Mandatory Binding Arbitration

November 27, 2007 11:49 PM

NOTICE OF ARBITRATION AGREEMENT:

This agreement provides that disputes between you and $$$ Ltd. will be resolved by BINDING ARBITRATION.

You thus GIVE UP

YOUR RIGHT TO GO TO COURT to assert or defend your rights under this contract.

*Your rights will be determined by a NEUTRAL ARBITRATOR and NOT a judge or jury

*You are entitled to a FAIR HEARING BUT the arbitration procedures are SIMPLER AND MORE LIMITED THAN RULES APPLICIBLE IN COURT.

*Arbitrator decisions are as enforceable as any court order and are subject to VERY LIMITED REVIEW BY A COURT.

FOR MORE DETAILS

posted by bigmusic (101 comments total)

I'm not sure how I feel about the topic, but, damn. Good presentation.
posted by OrangeDrink at 11:53 PM on November 27, 2007 [1 favorite]

Excellent presentation big and an important issue.
posted by mlis at 11:58 PM on November 27, 2007

Love it, great post.
posted by IronLizard at 12:02 AM on November 28, 2007

Binding Arbitration = Bad
Chafing Arbitration = Worse
Commando Arbitration = Aaaaah...

(good post, serious topic, too easy joke)
posted by wendell at 12:08 AM on November 28, 2007

When I read shit like this, I want to get all Fight Clubby.
posted by lalochezia at 12:09 AM on November 28, 2007 [2 favorites]

Consumers cannot expect honorable treatment from American businesses because American businesses do not expect honorable treatment from consumers. Could we just start over?
posted by Cranberry at 12:10 AM on November 28, 2007

Thank you for this great post.
posted by Dee Xtrovert at 12:15 AM on November 28, 2007

Deregulation and tort reform work!

Seriously, great post.
posted by orthogonality at 12:16 AM on November 28, 2007

Well done. Thanks, bigmusic.
posted by homunculus at 12:37 AM on November 28, 2007

Arbitration? How arbitrary can it be, when one party gets to pick the arbiter, with knowledge of that arbiter's history? If the contract states "neutral" arbitration, and then chooses an industry-supported arbiter, can not the consumer cry FOUL! and sue in court?
posted by Goofyy at 1:00 AM on November 28, 2007

I just got the subject of my question for the next YouTube debate!
posted by stupidsexyFlanders at 1:02 AM on November 28, 2007

I have never understood how these people get it into their heads that eliminating due process from the picture protects them in some way.

The whole reason we have due process is to give us a method of resolving disputes that's better than crushing somebody's skull with a rock. Abolishing it doesn't help them. It puts them in terrible, terrible danger every moment of every day and night. I don't know they can stand it.
posted by Naberius at 1:23 AM on November 28, 2007

It isn't surprising that companies would try to take advantage of such clauses. Are they allowed to though? In Greece, even if the car dealership provided such a signed document, it'd be void as the rights in question are considered obligatory i.e. you cannot give up on them. Does anyone know if it's legal in the U.S.?
posted by ersatz at 1:45 AM on November 28, 2007

Yeah. I have a feeling that in the UK, unreasonable clauses in contracts (including often pre-nups) are routinely voided by courts as they conflict with Common Law.

But, we get all our unreasonable law kicks from libel cases.
posted by rhymer at 2:12 AM on November 28, 2007 [1 favorite]

Abolishing it doesn't help them. It puts them in terrible, terrible danger every moment of every day and night. I don't know they can stand it.

They have money, politicians and cops. The entire apparatus of our society is designed to protect business and corporations to the last man's last drop of blood. Why should they care?
posted by Avenger at 2:20 AM on November 28, 2007 [4 favorites]

The entire apparatus of our society is designed to protect business and corporations

Time to disassemble, dismember, discombobulate. "Fold, spindle, and mutilate", as the saying once went. Or, if you prefer, "Burn baby, burn, so we can build, baby, build" (and I don't know where that comes from).
posted by Goofyy at 2:45 AM on November 28, 2007

Another dire problem we face in the United States that most people I know are clueless about. I swear to god, every time I hear someone express mindless pride in "America" the temptation to laugh bitterly is overpowering.
posted by JHarris at 3:56 AM on November 28, 2007

Seem to be missing the right-wing voices here, so here goes:

Why is it the state's role to break or amend private contracts between individuals and companies? These individuals are adults, and can read all the fine print, and simply choose not to do so. They aren't children and shouldn't be treated as such. We should be taking responsibility for the agreements into which we enter.

