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The American legal system is built on the right to your day in court. This principle, based in the Constitution, evokes images of citizens presenting their case before a jury of their peers – a cornerstone of democratic justice.
Yet for tens of millions of Americans, this right has been quietly and systematically replaced by a different system, one often agreed to unknowingly in the fine print of a cell phone contract, employment application, or credit card agreement.
This parallel system is called forced arbitration, and its rise has created a profound clash with one of the nation’s oldest legal guarantees.
Are Americans trading a constitutional right for access to the basic goods, services, and jobs of modern life?
Your Constitutional Right to a Jury
At the heart of this debate is a core component of the Bill of Rights, an amendment designed to protect citizens in civil – not criminal – disputes.
What the Constitution Guarantees
The Seventh Amendment to the U.S. Constitution reads: “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any court of the United States, than according to the rules of the common law.”
This text contains two distinct but related protections.
The first part is the Preservation Clause: “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” This clause establishes the types of cases that require a jury. The threshold of twenty dollars, while seemingly trivial today, has been preserved in its original form and underscores the Framers’ intent to make this right broadly available.
The second part is the Re-examination Clause: “…and no fact tried by a jury, shall be otherwise re-examined in any court of the United States, than according to the rules of the common law.” This prevents federal judges from simply discarding a jury’s factual findings and substituting their own judgment, ensuring the finality and authority of a jury’s verdict.
A Revolutionary Tool
The right to a civil jury wasn’t a novel idea in 1791 – it was inherited from English common law and forged in the crucible of colonial resistance. In medieval England, juries were composed of ordinary people, inexperienced in legal matters, who were tasked with making decisions.
Centuries later, in the American colonies, this institution took on a revolutionary character. As the British Parliament asserted its authority to impose laws from across the ocean, colonial juries became powerful tools of defiance, often nullifying ordinances passed by the Crown that they deemed unjust.
This history powerfully informed the Constitutional Convention debates. The Federalists, concerned with creating a stable national economy, worried that state civil juries, which often sided with debtors, would undermine contract law.
However, the Anti-Federalists insisted on including civil jury rights in the new federal constitution. They saw it as an essential democratic check on the new government’s power, arguing it would be effective defense against potential “overreach and corruption from the legislative, executive, and judicial branches.”
More Than Just Procedure
This historical context reveals that the Seventh Amendment was conceived as more than a procedural convenience for resolving private disputes. It was intended as a structural element of American democracy.
By placing a panel of ordinary citizens between the state and the individual, the jury was designed to inject community values into the law and serve as a “critical bulwark against governmental overreach and tyranny.”
Therefore, any mechanism that systematically diverts disputes away from juries doesn’t merely alter a process for individuals – it potentially weakens a democratic institution designed to protect citizens from concentrated power, whether governmental or corporate.
Constitutional Limits
Despite its foundational importance, the Seventh Amendment’s application has specific and often complex limitations.
First, the right to a civil jury trial is a right in federal court only. The Supreme Court has never “incorporated” this right to apply to the states through the Fourteenth Amendment, as it has with most other Bill of Rights provisions.
This makes the Seventh Amendment unusual. While nearly every state has a right to a civil jury trial in its own constitution, the federal guarantee doesn’t extend to state court proceedings adjudicating state law.
Second, the right applies only to “Suits at common law.” This seemingly archaic phrase is key to understanding the amendment’s scope. At the time of ratification in 1791, the English legal system had two main types of courts: courts of law and courts of equity.
Courts of law handled disputes seeking “legal” remedies, which primarily meant monetary damages. These cases were heard by juries.
Courts of equity handled disputes seeking “equitable” remedies, such as injunctions (court orders to stop doing something) or specific performance (court orders to fulfill contracts). These cases were decided by judges alone.
The Supreme Court has consistently held that the Seventh Amendment was intended to preserve this historical distinction. To determine if a jury is required for a modern case, courts perform a historical test: they look at whether the case and remedy sought are analogous to the kinds of cases tried in English common law courts in 1791.
This test applies even to rights created by modern federal statutes. For example, if a federal law prohibits housing discrimination and allows victims to sue for damages, that’s considered a “legal” remedy, and defendants have rights to jury trials.
The Rise of Forced Arbitration
While the Seventh Amendment preserves the public court system, a parallel, private system of justice has grown to handle vast numbers of civil disputes. This system is known as arbitration.
Defining the Terms
Arbitration is a form of alternative dispute resolution where parties in a dispute present their case to a neutral third party, known as an “arbitrator” or panel of arbitrators, instead of to a judge and jury. The arbitrator hears evidence and arguments from both sides and then issues a decision.
