Faculty Scholarship Digest

Sarah Rudolph Cole

 

Articles

Sarah Rudolph Cole (with Theodore H. Frank), The Current State of Consumer Arbitration, DISPUTE RES. MAG. 30 (Fall 2008).

In this article, Cole and her co-author vigorously contest the conclusions of Public Citizen, the consumer advocacy group, in a 2007 report (that received substantial media attention) that purported to demonstrate that consumer arbitration is bad for the “little guy.” Cole and her co-author criticize the Public Citizen report for selective use of data. In particular, they note that Public Citizen limited itself almost exclusively to “collection cases,” in which the consumer is the defendant. In these cases, they report that consumers do almost always lose, whether in arbitration or litigation, because the consumer does in fact have the credit card debt in question.

Reviewing other empirical studies, Cole and her co-author write that consumers actually prevailed in 32.1% of initiated arbitrations and, even when they lost, won reductions of their amounts owed in about one-third of the cases. Other studies they review show that consumers prevail more than half the time in consumer initiated cases and report satisfaction with the outcome about 70% of the time. In addition, Cole and her co-author note studies that show consumers prevail at a nearly 10% higher rate when they bring cases in arbitration as opposed to civil court (65% compared to 60%), whereas when the business brings the case, businesses prevail at roughly the same rate (75%) through either process. In addition, consumers paid lower fees in arbitration cases.

Cole and her coauthor conclude that the data, read fairly, suggests that “arbitration is a relatively inexpensive and fair mechanism that produces positive outcomes for consumers,” even without accounting for “the benefits to consumers through lower prices from mandatory binding arbitration clauses.”


Sarah Rudolph Cole, On Babies and Bathwater: The Arbitration Fairness Act and the Supreme Court’s Recent Arbitration Jurisprudence, 48 48 Hou. L. Rev. 457 (2011).

For the past decade, some federal legislators have attempted, without success, to amend the Federal Arbitration Act to restrict employers’ ability to bind employees to predispute arbitration agreements and, more recently, to bind consumers to arbitration for dispute settlement with businesses, such as financial or wireless service providers. The latest iteration of these efforts, the Arbitration Fairness Act, would largely eliminate predispute arbitration agreements in many contexts. While such legislation has languished, the U.S. Supreme Court has simultaneously been expanding arbitration’s reach. In this article Sarah contends that both sides of this argument are deeply flawed and proposes a middle ground that, she argues, will best represent the interests of consumers and employees.

Sarah, as she has done in previous work, gathers empirical evidence to support the view that in fact consumers, particularly those with substantial claims, receive similar or better results in arbitration than they would through court proceedings, at lower cost. Therefore, she argues, current efforts to amend the Arbitration Act to prohibit such resolutions are not a good idea. At the same time, however, Sarah notes that businesses also prefer arbitration agreements in order to avoid class actions. Arbitration is now a particular boon to such efforts because the Supreme Court, as Sarah details, has in the past two years essentially shut the door on class arbitration procedures. As a result, Sarah notes, “remedies for consumers with low value claims will no longer be available through the judicial system,” since it makes no sense to bring, say, a $30 claim even in arbitration, where the cost of obtaining the recovery will exceed the recovery. The article proposes a revised, less radical, version of the Arbitration Fairness Act that would preserve the general force of consumer arbitration provisions, but restore the possibility of class arbitration for low value claims.


Sarah Cole (w/Kristen M. Blankley), Empirical Research on Consumer Arbitration: What the Data Reveals, 4 PENN. ST. L. REV. 1051 (2009).

Public Citizen, a non-profit public interest organization, issued a report in 2007 that was sharply critical of the arbitration process as it used to resolve disputes between credit card companies and consumers. The Public Citizen report, which drew on a database of 34,000 arbitrations in California, concluded that “mandatory binding arbitration is a rigged game in which justice is dealt from a deck stacked against consumers,” and made a number of specific claims to support that conclusion.

