Offensive Arbitration

The standard critique of binding arbitration for consumer and employment disputes is that arbitration favors defendants. Arbitration often has reduced discovery, shortened statutes-of-limitations, limited information sharing, bans on class actions and other aggregate litigation. Thus, companies use arbitration defensively, as a shield to protect them from liability. This conventional narrative overlooks a troubling new trend in the corporate playbook: offensive arbitration. Offensive arbitration refers to companies using arbitration as a sword by bringing arbitration claims as plaintiffs against consumers and employees. In particular, companies bring offensive arbitration claims to enforce non-compete clauses and restrictive training repayment agreements against their employees, as well as to collect employee and consumer debt. Offensive arbitration gives rise to unique and different problems than those that plague defensive arbitration, problems that deserve further study. Companies may use offensive arbitration to chill employees from exercising their rights, to enforce illegal provisions that would be struck down if they were addressed by a court, to impose added costs and fees on employees, and to minimize procedural protections for individual, often pro se, consumer and employee defendants. Accordingly, offensive arbitration should face scrutiny from legislatures, courts, and arbitration providers. Lawmakers should consider various measures to address offensive arbitration abuses, such as expanding anti-Slapp statutes to address arbitration, giving state agencies greater supervisory authority over employment arbitration clauses, and encouraging arbitration providers to refuse to enforce invalid arbitration provisions against consumer and employee defendants.