By: Kathryn Meyer
Arbitration Law Review, Senior Editor

1. Introduction

 

On November 28, 2018, Shawn Carter, better known as Jay-Z, filed a memorandum of law with the Supreme Court of New York in Manhattan, requesting a stay of arbitration citing the overwhelmingly white pool of available arbitrators as a violation of New York public policy that could potentially cause “irreparable harm” to Mr. Carter’s interests.[1]  Mr. Carter and his lawyers claimed that a lack of diverse arbitrators deprives “black litigants like Mr. Carter. . . of equal protection of the laws, equal access to public accommodations, and mislead[s] consumers into believing that they will receive a fair and impartial adjudication.”[2] The Judge ultimately granted an injunction until a hearing could be held on December 11, 2018.[3] However, on December 9, 2018, Mr. Carter withdrew his motion for an injunction stating that the American Arbitration Association (AAA) had made a commitment to diversifying its pool of arbitrators.[4] While Mr. Carter brought a great deal of attention to the stark lack of racial diversity in arbitration, he also brought attention to the lack of diversity as a whole in arbitration. Not only are African-Americans largely excluded from participating as arbitrators, but other racial minorities, as well as women and members of the LGBTQ+ population, are largely lacking from arbitration institutions’ arbitrator candidate pools.

 

1. Overview of Arbitrator Demographics

 

1. Lack of Non-White Arbitrators

 

While Mr. Carter’s injunction focused mainly on the lack of African-American arbitrators available through the AAA, his court filing also brought attention to the lack of people of color available as potential arbitrators. After reviewing the initial list of arbitrators included on the “Large and Complex Cases roster,” Mr. Carter requested that the AAA provide him with the names of “neutrals of color.”[5] In response, the AAA provided him with the names of six individuals, one of whom was Asian-American, one who was “South Asian,” another who was “Latino,” and three who were African-American.[6] These six “neutrals of color” were reviewed among a list of over 200 hundred potential arbitrators.[7] That means, of the potential arbitrators available to preside over a “Large and Complex Case,” roughly three percent of the available arbitrators were people of color. The AAA is not the only organization that struggles with diversity. The Financial Industry Regulatory Authority (FINRA), which also provides arbitration services, lacks a diverse arbitrator candidate pool from which parties may choose. FINRA’s arbitrator roster is roughly 84% white.[8] With white people making up the overwhelming majority of available arbitrators, only six percent of FINRA’s arbitrators were African-American, and only four percent identified as Hispanic or Latinx.[9] Asian people make up an even smaller portion of the available arbitrators at two percent of the total arbitrator roster.[10] People who identified as “multi-racial” also only made up two percent of the total.[11] Additionally, FINRA’s arbitrator roster contained no American Indians or Alaskan Natives.[12]

When these statistics are put into context, they become even more alarming. According to the United States Census Bureau, white Americans make up just 60.7% of the total population.[13] While white people make up just over 60% of the American population, they make up a much more significant percentage of the domestic arbitrator pool.[14] Additionally, black Americans account for 13.4% of the total population.[15] That’s a much higher percentage than the number of black arbitrators available through the AAA’s Large and Complex Cases roster and through FINRA’s arbitrator pool.[16] Further, those who identify as Hispanic or Latinx are woefully underrepresented in arbitrator rosters. While four percent of FINRA’s arbitrator roster identified as Hispanic or Latinx, 18.1% of the American population identifies as Hispanic or Latinx.[17] Asian people also make up almost six percent of the American population, but these numbers are not represented in arbitrator rosters.[18] Those who identify with two or more races make up just under three percent of the population, and American Indians and Alaska Natives make up just over one percent. These statistics show that white people are overwhelmingly represented in arbitrator rosters, meaning people of color who must select an arbitrator are less likely to find arbitrators that are representative of themselves and their backgrounds.

