Analysis of Consumer Arbitration Agreements by Prof. David Horton and Industry Response

Title: Professor Challenges Interpretation of Consumer Arbitration Agreements in New Article

In a groundbreaking new article, Professor David Horton of the University of California, Davis, challenges the traditional interpretation of consumer arbitration agreements. His article, soon to be published in the Washington University Law Review, delves into key provisions frequently used in these agreements and argues for a more nuanced approach by the courts.

One of Prof. Horton’s main contentions is that courts have been misinterpreting the Federal Arbitration Act (FAA) by requiring arbitration clauses to be broadly construed. This, he argues, often leads to consumers being forced into arbitration for disputes that are not directly related to their original transaction with the company. Instead, Prof. Horton suggests that courts should adhere to the literal text of the FAA, which limits the statute’s application to disputes that “arise out of” the contract containing the arbitration clause.

Additionally, Prof. Horton addresses the issue of third parties who are not signatories to the arbitration agreement but are still defined as “parties” in the agreement. He argues that this “artificial privity” expands the scope of the arbitration clause unnecessarily, as many courts allow these third parties to enforce the agreement without meeting the stricter requirements of state law for third-party beneficiary status.

Mark Levin, Senior Counsel in the Consumer Financial Services Group, provides the industry response to Prof. Horton’s arguments, offering a different perspective on the use of arbitration agreements and class action waivers in consumer contracts. Alan Kaplinsky, Senior Counsel and former chair of the Consumer Financial Services Group, hosts the discussion.

Prof. Horton’s article promises to spark debate and potentially reshape the way courts interpret and enforce consumer arbitration agreements. Stay tuned for more developments in this evolving legal landscape.
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