Miller arbitration study discussed in The New York Times
The New York Times reports that despite corporate executives praising arbitration clauses, companies are far less likely to use such clauses in contracts with each other than they are in contracts with consumers, according to a recent study co-authored by Stuyvesant P. Comfort Professor of Law Geoffrey Miller.
In the study, which appears as an article in the University of Michigan Journal of Law Reform, Professor Miller and co-authors Professors Theodore Eisenberg and Emily Sherwin of Cornell Law School compared arbitration clauses in telecommunications and financial services companies' consumer contracts with their use in the same firms’ non-consumer contracts. They found that more than three-quarters of the consumer agreements provided for mandatory arbitration but less than 10 percent of the firms’ material non-consumer, non-employment contracts included arbitration clauses.
These findings suggest that companies prefer to litigate disputes with peers but would rather arbitrate consumer disputes. The study’s co-authors believe the focus on consumer arbitration is an effort by companies to avoid class action lawsuits rather than promote fair and efficient dispute resolution, as companies often claim.
Arbitration provisions are a controversial topic. Congress has proposed legislation limiting their use in nursing home contracts, and the Supreme Court heard arguments on Oct. 6 in a case about the enforceability of arbitration agreements.