As the Supreme Court pondered Rent-A-Center West v. Jackson, a case in which an employee challenged an employment agreement that required the parties to arbitrate any disputes, I wondered if the Court’s holding would provide any clues on the future of mandatory arbitration clauses in other contexts (see “Man, Dat Ornery Arbitration”). One such context is, of course, brokerage industry disputes.
Whether the Court provided this guidance is subject to debate as it decided Rent-A-Center with one what might consider judicial hair-splitting. The Court held that a challenge to the contract as a whole must be brought before an arbitration panel, but a challenge to the agreement’s provision to arbitrate could be waged in court. On the one hand, the Court did not strike down an arbitration agreement imposed by a party with greater bargaining power (an employer) on a party with lesser bargaining power (an employee). O n the other hand, it signaled an instance (albeit, a limited one) in which a party can get part of his or her dispute out of arbitration and into court, suggesting that these agreements are not completely iron-clad.
So, is mandatory arbitration an arbitrary mandate? For now, I am content to have members of Congress and other interest groups (such as the National Association of Consumer Advocates) wage that battle. The reality is that, today, investors must litigate any issues concerning their financial advis...
