Stuck in Arbitration

Novo Justice Blog by Colin Rule

AMALIA D. KESSLER, NYT, March 6, 2012

“YOU buy a cellphone, computer or car. You sign up for a credit card or open a retirement account. You apply for a job.

In all these circumstances, you’re told that you must agree to dozens of terms and conditions, set forth in technical verbiage and tiny print. Eager to complete your purchase — or desperate to be hired — you ultimately sign without reading.

If you’re lucky, nothing goes wrong. But a growing number of consumers and job seekers discover, when something does go wrong, that they have unknowingly agreed to waive their right to file a lawsuit. Instead, they must submit to arbitration.

For some, arbitration proves too costly to pursue. Among those who can afford the fees, many learn they cannot enforce their legal rights because arbitration decisions do not need to be based on the law; arbitrators have their own procedures, and some studies have found that they are systematically biased in favor of the companies that hire them. Lawyers are often unwilling to represent arbitration complainants because of award caps in the agreements. And increasingly, these accords bar class-wide arbitrations. Because arbitration decisions are typically not disclosed and not subject to appeal, consumers and workers are left without recourse and must bear the cost of unfair, deceptive and harmful practices.

One 2008 study in the University of Michigan Journal of Law Reform examined employment and consumer contracts used by 21 major corporations and found mandatory arbitration clauses in 93 percent of the employment contracts and 77 percent of the consumer contracts. But Congress has repeatedly failed to step in and fix this system. The proposed Arbitration Fairness Act of 2011 would be a step in the right direction. The legislation would make predispute agreements to arbitrate consumer and employment disputes unenforceable. Similar bills, introduced in 2007 and 2009, both died in committee.

It wasn’t always this way…”

http://www.nytimes.com/2012/03/07/opinion/stuck-in-arbitration.html?_r=1&hp

                        author

Colin Rule

Colin Rule is CEO of Resourceful Internet Solutions, Inc. ("RIS"), home of Mediate.com, MediateUniversity.com, Arbitrate.com, CaseloadManager.com and a number of additional leading online dispute resolution initiatives.  From 2017 to 2020, Colin was Vice President for Online Dispute Resolution at Tyler Technologies. Tyler acquired Modria.com, an ODR provider that Colin co-founded,… MORE >

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