Forced Arbitration

Many times in the past several years I have spoken out against laws and court decisions which force us to resolve disputes in arbitration rather than in a court of law.  These forced arbitration contractual clauses have found their way into virtually every contract you are required to sign to obtain ordinary goods and services, e.g., credit cards, banking services, financial (brokerage) services, cell phone service, etc., etc.  Forced arbitration clauses have even become common in employment contracts, contracts for nursing home care, payday loans and even agreements for the rental of scooters.  Yes, even the rental of scooters.  If you punch the “I agree” button when you rent a scooter, you have agreed that whatever happens, you won’t go to a court of law to resolve your dispute and you won’t be a part of a class action. 

Lawyers are not immune to this problem.  My wife and I recently received a contract from a large financial services company.  Because I am a lawyer and sensitive to the issue, I read the contract and quickly found the forced arbitration clause.  As a test, I crossed it out and returned the signed contract.  It took a while, but we received a letter telling us that we had to sign the forced arbitration clause or our account would be terminated.  Problem is, every similar provider of financial services has the same forced arbitration clause in their contract.  We have no real choice other than to do without the services altogether.  And, that is the whole point.  You don’t have a choice.  I can easily choose to live my life without a rented scooter, but it is very difficult to live a life in the modern world without a cell phone, credit card and bank account.

 I am happy to report that there is a bill, the FAIR Act, floating around Washington which has some support which would end this rampant abuse of our 7th Amendment right to a civil jury trial in a court of law.

The FAIR Act states that “no–pre-dispute arbitration agreement or pre-dispute joint-action waiver shall be valid or enforceable with respect to an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute”.  If this bill passes, and it’s still a longshot, large business interests will no longer be able to mandate arbitration as a condition of employment or doing business.

Needless to say, the closer this bill comes to becoming law, the harder the lobbying industry will fight it.  You can expect every industry that benefits from forcing us into arbitration to fight this bill tooth and nail.  With words of extravagant praise for arbitration and doomsday predictions of chaos and anarchy if it passes, this bill will be condemned.  One has to wonder why they are so afraid of a court of law.  The answer is simple.  In arbitration they control virtually every aspect of the process and, therefore, the outcome.  They don’t want a level playing field.