By Anthony J. Meyer. Full Text.
Long before this Article’s germination, Professor David Schwartz quipped that the Federal Arbitration Act (FAA) “is unconstitutional . . . and no one has noticed.” The observation is both delightfully sardonic and—for a variety of reasons, including those expounded in this Article—true. Professor Schwartz asserts a brilliantly creative thesis regarding federal court decisional law as applied in state courts, arguing that though state courts are not bound by Congress’ control, they nonetheless enforce the FAA as though they were. Yet in the nearly two decades since Professor Schwartz put forth his thesis, it appears the argument has not caught on.
This Article asserts a different challenge to the FAA’s constitutional validity concerning the separation of power between the judicial and legislative branches at the federal level, not the divi- sion between the states and the federal government. The thesis parallels that of Professor Schwartz, though, because it is largely theoretical rather than practical, for it is almost unthinkable that any court—let alone the Supreme Court of the United States—would suddenly conclude the FAA violates the United States Constitution. After all, the FAA has withstood constitutional challenges for decades, including some that were straightforward and (seemingly) meritorious, such as whether Congress has the power to preempt the states’ contract laws. The Court, furthermore, has emerged as an ardent supporter of the FAA and a broader policy favoring nonjudicial arbitration. The reasons for the FAA’s longevity are complicated, and a full dissertation is beyond the scope of this Article. But there can be no doubt that policies favoring arbitration are so entrenched in the American economy and American jurisprudence that any uncertainty as to the enforceability of arbitration agreements would wreak chaos in both systems. Indeed, Supreme Court decisions broadly favoring arbitration reached a fever pitch around the turn of the twenty-first century, when a national, newly connected economy and stress on overloaded federal court dockets both reached an apogee.
But the constitutional underpinnings of the Supreme Court’s approach deserve attention, even skepticism. This Article argues the FAA violates the Constitution because it creates a prohibited rule of decision, whereby Congress directs courts to make a judicial finding when they are presented with a certain set of facts. For this reason, the FAA violates the separation of powers principles in the United States Constitution.