A Risk-Based Approach to Mandatory Arbitration
![handle is hein.journals/orglr83 and id is 871 raw text is: SCOTI BAKER*
A Risk-Based Approach to
Mandatory Arbitration
n recent years, the Supreme Court has upheld contractual pro-
visions that require mandatory, binding arbitration of employ-
ment discrimination claims.' In the wake of these decisions,
many legal academics have condemned this practice, arguing that
the mandatory arbitration of discrimination disputes violates
public policy and possibly even due process.2 These critics assert
* Associate Professor of Law and Adjunct Assistant Professor of Economics, Uni-
versity of North Carolina at Chapel Hill. I thank participants at the Stanford/Yale
Junior Faculty Forum and faculty workshops at the University of Virginia and UNC
for helpful comments. I owe special thanks to my referees at the Forum, Judith
Resnik and Deborah Hensler. For comments and conversations, I thank Lou Bi-
lionis, Don Clifford, Marion Crain, Chris Drahozal, Adrienne Davis, Max Eichner,
Don Hornstein, Joe Kennedy, Kim Krawiec, Mitu Gulati, Doug Lichtman, Anup
Malani, Bill Marshall, Claudio Mezzetti, Eric Muller, Shawn Pompian, Jim Rossi,
Eric Talley, Bill Turnier and Steve Ware. Finally, I thank Rob Warner, John Marold,
and Rudy Kleysteuber for research assistance.
1 See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 109 (2001); Gilmer v. Inter-
state/Johnson Lane Corp., 500 U.S. 20, 27-30 (1991). This Article considers arbitra-
tion provisions that employees must sign as a condition of employment. Although
mandatory is perhaps a misnomer, I follow the literature and refer to these predis-
pute arbitration agreements as mandatory.
2 See, e.g., Thomas E. Carbonneau, Arbitral Justice: The Demise of Due Process in
American Law, 70 TUL. L. REV. 1945, 1967 (1996); Charles L. Knapp, Taking Con-
tracts Private: The Quiet Revolution in Contract Law, 71 FORDHAM L. REV. 761, 766
(2002); Jean R. Sternlight, Panacea or Corporate Tool?: Debunking the Supreme
Court's Preference for Binding Arbitration, 74 WASH. U. L.Q. 637, 643 (1996) [here-
inafter Sternlight, Panacea]; Jean R. Sternlight, Rethinking the Constitutionality of
the Supreme Court's Preference for Binding Arbitration: A Fresh Assessment of Jury
Trial, Separation of Powers, and Due Process Concerns, 72 TUL. L. REv. 1 (1997)
[hereinafter Sternlight, Constitutionality]; Katherine Van Wezel Stone, Mandatory
Arbitration of Individual Employment Rights: The Yellow Dog Contract of the
1990s, 73 DENV. U. L. REV. 1017, 1049 (1996); Christine M. Reilly, Comment,
Achieving Knowing and Voluntary Consent in Pre-Dispute Mandatory Arbitration
Agreements at the Contracting Stage of Employment, 90 CAL. L. REV. 1203, 1224
(2002); see also Sarah Rudolph Cole, Incentives and Arbitration: The Case Against
Enforcement of Executory Arbitration Agreements Between Employers and Employ-
ees, 64 UMKC L. REV. 449, 454 (1996); Geraldine Szott Moohr, Arbitration and the
Goals of Employment Discrimination Law, 56 WASH. & LEE L. REV. 395, 439
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A Risk-Based Approach to Mandatory Arbitration
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