This site is generally against state intervention in adult behaviour, for example where it applies to the consumption of recreational drugs that can lead to physical harm, or prostitution, arguing that the individual knows better than the state what is good for them: why does this not apply to reading and signing contracts? Why should the state step in to protect my wallet but not my health?
posted by alasdair at 4:17 AM on November 28, 2007 [1 favorite]

rhymer - it's not common law that they conflict with, it's primary legislation. Namely the helpful Unfair Contracts Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999, both of which help prevent this kind of nonsense in business - consumer contracts.
posted by patricio at 4:21 AM on November 28, 2007

alasdair - to keep a right-wing point of view, is it not economically efficient to allow consumers to contract with businesses safe in the knowledge that they don't have to hire lawyers to read complex contracts before entering into the most simple transactions?
posted by patricio at 4:23 AM on November 28, 2007

Last month, a Maryland woman named Deborah Williams testified at a hearing in the House about her dispute over a Coffee Beanery franchise. Despite the fact that Maryland's attorney general determined that the Coffee Beanery had defrauded her, she was forced into arbitration in Michigan, where the company is headquartered. The Coffee Beanery's attorney actually worked as an arbitrator for AAA, the same firm handling her case, and her arbitrator shared an accounting firm with the company, a clear conflict of interest. Despite the decision from Maryland's attorney general, the arbitrator ruled against Williams, assessed her $100,000 for the cost of the arbitration, a $150,000 judgment to be paid to Coffee Beanery, and ordered her to pay the company's legal fees as well. Williams is now bankrupt and nearly homeless as a result and can't appeal the decision. She will be paying off the award for the rest of her life.

There are many points in your life when you would happily give up every convenience and technology invented over the last three centuries or so if only to go back to a time when it was perfectly reasonable to riot en masse against the wealthy and decapitate them in the public square. This is one of them.
posted by XQUZYPHYR at 4:24 AM on November 28, 2007 [12 favorites]

Obviously this can't be a problem if the efficent market hypothesis is true!

We tend to intervene in areas where people have to reach "agreements" over a huge asymmetry of information and power. For example, if I need to get to work my ability to not buy a car out of protest is fairly limited. The ability of any and all dealerships to get by not selling me one is ample. cf workplace safety law, consumer protection generally
posted by a robot made out of meat at 4:42 AM on November 28, 2007

Someone needs to put together a Contract Bingo board with key red flag phrases. Like a bust card for consumers.
posted by Skorgu at 4:51 AM on November 28, 2007

I don't understand how binding arbitration doesn't violate one of the most central tenants of contract law: you can't sign away your rights. (Merritt v. Merritt) So, for example, if a contract had in teeny tiny small print "Failure to comply will result in immediate relinquishment of your firstborn," well... you don't have to honor that part. It could also be construed as being unconscionable since one party benefits outrageously more than the other. It seems like the only reason it's allowed to exist is because of the utilitarian convenience to a (backlogged) judicial system that has more "important" things to worry about than the fiscal solvency of the common man.
posted by Civil_Disobedient at 4:56 AM on November 28, 2007 [1 favorite]

Why is it the state's role to break or amend private contracts between individuals and companies? These individuals are adults, and can read all the fine print, and simply choose not to do so. They aren't children and shouldn't be treated as such. We should be taking responsibility for the agreements into which we enter.

Jesus Christ, alasdair, that's not the "right-wing voice," that's the "contrarian asshole voice." A shitty argument for the sake of wanting to have a shitty argument with someone. You spout this shit like human life is some merry little game of personal amusement. As if Deborah Williams, who literally had her life destroyed by the company she used to work for, is going to respond to this all with "oooohhh, hahahaha, you're right! I guess I didn't read all that fine print! Boy, is my face red!"

Right-wingers bitch and moan all the time about "nanny state" or "mommy state" intervention, but do you know why we have a "mommy" state? Because our state also has a shitload of drunken fathers, abusive babysitters, and molesting uncles. And despite the constant mantra from the Republican Party that we don't, Americans generally enjoy having mechanisms in place that protect us form people who want to beat on us just because they happen to be bigger, taller, or richer. If liberals represent the "mommy state" then you're representing a state that slaps their just-raped daughter for staying out too late and dressing like a little slut.

