Diversity in private arbitration and the bench

Diversity in private arbitration and the bench
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It should be an uncontroversial proposition that judges and private arbitrators should at least come close to reflecting the diversity of the parties whose cases they are responsible for resolving. 

When a person becomes involved in civil litigation, whether as a plaintiff or a defendant, there should be at least some chance that the judge or arbitrator in their case looks like them or shares some similar life experiences. When diversity is absent, stereotypes, lack of shared life experience, and unconscious biases can calcify into a culture, making justice for people of color and women that much harder. Studies of diversity in the federal judiciary and private arbitration offer us reasons for serious concern. 

During his presidency, Donald TrumpDonald TrumpTrump hails Arizona Senate for audit at Phoenix rally, slams governor Arkansas governor says it's 'disappointing' vaccinations have become 'political' Watch live: Trump attends rally in Phoenix MORE nominated — and the Republican-controlled Senate confirmed — 234 Article III judges to the federal bench. Only nine of these judges were Black, nine were Latinx, 13 were Asian American, and six were biracial or of another race. Out of 234 judicial nominees, 197 were white and 76 percent were men. Only about 25 percent of current federal judges are people of color, far below their 40 percent share of the U.S. population, and only 33 percent are women. The federal judiciary does not look like America.  

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This lack of diversity on the bench has garnered some — albeit not enough — attention, including a hearing in the U.S. House of Representatives this past spring. During that hearing, Judge Edward M. Chen of the U.S. District Court for the Northern District of California identified four reasons he believes a diverse judiciary is essential to a fair and just judiciary: promotion of “trust and confidence of the public” in courts’ decisions; creating opportunities for judges to learn from one another’s unique experiences and perspectives; facilitating “better court governance;” and improving “the quality of decision-making.” 

Less attention has been paid to the alarming lack of diversity in the pool of private arbitrators responsible for resolving a growing number of civil cases. A recent study by the American Association for Justice (AAJ) shined a telling light on this problem. Similar to, if not worse than the federal bench, 88 percent of arbitrators are white, and 77 percent are men.   

The lack of diversity in private arbitration is particularly concerning. The courthouse doors are closed for more than 50 percent of employees and consumers through forced arbitration clauses in employment, credit, and consumer contracts. These clauses are often signed when the employee or consumer has little or no bargaining power and may be unaware of the clause’s presence in the contract. The effect of these arbitration clauses is to force employees and consumers to forego their often constitutionally guaranteed right to have a jury of their peers decide their claims. 

As the study of arbitrators reveals, employees and consumers are instead forced to bring their claims before private arbitrators who are overwhelmingly male, overwhelmingly white, and often chosen by the same companies the employees or consumers are suing. This is a recipe for biased and sclerotic decision-making that harms the public’s trust in and credibility of this alternative system of so-called justice. 

According to the AAJ study, this lack of diversity among arbitrators is only compounded by the fact that women and Black litigants are more likely than men and white litigants to be subject to forced arbitration clauses. This means that an overwhelmingly white and male pool of arbitrators is deciding cases involving sexual harassment and racial discrimination. They have little personal experience and about which their unexamined biases may predispose them to doubt.  

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As Judge Chen recounted in his testimony about the value of having judges of different races on the bench, “a witness’s testimony may seem more credible if it is consistent with the judge’s knowledge or experience, and, conversely, less credible if it remains outside the judge’s experience.” The same is undoubtedly true for private arbitrators. 

Given the numerous biases and marked power imbalances present in these private arbitration arrangements, it’s not surprising that the likelihood of a plaintiff succeeding is vanishingly small. As the AAJ study notes, “A consumer is more likely to be struck by lightning than win a monetary award in forced arbitration.” 

For the federal judiciary, addressing the lack of diversity begins with nominating more women and people of color to the bench. In its early days, the Biden administration has answered this call to action, with five out of six of its confirmed nominees being people of color and four out of the six being women. This is not enough to change the balance of the federal judiciary, but it is a necessary first step. 

For arbitrators, the path toward greater diversity and greater fairness for parties involved in arbitration is less straightforward. Traditional feeders into arbitrator positions are white and male-dominated areas of the law. Even when women and arbitrators of color are available, parties, particularly corporate defendants, will choose white men, likely calculating that their odds of prevailing will be better. To address this, private arbitration firms such as the American Arbitration Association, JAMS, and the Financial Industry Regulatory Authority must make more significant commitments to hiring women and people of color and preventing parties from using an arbitrator’s race or gender as a criterion for selection. 

More importantly, Congress must address the U.S. Supreme Court’s string of decisions over the past decade that misinterpret the Federal Arbitration Act in a way that gives companies oversized power to force employees and consumers into arbitration. The FAIR Act (Forced Arbitration Injustice Repeal), which was introduced in the House, eliminates forced arbitration clauses in consumer, antitrust, employment, and civil rights cases while preserving the right to choose arbitration if the parties so desire.  

In addition to diversifying the pool of private arbitrators, the trend towards forced arbitration must be reversed if justice is to be achieved. Employees’ and consumers’ rights to a jury trial must be restored to mitigate the distorting effect of a racially homogenous private arbitration industry. Otherwise, forced arbitration needs to be rightly described not as an alternative route to justice but as a road to skirt justice for companies and employers.  

Christopher Wright Durocher is the senior director of Policy and Program at the American Constitution Society.