Binding Arbitration means the arbitrator’s decision is final and legally enforceable in court. Crucially, the grounds for appealing an arbitrator’s decision are extremely narrow, often limited to proving corruption or fraud on the arbitrator’s part, not simply that the arbitrator made a mistake of fact or law.
“Forced” or “Mandatory” Arbitration is the practice where a business requires consumers or employees to agree to use binding arbitration for any future disputes as a condition of receiving a service or getting a job. These agreements are called “pre-dispute” because they’re signed before any conflict has arisen.
Critics use the term “forced” to emphasize that these are typically presented in “take-it-or-leave-it” contracts where individuals have no real bargaining power to negotiate the terms.
The Fine Print in Your Life
Forced arbitration clauses have become nearly ubiquitous in modern commerce. They’re commonly found buried in the fine print of contracts for:
- Employment agreements
- Credit cards and bank accounts
- Cell phone services
- Car loans and leases
- Insurance policies
- Nursing home admissions
- Home-building contracts
- Retirement and investment accounts
A 2020 Consumer Reports study found that 60 percent of popular products it reviewed included arbitration clauses.
The pervasiveness of these clauses means that a majority of Americans have likely agreed to them, often without realizing it. Studies confirm that most people are unaware they have waived their constitutional right to a jury trial because the clauses are hidden in lengthy and difficult-to-understand legal documents.
The Class Action Killer
Perhaps the most consequential feature of modern forced arbitration clauses is that they’re almost always paired with a class action waiver.
A class action is a lawsuit in which a large group of people collectively bring a claim to court. This tool is essential for addressing widespread, low-dollar harm. For instance, if a bank illegally charges millions of customers a $10 fee, it’s not economically practical for any single customer to hire a lawyer and sue for $10. A class action allows them to band together to hold the company accountable for the millions of dollars it wrongfully took.
The class action waiver in a forced arbitration clause prohibits this. It forces every individual to bring their claim separately in a private arbitration proceeding.
For most small-dollar claims, this makes pursuing justice impossible. Critics argue this effectively grants corporations immunity for systemic misconduct that harms millions of people, as long as the harm to each individual is small enough to discourage a solo fight.
Can You Opt Out?
In some instances, consumers and employees have a very narrow window to preserve their right to go to court. Some contracts contain an opt-out provision, which typically allows individuals to reject the arbitration clause by sending written notice to the company within a specific timeframe, often 30 to 60 days after signing the agreement.
However, this requires a level of diligence that few possess. One must first find and understand the clause in the fine print and then follow the specific, often burdensome, instructions for opting out, such as sending a physical letter via mail.
Because this opportunity is so easily missed, the vast majority of people bound by these agreements never exercise their chance to opt out.
The Law That Changed Everything
The legal foundation that allows companies to enforce these arbitration clauses is a nearly century-old law, the Federal Arbitration Act of 1925 (FAA). The story of the FAA is one of a statute whose modern application has expanded far beyond what its original drafters likely ever conceived.
Original Intent: A Law for Merchants
The FAA was enacted in an era when courts were deeply hostile to arbitration agreements. This hostility was a relic of English judicial tradition, where judges were reluctant to give up their jurisdiction (and the fees that came with it).
In the burgeoning American economy of the early 20th century, business communities and trade associations campaigned for a law that would make arbitration agreements between commercial entities enforceable. They sought a faster, more efficient way to resolve contract disputes with their peers, avoiding the expense and delay of litigation.
The FAA was thus passed to put arbitration agreements “upon the same footing as other contracts.” Its purpose was to ensure that when two businesses of relatively equal bargaining power agreed to arbitrate, the courts would honor that agreement.
The legislative history shows that the law was primarily intended for business-to-business disputes. In fact, after labor advocates raised concerns, the drafters explicitly amended the text to exclude “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from the FAA’s scope.
For decades, its application remained largely confined to this commercial context.
The Supreme Court’s Transformation
Beginning in the 1980s, a series of Supreme Court decisions dramatically reinterpreted and expanded the FAA’s power, transforming it from a procedural rule for merchants into a formidable tool for enforcing arbitration on consumers and employees.
Federal Power Ascendant (Southland Corp. v. Keating, 1984): The Court ruled that the FAA established a national policy favoring arbitration that preempts (or overrides) conflicting state laws. In this case, a California law that sought to keep certain franchise disputes in court was struck down.
This was a pivotal moment, as it prevented states from carving out protections for their citizens and established the FAA as the supreme law of the land on arbitration.
