Arbitration Fairness

The U.S. Supreme Court's recent ruling in Rent-A-Center v Jackson, "dealt a major blow to consumers and employees who seek to challenge arbitration agreements on the ground that they are unfair or unconscionable", instead, upholding the authority of arbitrator to rule on the validity of agreements to arbitrate, relegating American workers to arbitration proceedings that can be structurally biased to favor large corporations, showing once again how the Supreme Court favors corporations and unfairly disadvantages hard-working Americans.

However, President Obama, by signing into law the new Consumer Financial Protection Bureau (CFPB), under the just-passed Wall Street Reform Act, helps limit the use of abusive forced arbitration clauses in financial contracts.

“The new CFPB will help address the abusive forced arbitration practices used by banks against consumers. Congress must now pass the Arbitration Fairness Act to ensure these predatory clauses are banned once and for all.” -- American Association for Justice President Gibson Vance.

Two other bills have been introduced in Congress to stem the abusive practice of forced arbitration:

Arbitration Fairness Act 2009 - sponsored by Sen. Russ Feingold (D-Wis.) and Rep. Hank Johnson (D-Ga.), would ensure that the decision to arbitrate is made voluntarily and after a dispute has arisen, so corporations cannot manipulate the arbitration system in their favor at the expense of consumers and employees.

Fairness in Nursing Home Arbitration Act (S. 512 / H.R. 1237), sponsored by Sen. Herb Kohl (D-Wis.) and Rep. Linda Sanchez (D-Calif.), would eliminate forced arbitration clauses in nursing home contracts.

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Do You Realize You Sign Away Your Rights to Trial By Jury on a Regular Basis?

Approximately one year ago I blogged about Michael Stamenson - Merrill Lynch's number one salesman, who ended up pushing his county into bankruptcy because of his reckless investment advice - in an effort to illuminate how Binding Mandatory Arbitration heavily favors corporations, by taking away a customer or employee's right to a trial by jury or judge, and legally binds customers/employees into a one-sided, pre-emptive and non-consensual form of arbitration should they suffer the consequences of the corporation's product, service or employee.

The Supreme Court's approval of this method of solving corporate/customer disputes, gave banks and credit card companies their own system of "justice" where the corporation acts as judge and jury - the corporation picks the arbiter who will decide the outcome - in a private forum of the corporation's choice.

In other words, the consumer/employee blindly signs away his right to take legal action (mandatory binding arbitration clauses are hidden in the fine print, normally written with intent to obscure meaning), and this applies, even in the case of serious injury by a product, service, or, as in the case of Halliburton employee, Jamie Leigh Jones, who was brutally raped by several Halliburton employees over in Iraq, by employee. Sen. Patrick Leahy, D-Vt sums it up as the Supreme Court's "blind devotion to corporation arbitration schemes".

“A series of United States Supreme Court decisions have changed the meaning of the [Federal Arbitration] Act so that it now extends to disputes between parties of greatly disparate economic power, such as consumer disputes and employment disputes. As a result, a large and rapidly growing number of corporations are requiring millions of consumers and employees to give up their right to have disputes resolved by a judge or a jury, and instead submit their claims to binding arbitration.” -- (1)-S. 1782, Arbitration Fairness Act, Sec. 2 (1), 110th Cong. (2007)

It's impossible to escape the possible ramifications of this Supreme Court decision, which essentially wiped out corporate accountability. If you use credit cards, cell phones, own a house, have a job, have health insurance, have taken out a loan, rented a car, signed a contract with a nursing home, etc., you have agreed to what the National Association of Consumer Advocates call "take it or leave it" conditions. Overall, consumers lost 94 percent of the time.

The Arbitration Fairness Act of 2009, introduced by Rep. Hank Johnson (D-GA), will ensure that the decision to arbitrate be made voluntarily and after the dispute has arisen, so that corporations cannot manipulate the arbitration system in their favor.

The Arbitration Debate Trap How opponents of corporate accountability distort the debate on arbitration

Stop BMA coalition.

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We Must Eliminate Star Chamber Sessions

"Star Chamber" sessions - maybe not quite as extreme as pictured at left, however, the outcome is just as assured - have played a key role in this financial crisis as well as the Iraq war. This type of tribunal also wields its arbitrary power in our every day lives.

We, the people, as consumers and/or employees, are normally unaware that we have signed binding mandatory arbitration (BMA) clauses (a for-profit backroom process of settling disputes), that require us to give up our rights to sue the companies - and the right to a jury trial - we do business with, if these companies cheat or treat us unfairly. Essentially, consumers and employees are railroaded into arbitration. It's a "rigged game in which justice is dealt from a deck stacked against consumers."

Haliburton, and many large corporations force employees to sign this type of contract, and the credit card industry is notorious for trapping consumers into private arbitration.

Public Citizen, a national non-proift public interest organization found that big business is pushing pre-dispute BMA in an effort to substitute the "star chamber", whose sole purpose will the execution of the credit card company's functions, for the open trial justice we're guaranteed access to by the Constitution. This is a deliberate strategy, by big business interests, who are fully aware that the liability will always fall on the consumer.

So, barred from bringing claims to court, victims of abusive lending practices, abusive employers, abusive credit card companies etc., frequently find that their contracts require them to go through arbitration. Not only are these proceedings conducted in secrecy, with very limited evidence and scarce documentation, the victims also pay excessive costs only to receive results guaranteed to benefit the company who has engaged in abusive tactics.

It works much the same way in the legal industry. Negligent, unscrupulous and incompetent attorneys know they have legal consumers at their mercy. In many states, there is virtually no recourse for victimized legal consumers because as a 2006 American Bar Association survey found, out of 123,927 complaints, only 3.5% led to formal discipline and less than 1% resulted in disbarment. I happen to reside in one of the worst states for lawyer and judicial accountability and believe me when I tell you it takes a "Tom Capano" act to get disbarred in this state, and even then, you better have clear video and a dozen eyewitnesses to back you up.

“A series of United States Supreme Court decisions have changed the meaning of the [Federal Arbitration] Act so that it now extends to disputes between parties of greatly disparate economic power, such as consumer disputes and employment disputes. As a result, a large and rapidly growing number of corporations are requiring millions of consumers and employees to give up their right to have disputes resolved by a judge or a jury, and instead submit their claims to binding arbitration.” (1)-S. 1782, Arbitration Fairness Act, Sec. 2 (1), 110th Cong. (2007)

Sen. Russell Feingold [D-WI] introduced the Arbitration Fairness Act of 2007.

The bill declares no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of: (1) an employment, consumer, or franchise dispute, or (2) a dispute arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.

Declares, further, that the validity or enforceability of an agreement to arbitrate shall be determined by a court, under federal law, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.

Exempts arbitration provisions in collective bargaining agreements from this Act.

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