FORCED ARBITRATION AND THE FATE OF THE 7TH AMENDMENT THE CORE OF AMERICA’S LEGAL SYSTEM AT STAKE? R EPO R T OF THE 2 0 1 4 F O R UM FO R S TATE A PPELLATE C OU R T J UDGE S FORUM ENDOWED BY HABUSH HABUSH & ROTTIER S.C. FORCED ARBITRATION AND THE FATE OF THE 7TH AMENDMENT THE CORE OF AMERICA’S LEGAL SYSTEM AT STAKE? R EPO R T OF THE 2 0 1 4 F O R UM FO R S TATE A PPELLATE C OU R T J UDGE S FORUM ENDOWED BY HABUSH HABUSH & ROTTIER S.C. When quoting or reprinting any part of this report, credit should be given to the Pound Civil Justice Institute. Permission to reprint a paper should be requested from: Pound Civil Justice Institute 777 Sixth Street, NW, Suite 200 Washington, D.C. 20001 www.poundinstitute.org [email protected] The endower, Habush Habush & Rottier S.C., has no control over the placement of information in or the editorial content of the Report of the 2014 Forum for State Appellate Court Judges. Library of Congress Control Number Pending ISBN: 978-0-933067-24-0 ©2015 Pound Civil Justice Institute “If people think they still have the right to sue after signing a contract, that means they are clinging to something very deep—their right to bring an action that they don’t believe they could possibly have signed away.” —A judge attending the 2014 Forum “The courts are supposed to be the place where we get it right, where we see that all of the cards get played. I don’t think that is happening anymore. I don’t buy it for a second that arbitration is there to protect any consumer. It is not. It is there to protect the business model.” —A judge attending the 2014 Forum TABLE OF CONTENTS FOREWORD ......................................................................................................................................................................... 1 INTRODUCTION .................................................................................................................................................................. 3 WELCOME BY HONORABLE MARY ELLEN BARBERA, CHIEF JUDGE, MARYLAND COURT OF APPEALS .... 5 MORNING PAPER, ORAL REMARKS, AND COMMENTS ............................................................................................. 7 “The Demise of Deterrence: Mandatory Arbitration and the ‘Litigation Reform’ Movement” Professor Myriam Gilles, Cardozo Law School, Yeshiva University ................................................................... 7 Oral Remarks of Professor Gilles ....................................................................................................................... 29 Comments by Panelists, Response by Professor Gilles ...................................................................................... 33 LUNCHEON ADDRESS ..................................................................................................................................................... 47 “Consumer Understanding of Arbitration Clauses in Contracts: ‘Whimsy Little Contracts’ with Unexpected Consequences” Professor Jeff Sovern, St. John’s University School of Law .............................................................................. 47 AFTERNOON PAPER, ORAL REMARKS, AND COMMENTS ...................................................................................... 55 “State Court Authority Regarding Forced Arbitration After Concepcion” Professor Richard Frankel, Earl Mack School of Law, Drexel University ......................................................... 55 Oral Remarks of Professor Frankel ..................................................................................................................... 81 Comments by Panelists, Response by Professor Frankel ................................................................................... 85 THE JUDGES’ COMMENTS .............................................................................................................................................. 97 POINTS OF AGREEMENT ............................................................................................................................................... 151 APPENDICES .................................................................................................................................................................... 153 Faculty Biographies ......................................................................................................................................... 153 Judicial Attendees ............................................................................................................................................. 161 Forum Underwriters ......................................................................................................................................... 165 About the Pound Civil Justice Institute ........................................................................................................... 166 Officers & Trustees of the Pound Civil Justice Institute ................................................................................... 167 Papers of the Pound Civil Justice Institute ....................................................................................................... 168 FORCED ARBITRATION AND THE FATE OF THE 7TH AMENDMENT i FOREWORD The Pound Civil Justice Institute’s 22nd annual Forum for State Appellate Court Judges was held on July 26, 2014, in Baltimore, Maryland. As with all of every past Forum, it was both enjoyable and thought-provoking. In the Forum setting, judges, practicing attorneys, and legal scholars were able to consider the increasingly important issue of forced arbitration and its impact on Americans’ Constitutional right to trial by jury. The Pound Civil Justice Institute recognizes that the state courts have the principal role in the administration of justice in the United States, and that they carry by far the heaviest of our judicial workloads. We try to support them in their work by offering our annual Forums as a venue where judges, academics, and practitioners can have a frank, pertinent dialogue in a single day. These discussions sometimes lead to consensus, but even when they do not, the exercise is always fruitful. Our attendees always bring with them different points of view, and we make concerted efforts to include panelists with outlooks that differ from those of most of the Institute’s Fellows. That diversity of viewpoints always emerges in our Forum reports. Our Forums for State Appellate Court Judges have been devoted to many cutting-edge topics, ranging from the court funding crisis, to the decline of jury trial, to separation of powers and secrecy in litigation. We are proud of our Forums, and are gratified by the increasing attendance we have experienced since their inception, as well as by the very positive comments we have received from judges who have attended in the past. A full listing of the prior Forums and their content is provided in an appendix to this report, and their reports and papers—along with most of our other publications—are available free on our website, www.poundinstitute.org. The Pound Institute is indebted to many people for the success of the 2014 Forum for State Appellate Court Judges: • Professor Myriam Gilles and Professor Richard Frankel, who wrote academic the papers that framed our discussions; • the Honorable Mary Ellen Barbera, Chief Judge of the Court of Appeals of Maryland, for welcoming us to Baltimore; • our lunch speaker, Professor Jeff Sovern of St. John’s University School of Law, for briefing us on a new and important study of consumers’ understanding of mandatory arbitration provisions in contracts; • our panelists—Professor Andrew Popper, the Honorable Janice Holder, Archis Parasharami, Alan Gilbert, the Honorable Marilyn Kelly, the Honorable Simeon Acoba (ret.), Michael Weston, and Leslie Bailey; FORCED ARBITRATION AND THE FATE OF THE 7TH AMENDMENT 1 • the moderators of our small-group discussions—David Arbogast, Linda Atkinson, Kathryn Clarke, Mark Davis, Molly Hoffman, Betty Morgan, Barry Nace, Gale Pearson, Kathleen Flynn Peterson, Ellen Relkin, and John Vail—for helping us to arrive at the essence of the Forum, which is what experienced state court judges think about the issues we presented; • and the Pound Civil Justice Institute’s efficient and dedicated staff—Mary Collishaw, our executive director, and Jim Rooks, our consultant and Forum reporter—for their diligence and professionalism in organizing and administering the 2014 Judges Forum. It goes without saying that we appreciated the attendance of the distinguished group of judges who took time from their busy schedules so that we might all learn from each other. To echo the sentiments of Professor Popper, you judges are “the real architects of civil justice.” We hope you enjoy reviewing this report of the Forum, and that you will find it useful to you in your future consideration of matters relating to arbitration and trial by jury. Herman J. Russomanno President, Pound Civil Justice Institute, 2013-15 2 FORCED ARBITRATION AND THE FATE OF THE 7TH AMENDMENT INTRODUCTION On July 26, 2014 in Baltimore, Maryland, 144 judges representing 36 states took part in the Pound Civil Justice Institute’s 22nd annual Forum for State Appellate Court Judges. The judges examined the topic, “Forced Arbitration and the Fate of the Seventh Amendment: The Core of America’s Legal System at Stake?” Their deliberations were based on original papers written for the Forum by Professor Myriam Gilles of the Benjamin N. Cardozo School of Law,