In this article, Sarah and her co-author analyze the data underlying Public Citizen’s report and reach very different conclusions. The article contends that Public Citizen’s claims are exaggerated and, in truth, the “data reveals that the consumer arbitration process provides a more pro-consumer environment for claims adjudication than does the traditional court system.” In addition to demonstrating the gap between the data and the conclusions in the Public Citizen report (in part because the report paid little attention to settlements and to awards that were less than the amount the creditor sought), the article points to empirical evidence of the much greater speed with which claims are resolved in arbitration and the apparent conclusion of courts that the process is fundamentally fair. The article concludes with some suggestions about additional data that would shed further light on the fairness of consumer arbitration.


Sarah Rudolph Cole, Let the Grand Experiment Begin: Pyett Authorizes Arbitration of Unionized Employees’ Statutory Discrimination Claims, 14 LEWIS & CLARK L. REV. 861 (2010).

This article offers a full-throated defense on normative grounds of the Supreme Court’s 5-4 decision last year holding that collective bargaining agreements may contain arbitration clauses that require unionized employees to arbitrate statutory discrimination claims. Sarah anticipates academic attack on the decision on the grounds that labor arbitration will be a poor substitute for litigation in defending against discrimination and that union willingness to “bargain away minority members’ rights to the judicial forum is but one more sign of union bias against women and minorities.” The article vigorously contests both of these assertions.

Regarding the competence of labor arbitration and arbitrators to resolve federal statutory claims, Sarah surveys numerous prominent studies and informed opinions---from the authors of the leading arbitration treatise to Judge Harry Edwards---concluding that arbitrators are the equal of courts in resolving such claims. One study, for example, found that reversal rates of arbitrators by district courts on de novo review were no higher than reversal rates of district courts on appellate review in similar cases. As for the argument that unions might “sell out” the rights of their minority members for majority benefits, Sarah contends first that the conception of unions as sexist and racist organizations is divorced from contemporary reality. Citing a number of empirical sources, she argues that “[i]n the modern era, unions have, perhaps primarily for practical reasons, become the natural allies of the civil rights and women’s movements.”

Beyond that alignment of interests, the article points to statutory duties of fair representation and nondiscrimination by unions and, perhaps most importantly, contends that unions are best placed to negotiate favorable arbitration provisions and that “arbitration presents employees with their best opportunity to have their cases heard.” On this point, Sarah reviews studies of the results from nonunion employment arbitration both in comparison to union (labor) arbitration and to litigation in the antidiscrimination context, and finds support for the view that union members will be better off in arbitration.

Finally, the article discusses psychological reasons why union-members would be best-served by representation through repeat-player experts (the union) rather than by handling discrimination claims individually through litigation.


Books

Sarah R. Cole & Nancy H. Rogers (w/Craig A. McEwen, James R. Coben, and Peter N. Thompson), Mediation: Law, Policy & Practice (West 2012).

This outstanding three-volume treatise, which was published in its original award winning form in 1989, is now in only its third edition (the authors create annual supplements), so this publication is a significant event. The law and practice of mediation has, of course, grown exponentially over those 22 years, and there is a great quantity of new cases, statutes and empirical research for the authors to include. That sentence, though, understates the transformation of the field, and hence the substantial changes and additions to the treatise. As the authors note, when the book was first published, the primary issue was merely helping lawyers recognize mediation as a potential alternative to litigation or unassisted direct negotiation. Twenty years later, mediation has become a fundamental part of law practice, and the book must address its dramatic rise in use within courts, the training and qualifications of mediators, and the slew of litigation issues that arise from mediations, such as enforcement of settlements and breaches of confidentiality.

As a result, the treatise contains many new chapters and has undergone a substantial reorganization. One substantially revised chapter addresses the new Uniform Mediation Act, which was something the closing chapter of the last book called for. Five new chapters include coverage of the choice to mediate or not to mediate and its influences on the litigation process, a guide to the most commonly litigated mediation dispute—enforcement of settlement agreements, coverage of judicial power to compel mediation, as well as the law of sanctions, costs and attorney’s fees, coverage of malpractice, unauthorized practice and other ethical issues in the context surrounding mediation, coverage of key mediation advocacy themes, including “how best to manage the tension between mediation’s invitation for collaborative problem-solving and the necessity of protecting clients from exploitation,” and thorough review and discussion of the increasing body of social science research on mediation. In short, this is a substantial and consequential work deserving of its leading place in the field.