 

1. Lack of Female and LGBTQ+ Arbitrators

 

In addition to the underrepresentation of people of color in arbitrator rosters, individuals who identify as women and/or members of the LGBTQ+ community are also largely excluded from arbitrator rosters. The AAA states that its “overall Roster of Neutrals is approximately 23% for gender and race.”[19] That means that the percentage of women included on the Roster of Neutrals is likely less than 23%, as some portion of the 23% is likely to include men of color. As for FINRA, the results are only nominally better. Only 25% of the arbitrator roster is women.[20] Additionally, JAMS states that only 12% of the arbitrators on its roster are female, while the National Academy of Arbitrators’ roster is 15% female.[21] However, according the U.S. Census Bureau, 50.8% of the population identifies as female.[22] Women make up a majority, however slight, of the American population, but are represented at a significantly lower rate in arbitrator rosters. Statistics on LGBTQ+ arbitrators are not as reported as statistics for race, gender, or age, but FINRA has statistics regarding LGBTQ+ status of its arbitrators, with two percent of arbitrators identifying as LGBT.[23] While it is possible that this number is higher, as some people may not be comfortable identifying as LGBT, this number is also lower than the number of Americans who voluntarily identified as LGBT. A Gallup Poll from 2018 reported that the number of Americans who voluntarily identified as LGBT for purposes of the poll rose to 4.5%.[24] Like people of color, women and members of the LGBTQ+ community are underrepresented on arbitrator rosters.

 

1. Lack of Young Arbitrators

 

Additionally, arbitrator rosters are largely under representative of individuals under 60 years old. Only 29% of FINRA’s arbitrator roster is made up of arbitrators under 60 years of age.[25] On the other hand, “39% of the roster is 70 or older,” and “27% is 61-69” years of age.[26] The majority of FINRA’s arbitrators are over 60 years old, while only 15.6% of American population is 65 years and older.[27] However, the lack of younger arbitrators may be due to the fact that those over 60 years of age are likely to have more experience, and thus, are more likely to be chosen as neutrals. Frequently, arbitrators only become arbitrators after years of experience as attorneys, judges, academics, or in other relevant professions, with most individuals becoming “fully-fledged arbitrators” after 50.[28]  For example, the AAA requires a “[m]inimum of 10 years of senior-level business or professional experience or legal practice.”[29] Additionally, the AAA requires arbitrators to be members of professional associations, be leaders in their respective fields, have training in arbitrator and other forms of alternative dispute resolution, and education and/or professional licenses in their respective fields.[30] These experience requirements will likely preclude younger arbitrator candidates from being added to the AAA roster. While this overrepresentation of individuals 60 years of age and up may be the result of experience, the statistics seem to suggest that people who are not heterosexual, cis-gendered, white men under 60, are significantly less likely to feel represented when looking at an arbitrator roster.

 

• Importance of Diverse Arbitrator Rosters

 

In order for arbitration to be an impartial and fair process for dispute resolution, it is essential that diversity becomes one of its many features. In Mr. Carter’s court filing he noted that he believed the lack of African-American arbitrators available to him could “irreparably harm” him.[31] If one feels that a lack of representation would prevent them from receiving a truly fair hearing, then the legitimacy of the process is put into question. Diversity has been said to contribute to the legitimacy of an institution in two ways: creating the “appearance that the justice system is open to all,” and by including “unique perspectives” that could result in changes in the institution over time.[32] Additionally, diversity can help overcome the issue of implicit bias. Individuals are more likely to relate to and empathize with other people like them. Thus, when a party to an arbitration is not an older white man, it is less likely that an older white male arbitrator could “fully understand and effectively resolve disputes between individuals whose lives are not reflective of the traditional white male experience.”[33] Diversifying arbitration panels will allow typically underrepresented parties to have their voices truly heard, and it will only make the process more fair and legitimate.

 

1. Conclusion

 

In order for arbitration to be truly fair, institutions must recognize that diversifying their arbitrator rosters is one of the first steps to take. Without diversity, those who are underrepresented in such rosters will not trust the process, and without this trust, the legitimacy of the process is undermined. Further, the distrust is not without warrant. It is difficult for individuals to empathize and relate to those who do not look like them or who have not led similar lives. This inability to relate can lead to disparities in arbitration outcomes. The makeup of arbitrator rosters should mirror the American population, and institutions must strive toward this goal. The need for a diverse pool of arbitrators becomes even more apparent as more and more people begin to participate in arbitration. Because of the importance of diversity in arbitration, it is increasingly necessary for people to address discrepancies where they see them, as Mr. Carter did in his own arbitration proceeding.[34] The purpose of arbitration is to resolve an issue fairly, and diversifying the pool of arbitrators is one step in obtaining a fair outcome.

 

 

 

[1] Brief for Petitioner at 6-7, Carter v. Iconix Brand Group, Inc., No. 10 (N.Y. Sup. Ct. 2008; David Mack, Jay-Z Says There Aren’t Enough Black Arbitrators To Hear His Legal Dispute, Buzzfeed (Nov. 28, 2018).

