By: Morgan Gaynor
New York Times published a two-part article last weekend which illustrates the dangers
of arbitration. Arbitration is supposed to be an informal process for
deciding legal disputes which is quicker and less expensive than a court
battle, but the
Times article shows it is really just a way for corporations to stack the deck
Horror stories abound in the articles. Arbitrators write crazy decisions
favoring corporations which cannot be reviewed by appeals courts; arbitrators
socialize with employees of the corporations whose cases they are hearing;
and consumers are thwarted because they cannot band together to claim
small amounts of money.
Some of the material in the
Times article contained the same criticisms of arbitration which we’ve
made in this blog for years. For example, we described the huge loss suffered
by consumers when the U.S. Supreme Court upheld arbitration provisions
and blocked a class action in
AT&T v. Concepcion in 2011. We similarly criticized Halliburton in 2010 when it tried to
force a female employee into arbitration after she claimed a coworker
Times article goes into the history of arbitration and how it became the monster
it is today. It was first conceived as a way to avoid courtrooms by corporate
lawyers serving the banking finance industry. Since then, it has spread
to all kinds of businesses such as medical practices, rental car companies,
sellers of computer products, and even funeral homes.
Corporations who use arbitration are some of the most familiar names in
American business: Starbucks, Netflix, Discover, Ebay, and of course AT&T.
A huge number of consumer transactions now require buyers of goods and
services to unknowingly forfeit their legal rights.
Consumers aren’t the only ones subjected to arbitration. Many people
are now required to agree to arbitration when they get hired by corporate
employers. For example, Taco Bell thwarted a discrimination suit by African-American
employees by invoking arbitration agreements they were forced to accept
when they hired.
The “take it or leave it” nature of these agreements has so
far made no difference to our courts. The U.S. Supreme Court has been
downright dismissive about such concerns. In the
Concepcion case, the court’s opinion upholding arbitration said “the
times in which consumers contracts were anything other than adhesive are
long past.” As we said at the time, the plain English translation
of this phrase is: consumer contracts have been unfair as hell for a long
time, and we’re not going to do anything about it, so get over it.
Many lower court judges have been more troubled by this “get out
of jail free” card for corporations. However, they are constrained
from doing anything about it, because the U.S. Supreme Court and other
higher courts have upheld arbitration agreements over and over again.
We’re hoping the
Times article will bring some much-needed attention to the abuses of this privatized
legal system. Maybe legislatures will then be compelled, or shamed, into
making some real reforms.
Links to the Times article can be found at:
http://nyti.ms/1itwQ9y (Part I) and
http://nyti.ms/1MAw0WA (Part II).