Contrary to popular opinion, arbitration under the Federal Arbitration Act (FAA) is not intended to be forced or unfair, including in the employment context. Indeed, § 2 of the FAA permits courts to refuse enforcement of arbitration agreements on the basis of generally applicable state contract law defenses, such as unconscionability, in order to safeguard against potential abuse of the arbitral process. Yet decisions such as that of the United States Court of Appeals for the Seventh Circuit in Campbell v. Keagle threaten to nullify the FAA’s protections and reinforce the perception of arbitration as an unjust process. The district court in this case found that the parties’ employment arbitration clause was inordinately one-sided in the employer’s favor and that the offending provisions could not be severed under Illinois law to compel arbitration. Thus, the arbitration clause was unenforceable under § 2 of the FAA. The Seventh Circuit reversed, but not on the basis of state contract law. Rather, the court of appeals enforced the parties’ agreement to arbitrate on the basis of subsequent procedural provisions of the FAA, namely §§ 4 and 5. This Essay argues that the Seventh Circuit’s reliance on these provisions to circumvent the district court’s finding of unconscionability under § 2 of the FAA ignores the significance of the FAA’s internal sequencing. An arbitration agreement found unenforceable under § 2—the substantive section of the FAA— cannot escape its fate because of the Act’s subsequent procedural provisions. The Seventh Circuit’s decision also conflicts with Supreme Court jurisprudence and creates a circuit split regarding the interrelationship between §§ 2, 4, and 5 of the Act. This Essay concludes that while the Seventh Circuit enforced the parties’ arbitration agreement in Campbell v. Keagle, its reasoning does not benefit FAA arbitration. It sets a dangerous precedent for future cases involving unconscionable arbitration agreements and fuels the growing backlash against employment arbitration under the FAA.
Author
Associate Professor, University of Alberta Faculty of Law. The author thanks Professor Jeremy Telman for his helpful comments on an earlier draft.
Copyright 2022 by Tamar Meshel
Cite as: Tamar Meshel, Two Comes Before Four and Five: The FAA in Campbell v. Keagle, 117 Nw. U. L. Rev. Online 74 (2022), https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1325&context=nulr_online.