[2] Brief for Petitioner, supra note 1, at 7.

 

[3] Sopan Deb, Jay-Z Criticizes Lack of Black Arbitrators in a Battle Over a Logo, New York Times (Nov. 28, 2018).

 

[4] Eriq Gardner, Jay-Z Scores Diversity Commitment from American Arbitration Association, The Hollywood Reporter (Dec. 10, 2018).

 

[5] Brief for Petitioner, supra note 1, at 9.

 

[6] Brief for Petitioner, supra note 1, at 9.

 

[7] Brief for Petitioner, supra note 1, at 8.

 

[8] Jenice L. Malecki, Diversity in Arbitration: Not Being an Old White Male, 20180515A NYC BAR 351 (May 15, 2018). (This article didn’t list page numbers, so I wasn’t sure how to cite).

 

[9] Id.

 

[10] Id.

 

[11] Id.

 

[12] Id.

 

[13]U.S. Census Bureau, Quick Facts United States: Race and Hispanic Origin.

 

[14] Brief for Petitioner, supra note 1, at 8-9; Malecki, supra note 8.

 

[15] U.S. Census Bureau, Quick Facts United States: Race and Hispanic Origin.

 

[16] Brief for Petitioner, supra note 1, at 8-9; Malecki, supra note 8.

 

[17] Malecki, supra note 8; U.S. Census Bureau, Quick Facts United States: Race and Hispanic Origin.

 

[18] U.S. Census Bureau, Quick Facts United States: Race and Hispanic Origin; Brief for Petitioner, supra note 1, at 8-9; Malecki, supra note 8.

 

[19] Sasha A. Carbone & Jeffrey T. Zaino, Increasing Diversity Among Arbitrators 84-JAN N.Y. St. B.J. 33, 34 (Jan. 2012) (emphasis added).

 

[20] Malecki, supra note 8.

 

[21] Caley Turner, “Old, White, and Male”: Increasing Gender Diversity in Arbitration Panels, Int’l Inst. For Conflict Prevention & Resol., 2, 4 (March 3, 2015).

 

[22] U.S. Census Bureau, Quick Facts United States: Age and Sex.

 

[23] Malecki, supra note 8.

 

[24] Frank Newport, In U.S., Estimate of LGBT Population Rises to 4.5%, Gallup Poll (May 22, 2018).

 

[25] Malecki, supra note 8.

 

[26] Id.

 

[27] Malecki, supra note 8; U.S. Census Bureau, Quick Facts United States: Age and Sex.

 

[28] Piotr Nowaczyk, It’s Not Easy to Start Out as an Arbitrator, Expert Guides (Sept. 25, 2017).

 

[29] American Arbitration Association, Qualification Criteria for Admittance to the AAA National Roster of Arbitrators.

 

[30] Id.

 

[31] Brief for Petitioner, supra note 1, at 12.

 

[32] Hon. Candy W. Dale & Anne E. Henderson, On the Bench and Before the Bar: Diversity as a Core Value, 62-Feb. Advoc. 19, 21(February 2019).

 

[33] Turner, supra note 21, at 2.

 

[34] See Linda Gertsel, RBG and Jay-Z: A 12-Step Recovery Plan for Increasing Diversity in ADR, The New York Law Journal (Jan. 24, 2019) (outlining 12 steps for organizations and parties to an arbitration to take in an effort to improve arbitrator diversity: “[f]irst, initiate discussions within your own firm regarding the value of diversity. Second, ask prospective neutral panels about policies and practices regarding diversity. Third, select diverse neutrals whenever practicable. Fourth, consider adding the JAMS diversity inclusion language in your dispute resolution clauses. Fifth, take public diversity pledges available from various institutions and tell your friends and family to do so. Sixth, implement a multi-pronged awareness-raising campaign—at internal meetings and in industry association meetings, with outside counsel, and with ADR providers. . . Seventh, consider distributing the ADR Inclusion Network Mindbug sheet. Eighth, host seminars that educate lawyers about tools to increase diversity either through the AW Diversity Tool Kit or the ADR Inclusion Network. Ninth, when you host panels of speakers make sure that diversity is represented. Tenth, consider offering young lawyers (age is another measure of diversity) opportunities to participate in shadowing neutrals. Eleventh, host elimination of bias programs at Bar Association continuing legal education series. Twelfth and finally, keep data—both to measure your firm’s progress and to put on tap the institutional knowledge upon which recommendations to in-house counsel can be made”).