Statutory Rights Become Arbitrable (Gilmer v. Interstate/Johnson Lane Corp., 1991): The Court held that claims arising from federal statutes, in this case the Age Discrimination in Employment Act, could be subject to compulsory arbitration.
The ruling stated that by agreeing to arbitrate a statutory claim, a party doesn’t forgo the substantive rights afforded by the statute, but simply submits their resolution to an arbitral, rather than judicial, forum. This decision opened the floodgates for employers to force claims of discrimination, harassment, and other civil rights violations into private arbitration.
The Class Action Waiver is Validated (AT&T Mobility v. Concepcion, 2011): This was arguably the most consequential decision for consumers. A California couple tried to bring a class action lawsuit against AT&T over a deceptive “free phone” promotion.
California courts had ruled that the class action waiver in AT&T’s contract was unconscionable and thus unenforceable under state law. In a landmark 5-4 decision, the Supreme Court reversed, holding that the FAA preempted California’s rule.
The Court reasoned that requiring class-wide arbitration was inconsistent with the FAA’s goal of promoting streamlined, efficient, bilateral arbitration. This decision gave corporations a green light to use arbitration clauses to eliminate the threat of consumer class action lawsuits.
Making it Official for Workers (Epic Systems Corp. v. Lewis, 2018): The Court extended the logic of Concepcion to the employment context. It held that employers could enforce arbitration agreements containing class and collective action waivers against their employees.
This was despite language in the National Labor Relations Act (NLRA) that explicitly protects the right of employees to engage in “concerted activities” for “mutual aid or protection,” which lower courts had interpreted as protecting the right to file group lawsuits. The Supreme Court’s 5-4 majority found that the FAA’s mandate to enforce arbitration agreements as written took precedence.
A Judicial Creation
The FAA as it exists and functions today – a powerful legal instrument used to enforce pre-dispute arbitration clauses in contracts of adhesion against individual consumers and employees, complete with class action waivers – is largely the product of these judicial interpretations.
The Court’s consistent prioritization of a “national policy favoring arbitration” has transformed the 1925 statute into what some legal scholars call a “super-statute,” one that holds a status above other state and federal laws and has effectively facilitated the mass waiver of the Seventh Amendment right to a jury trial.
This raises profound questions about the balance of power between the judiciary, Congress, and the states, and whether a statute has been interpreted in a way that undermines a constitutional protection.
The Case for Arbitration
Proponents of arbitration, including business groups like the U.S. Chamber of Commerce and arbitration service providers like the American Arbitration Association (AAA) and JAMS, argue that it’s a superior method of dispute resolution that benefits all parties, not just corporations.
They present a case centered on efficiency, cost, expertise, and finality.
Speed and Efficiency
The most frequently cited benefit of arbitration is its speed. Court litigation can be slow, with cases often taking years to reach trial due to backlogged dockets and complex procedural rules.
Arbitration, by contrast, is designed to be much faster. The AAA reports that, on average, arbitration is three times faster than litigation in U.S. District Courts. Hearings can be scheduled based on the parties’ convenience rather than a rigid court calendar, leading to resolutions in a matter of months.
Lower Cost
By streamlining the process and limiting costly procedures like extensive discovery, arbitration can be significantly less expensive than going to court. Reduced legal fees, fewer court filings, and quicker resolution time contribute to lower overall expenses for both sides, making it attractive for businesses and individuals looking to manage costs.
Expertise of the Decision-Maker
Unlike in court, where a case may be assigned to a judge with no specific background in the subject matter and decided by a jury of laypeople, arbitration allows the parties to select an arbitrator with specialized expertise.
For complex disputes involving finance, construction, intellectual property, or technology, having a decision-maker who understands the industry nuances can lead to more sophisticated and well-informed outcomes.
Confidentiality
Court proceedings are public record. Arbitration proceedings are private and confidential. This is a major advantage for businesses that want to protect their reputation, trade secrets, or sensitive financial information from public disclosure. It can also be beneficial for individuals in sensitive employment disputes.
Flexibility and Informality
The arbitration process is less formal than a court trial. The parties can agree to tailor procedural rules, timelines, and formats to suit their specific needs. The strict rules of evidence that apply in court are often relaxed, which can simplify the presentation of a case and make the process less intimidating.
Finality
Arbitration awards are final and binding, with very limited grounds for appeal. While critics see this as a flaw, proponents view it as a key benefit. It provides certainty and closure, preventing disputes from dragging on for years through multiple rounds of costly appeals, which is common in the court system.
