	Introduction

Under a growing number of consumer and employment agreements, companies are requiring disputes to be resolved through arbitration, a method of dispute resolution involving a neutral, private third party, rather than a judicial proceeding. While arbitration is often viewed as a faster and less expensive alternative to litigation, consumer advocates and others maintain that mandatory arbitration agreements create one-sided arrangements that deny consumers and employees advantages afforded by a judicial proceeding, such as the availability of a jury trial. The Federal Arbitration Act (FAA or the Act) was enacted in 1925 to ensure the validity and enforcement of arbitration agreements in any "maritime transaction or ... contract evidencing a transaction involving commerce[.]" The U.S. Supreme Court (Court) has recognized the FAA as evidencing "a national policy favoring arbitration." The application of the FAA, however, particularly in light of various state law requirements and the use of different types of arbitration agreements, has raised numerous legal questions and been the subject of several cases before the Court. Concern over a perceived lack of "meaningful choice" to decide whether to submit a claim to arbitration has also spurred recent federal regulatory action, as well as legislation that would amend the FAA to render pre-dispute arbitration agreements unenforceable. This report examines the FAA and reviews the Court's decisions involving the statute's preemption of state law requirements. The report also explores the Court's decisions involving mandatory arbitration agreements that prohibit a consumer or employee from maintaining a class or collective action. In its October 2017 term, the Court will consider three consolidated cases that challenge such agreements on the grounds that they violate the right to engage in "other concerted activities" under the National Labor Relations Act (NLRA). The question of whether the FAA preempts a state law or judicial rule is a subject of recurring litigation that has come before the Court more than a dozen times. In these cases, the Court has routinely held that the FAA supersedes state requirements that restrain the enforceability of mandatory arbitration agreements. The CFPB final rule circumscribes the use of mandatory arbitration agreements in two main ways. Examples include the following:
Arbitration Fairness Act of 2017 ( H.R. 1374 / S. 537 ).
Arbitration is a method of legal dispute resolution in which a neutral, private third party, rather than a judge or jury, renders a decision on a particular matter. Under a growing number of consumer and employment agreements, companies have come to require arbitration to resolve disputes. While arbitration is often viewed as an expeditious and economical alternative to litigation, consumer advocates and others contend that mandatory arbitration agreements create one-sided arrangements that deny consumers and employees advantages afforded by a judicial proceeding.
The Federal Arbitration Act (FAA) was enacted in 1925 to ensure the validity and enforcement of arbitration agreements in any "maritime transaction or ... contract evidencing a transaction involving commerce[.]" The U.S. Supreme Court (Court) has recognized the FAA as evidencing "a national policy favoring arbitration." The application of the FAA, however, particularly in light of various state law requirements and the use of different types of arbitration agreements, has raised numerous legal questions and been the subject of several cases before the Court.
The question of whether the FAA preempts a state law or judicial rule is a subject of frequent litigation. In these cases, the Court has routinely held that the FAA supersedes state requirements that restrain the enforceability of mandatory arbitration agreements. This report examines the FAA and reviews the Court's decisions involving the statute's preemption of state law requirements. The report also explores the Court's decisions involving mandatory arbitration agreements that prohibit a consumer or employee from maintaining a class or collective action. In its October 2017 term, the Court will consider three consolidated cases that challenge such agreements on the grounds that they violate the right to engage in "other concerted activities" under the National Labor Relations Act (NLRA).
Finally, concern over a perceived lack of "meaningful choice" to decide whether to submit a claim to arbitration has prompted regulatory activity, as well as legislation that would amend the FAA to render certain types of pre-dispute arbitration agreements unenforceable. The report discusses some recent examples of federal regulatory action that aim to restrict the use of mandatory arbitration in the consumer arena, and reviews bills like the Arbitration Fairness Act of 2017 (H.R. 1374/S. 537), which would prohibit the enforcement of an arbitration agreement that requires arbitration for an employment, consumer, antitrust, or civil rights dispute if the agreement was executed prior to the dispute's occurrence.