ostensibly under the rationale of being unfamiliar with those arbitrators and their abilities to resolve the dispute favorably for the employer. The arbitrator chosen is a white male in his 50s who rejects the discrimination claims and rules in favor of the employer.
When the few women and arbitrators of color were rejected by the employer in the selection process, the employee had no opportunity to challenge those rejections based on race or gender as she would have been allowed to do if in court. Also, unlike courts where parties can challenge the judge’s decisions on appeal, courts, in deference to agreements to arbitrate, will usually not hear challenges to an arbitrator’s decision even if the arbitrator engaged in “improvident, even silly, factfinding.”
What can be done to address the dearth of women and people of color who tend to serve as arbitrators? The problem requires attention to both supply and demand components. Regarding supply, you must consider the greater percentage of white males versus people of color who become attorneys. Because lawyers and former judges tend to be most often the ones selected as arbitrators for legal disputes, being a lawyer creates a bottleneck in the supply process. Some disputes may not require the arbitrator to also be an attorney. The National Academy of Arbitrators (NAA), an organization of preeminent labor and employment arbitrators in the United States and Canada, has many non-attorney members. The American Arbitration Association (AAA) and JAMS service providers tend to engage in intricate outreach efforts to have a more inclusive and diverse roster of arbitrators. Those efforts have helped in responding to the supply problem.
Even when there have been major efforts to leverage the pool of arbitrators to supply more diverse options, the demand issue has continued to prevent diverse selections. Attorneys, familiar with the ins and outs of resolving legal disputes in arbitration, want to select arbitrators who will rule in their clients’ favor. With the primacy of winning dictating arbitrator selections, attorneys, as gatekeepers for their clients, tend to be unwilling to select diverse arbitrators because they lack familiarity or prior arbitration experience with those arbitrators. This mindset perpetuates the ongoing selection of mostly white male arbitrators to serve in resolving legal disputes, the overall concern of the AAJ study.
Some suggestions to address the demand issue have been offered. I have argued that arbitrators should not be selected by the parties. Instead, neutral service providers, such as AAA and JAMS, should use an algorithm factoring in a certain consideration of diversity percentages to provide an arbitrator to the parties who agreed to arbitrate. This approach would attempt to replicate, in part, the selection process used by federal courts in assigning a judge to a lawsuit.
NAA members Homer La Rue and Alan Symonette have proposed a more comprehensive measure to address the demand problem that they call the Ray Corollary Initiative (RCI). According to La Rue, the RCI requires “that every final group of candidates for arbitration . . . will include 30 percent people of color, both male and female.” The RCI builds upon the Rooney Rule in the National Football League (NFL) requiring every NFL team with a head coaching vacancy must interview at least one diverse candidate and the Mansfield Rule, derived from the Rooney Rule, which requires that law firms set hiring benchmarks for key firm positions to include women, people of color, LGBTQ+, and those with disabilities for “at least 30 percent of the candidate pool.” The RCI has started to receive broad consideration and support from various groups involved in the arbitration process. With initiatives like RCI, the perception as well as the reality of fairness can be achieved by providing a diverse critical mass of arbitrators that parties select in resolving their disputes. Then the issue of arbitrator diversity will no longer matter.
Michael Z. Green is a professor of law and the director of the Workplace Law Program at Texas A&M University School of Law. The views expressed are his own and not those of his employer.