From this perspective, arbitration isn’t a subversion of justice but an improvement upon it – a modern, efficient, and expert-driven alternative that serves the interests of a fast-paced economy and provides a pragmatic way to resolve conflicts.
The Case Against Forced Arbitration
Critics of forced arbitration, including a wide coalition of consumer advocates, civil rights groups, and employee rights organizations like the National Employment Lawyers Association (NELA), argue that the system is fundamentally unfair and undermines basic American legal principles.
Their case rests on the loss of constitutional rights, systemic bias, secrecy that enables corporate wrongdoing, and procedural disadvantages that stack the deck against individuals.
Loss of Constitutional Rights
The primary and most fundamental objection is that forced arbitration clauses compel individuals to waive their Seventh Amendment right to trial by jury, often without their knowledge or meaningful consent.
Because these clauses are presented in non-negotiable, “take-it-or-leave-it” contracts, critics argue there’s no true agreement, only coercion.
A Rigged Game: The “Repeat Player” Effect
The arbitration system is structurally biased in favor of corporations. Companies are “repeat players” who are constantly involved in arbitration, while consumers or employees are typically “one-shot players.”
This creates two problems. First, companies develop an information advantage, tracking arbitrators’ records to select those who are more likely to rule in their favor.
Second, arbitrators have a powerful financial incentive to favor the corporate side, as their future income depends on being selected for more cases by these repeat players.
Research from Stanford University found this bias to be significant, estimating that customers would receive substantially higher awards if arbitrators were selected randomly.
Secrecy Breeds Immunity
The confidentiality prized by businesses is viewed by critics as a mechanism for concealing patterns of illegal or harmful behavior from the public and from regulators.
When disputes over defective products, widespread fraud, or systemic workplace discrimination are resolved in secret, there’s no public record. This prevents other victims from learning they’re not alone, allows the company to avoid accountability, and ensures that no legal precedent is set to guide future conduct or protect others.
Prohibitive Costs and Procedural Hurdles
While proponents claim arbitration is cheaper, for individuals it can be prohibitively expensive. Unlike in court, where the judge and jury are paid by the state, individuals in arbitration may have to pay thousands of dollars in filing fees and a share of the arbitrator’s hourly or daily rate.
Furthermore, corporations have begun engineering new tactics to block claims, such as adding complex pre-dispute requirements or simply refusing to pay their share of the arbitration fees, bringing the process to a halt and leaving the individual with no path to justice.
Limited Discovery
The process of gathering evidence, known as discovery, is often severely restricted in arbitration. Without the ability to take depositions or request key internal documents, it can be nearly impossible for an employee to prove a discrimination claim or for a consumer to uncover evidence of a widespread defect or scam.
Lower Win Rates and Awards
Data consistently shows that individuals fare much worse in arbitration than in court. Studies have found that consumers and employees win their cases far less frequently and, when they do win, the monetary awards are significantly lower than what juries award.
One analysis concluded that a consumer is more likely to be struck by lightning than to win a monetary award in forced arbitration.
These criticisms paint a picture of a “shadow justice system” that operates outside public view, lacks the procedural safeguards of courts, isn’t bound by precedent, and is structurally tilted in favor of the powerful party that drafts the contract.
This arrangement, critics contend, isn’t an “alternative” to the court system but a replacement of public law with private power, fundamentally undermining the rule of law itself.
Litigation vs. Arbitration: Side by Side
The abstract arguments for and against forced arbitration become clearer when comparing its practical features side-by-side with the traditional court system. For an individual facing a dispute, the differences are stark and consequential.
| Feature | U.S. Court System (Litigation) | Forced Arbitration System |
|---|---|---|
| Decision-Maker | Impartial Judge and/or a Jury of Peers from the community | One or more private Arbitrator(s), often chosen by the parties from a list provided by a for-profit company |
| Public Access | Proceedings and records are public, promoting transparency and accountability | Proceedings and outcomes are private and confidential, which can hide patterns of misconduct |
| Right to Appeal | Generally available to a higher court to correct legal errors | Extremely limited; decisions are final and binding even if the arbitrator makes a legal or factual error |
| Class Actions | Permitted, allowing many individuals with small claims to band together | Typically prohibited by a “class action waiver” in the contract, forcing individual claims |
| Rules of Evidence | Formal rules of evidence and procedure apply, ensuring fairness and reliability | Informal process; arbitrator is not bound by strict rules of evidence or procedure |
| Discovery | Extensive rights to gather evidence (depositions, document requests) from the opposing party | Discovery is often severely limited or at the discretion of the arbitrator, making it hard to prove a case |
| Cost for Individual | Court filing fees; the judge and jury are paid by the state | Filing fees plus a share of the arbitrator’s fees, which can be thousands of dollars per day; potential travel costs |
| Legal Precedent | Court decisions can create binding precedent that applies to future cases | Arbitration awards have no precedential value and do not guide future decisions |
The Political Pushback Begins
After decades of judicial expansion, the battle over forced arbitration has increasingly shifted to legislative and political arenas. A series of high-profile events and new laws have begun to challenge the status quo, suggesting a potential realignment in how this issue is perceived and regulated.
