A Small Victory for Consumers on Arbitration in Florida

A Small Victory for Consumers on Arbitration in Florida

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.

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