Academic

Barnes on the Federal Arbitration Act & Erie

By Lawrence Solum

Richard L. Barnes (University of Mississippi) has posted Prima Paint Pushed Compulsory Arbitration Under the Erie Train (Brooklyn Journal of Corporate, Financial & Commercial Law, Vol. 2, No. 1, 2007) on SSRN.  Here is the abstract:

As the face of commerce changes, the law usually follows, albeit at some distance. The United States Supreme Court has recently stepped up the pace. In a line of cases, some old, some recent, but all feeding off of one another, the Court has held that challenges to agreements which contain arbitration provisions must go to the arbitrator first. Courts may hear formational challenges only where they challenge the arbitration provision alone. In the Supreme Court, arbitration, with its vast potential for abuse as well as for good, has found a friend.

The Court's doctrine of choice, severability, raises serious concerns for the hallmark decision, Erie Railroad Co. v. Tompkins. Erie's firm principle that federal courts may not (constitutionally) create a general federal common law is imperiled by the Court's use of severability. A recent en banc decision from the Ninth Circuit, offered in the form of an engaging dialogue between a majority judge and a dissenting judge, demonstrates where the Supreme Court has gone awry and offers a fix. The solution offered is an Erie-based zone of deference for state contract law that both, is constitutional and honors the spirit of the Federal Arbitration Act.

Full post as published by Legal Theory Blog on March 17, 2008 (boomark / email).