A recurring theme in these blogs is the danger posed by arbitration. Arbitration
is supposed to be an informal, inexpensive process for deciding legal
disputes, but it has morphed into a way for corporations to take away
a consumer’s right to their day in court. Multiple articles about
the unfairness of the process have appeared in recent years, most notably in a
New York Times article in late 2015.
A bright spot in this ongoing battle is a Florida appeals court decision
from a few weeks ago. In that case,
All South Subcontractors v. Amerigas Propane, a group of customers created a class action for recovery of “fuel
recovery fees” foisted on them by Amerigas. Predictably, Amerigas
tried to dismiss the case. It argued the customers could not use the courts
and had to pursue their claims in individual arbitrations.
The customers’ claims were based on fees charged by Amerigas in 2010.
At the time, the customers were not required to arbitrate claims arising
from those fees. So one would think it was pretty simple for the customers
to go to court under the circumstances.
Not so fast. Amerigas made an astonishing argument to try to prevent that
from happening. Amerigas argued that a new set of “terms and conditions”
it sent to customers
in 2012 applied to the business they did with one another
in 2010. In other words, Amerigas unilaterally changed the business arrangement
in 2012. It then claimed with a straight face that the 2012 change should
govern transactions which took place two years before. Amerigas claimed
its continuing business relationship with customers somehow gave it the
right to impose an
ex post facto condition barring access to courts.
The appeals court wisely rejected this retroactive rules of the game argument.
It found that the customers could not have agreed in 2010 to new terms
and conditions which they never saw until 2012. The court found there
was no crystal ball-type assent to such conditions.
Now for the amazing part: as straightforward as this seems, the customers
had actually lost at the trial court level. The case was on appeal because
the trial judge found the customers were sophisticated enough to be bound
by the retroactive arbitration agreement.
Making matters worse, the arbitration agreement was never even truly agreed
on in 2012. Amerigas simply announced on its own that it was changing
the rules. The customers did not have to read and sign anything to accept
the new arbitration agreement. And of course, they didn’t receive
a discount or any other concession from Amerigas in exchange for the new term.
Again, the argument made by the lawyer for Amerigas was just a little on
the arrogant side. Under his logic, the customers received an “offer”
when they got the new terms mailed to them via a bulk mailer in 2012.
They then “accepted” the offer simply by continuing to do
business with Amerigas. No signature was required for customers to “accept”
these new terms. Just continuing to buy propane tanks meant they’d
automatically agreed to whatever new conditions Amerigas wanted - even
for disputes arising in the past.
Any layperson who made such an argument would probably be laughed out of
the courtroom. As most people understand, one of the foundations of our
legal system is a prohibition on
ex post facto laws. A person generally does not agree to a new contract just by staying
silent either. The fact that Amerigas was taken seriously - and then actually
won - before the trial judge illustrates just how skewed toward arbitration
some of our courts have become.
Fortunately, the appeals court restored a measure of common sense and ruled
in favor of the customers. Let’s hope other courts follow its lead
and refuse to send people to arbitration when there’s no real agreement
to go there.