A #MeToo Breakthrough
The most significant legislative change to the FAA in decades came in 2022 with the passage of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA).
The #MeToo movement brought to light numerous stories of how forced arbitration and confidentiality clauses were used to silence survivors of workplace harassment and assault, shielding perpetrators and enabling patterns of abuse.
This public outcry changed the political dynamic. The EFAA passed with overwhelming bipartisan support and was signed into law by President Biden on March 3, 2022.
The law amends the FAA to give individuals who allege sexual assault or sexual harassment the choice to file their case in court, even if they previously signed a pre-dispute arbitration agreement. The decision rests with the person making the allegation.
The passage of the EFAA has created new legal questions that courts are now grappling with. A key issue is whether the law invalidates arbitration for the entire “case” (including related claims like wage theft or racial discrimination) or only for the specific sexual harassment “claim.”
This distinction is critical and will continue to be litigated across the country.
The Next Frontier: The FAIR Act
Building on the momentum of the EFAA, advocates have pushed for much broader reform: the Forced Arbitration Injustice Repeal (FAIR) Act.
This bill would effectively end pre-dispute forced arbitration for all employment, consumer, antitrust, and civil rights disputes. It wouldn’t ban arbitration itself, but would ensure that the decision to arbitrate is made knowingly and voluntarily after a dispute has arisen, restoring choice to the individual.
The FAIR Act has passed the House of Representatives in previous congressional sessions but has consistently failed to overcome the 60-vote filibuster threshold in the Senate, highlighting the deep partisan divide on the issue.
Its reintroduction in 2023, along with more targeted bills like the Ending Forced Arbitration of Race Discrimination Act, shows continued legislative effort to chip away at the dominance of forced arbitration.
The Executive Branch Weighs In
In 2017, the Consumer Financial Protection Bureau (CFPB), after years of study, issued a rule aimed at curbing the use of forced arbitration in consumer financial contracts.
The rule would have prohibited financial companies from using arbitration clauses to block consumer class action lawsuits. However, before the rule could take full effect, it was swiftly nullified by a Republican-controlled Congress using the Congressional Review Act (CRA), a tool that allows lawmakers to overturn federal agency regulations with a simple majority vote.
This episode starkly demonstrated the powerful political and lobbying forces aligned in defense of the arbitration status quo.
States Fight Back (and Often Lose)
Several states, including California, New York, and Washington, have passed their own laws attempting to limit or ban forced arbitration, particularly in the context of employment discrimination and harassment claims.
However, these state-level efforts have faced an uphill battle. Consistent with Supreme Court precedent, federal courts have frequently struck down these state laws, ruling that they’re preempted by the Federal Arbitration Act.
This ongoing legal friction underscores the supremacy of the federal pro-arbitration policy and the difficulty states face in enacting stronger consumer and worker protections.
The successful passage of the EFAA, however, signals a crucial shift. For decades, the expansion of arbitration was a quiet project of the judiciary. The EFAA’s bipartisan success, fueled by the powerful public narrative of the #MeToo movement, reframed the issue from a technical business law matter into a more resonant question of civil and workers’ rights.
This provides a potential playbook for future reforms. While the Supreme Court has built a formidable legal fortress around its interpretation of the FAA, Congress always retains the power to amend the statute itself.
The future of the Seventh Amendment right in the face of forced arbitration may now be decided less in the courtroom and more in the halls of Congress. The question is whether the American public will demand the return of their day in court, or continue to accept a system where constitutional rights disappear in the fine print of everyday contracts.
What started as a business-friendly law to help merchants resolve disputes has evolved into a mechanism that affects nearly every aspect of American life. From the cell phone in your pocket to the job that pays your bills, chances are you’ve already agreed to give up your right to a jury trial.
The challenge now is whether democratic institutions can respond to restore the balance between efficiency and rights, between private resolution and public accountability. The stakes couldn’t be higher – they involve nothing less than the future of civil justice in America.
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