Americans, and by that I mean individual, working-class citizens just trying to get by from day to day (translated: about 90% of us) have this general animosity toward being fucked over. That is what companies in this article are trying to do: fuck us over. And if you're response to that is we all need to buck up and just stop complaining, then, well, I hope- nay pray- that's going to be the horseshit your side of the aisle will campaign on in the next election.
posted by XQUZYPHYR at 4:56 AM on November 28, 2007 [35 favorites]

Contract Red Flags [via]:
Binding Arbitration
Dissemination of Information
Governing Law
Hold Harmless
Indemnification
Independent Contractor
Insurance
Joint Venture/Partnership
Limited Damages
Liquidated damages
Publication
Publication Approval
Reporting Requirements
Scope of work: best efforts
Scope of work: satisfactory acceptance
Signing of Agreement
Term of Agreement
Termination of Agreement
Warrant
Warranty of Results

There's another one regarding specifying a jurisdiction for contract disputes (i.e. a defendant-friendly area) but I can't remember the term, so nyah.

By reading this post you give up your right to bear arms. Sign here here and here, initial here.
posted by Skorgu at 5:12 AM on November 28, 2007 [5 favorites]

My left nut for a candidate for public office that said what XQUZYPHYR said above verbatim.
posted by Civil_Disobedient at 5:14 AM on November 28, 2007

It's not just for sale contracts! Hooray, I had to sign one of these just to get a fucking job.
posted by Eideteker at 5:29 AM on November 28, 2007

Yes, absolutely, I too will give Civil_Disobedient's left nut for such a candidate.

Great post bigmusic, and I guarantee that I'll be bringing the paperwork home before I buy a car again (unless it's another $500 car from Craigslist).
posted by Mister_A at 5:49 AM on November 28, 2007

Why would anyone defend this nonsense? I know I'M awesome enough to outthink a corporation, but it doesn't mean everyone should be expected to.

on preview, what XQUZYPHYR said.
posted by Uther Bentrazor at 5:57 AM on November 28, 2007

I once had a molar extracted by an oral surgeon who first gave me a waiver to sign. Part of the waiver said I had been informed of the risks of the anesthetic (I hadn't) and that I agreed to give up any right to sue. In the place where it asked for my name, I wrote "I don't agree to any of this."
The oral surgeon asked me if I signed. I said, yes. Which was true - I just didn't sign with my name. He didn't bother to look at the document and extracted my tooth.
posted by dances_with_sneetches at 6:12 AM on November 28, 2007 [3 favorites]

"There are many points in your life when you would happily...riot en masse against the wealthy and decapitate them in the public square."

I suppose a weak alternative is to boycott the business with the caveat that the action would also hurt franchisees.
posted by bz at 6:35 AM on November 28, 2007

Jesus Christ, alasdair, that's not the "right-wing voice," that's the "contrarian asshole voice." A shitty argument for the sake of wanting to have a shitty argument with someone.

Actually, I think it pretty neatly summarizes the Libertarian viewpoint on the matter.

That said, I think this is a fine example of a situation that the market is extremely unlikely to resolve, because it is hard to imagine that a competitor will spring up and gain business by advertising that they are a full tort company.

As such, even people who understand how damaging a one-sided arbitration clause can be often get stuck with them and are simply forced to make a large bet that they won't have a problem.
posted by Tacos Are Pretty Great at 6:44 AM on November 28, 2007

alasdair:

Contract law (and its enforcement by the government) exists so that a level playing field can be created for commerce. In theory this is so that the government can maintain an effective monopoly on the use of force (i.e. corporations don't have to hire private armies to enforce their agreements) by acting as a neutral and fair arbiter of disputes over private agreements. In effect, it's there to make sure that the strong cannot dominate the weak, except through fair and open competition in the marketplace.

An effective private law system is one leg of the tripod that holds up a modern economy, along with property rights and laws that ensure the efficient flow of capital. The problem isn't that the arbitration clauses exist (they're perfectly legal), it's that EVERYONE DOES IT. Arbitration clauses make contracts unenforceable by the weaker of the parties involved, and thus worthless as an instrument.

When every contract that a consumer signs has an arbitration clause, private law becomes meaningless except at the highest levels of capitalization. Unless we regulate arbitration, we're kicking out one of the legs that supports the US consumer economy (which is the lion's share of our GDP).
posted by xthlc at 6:44 AM on November 28, 2007

There's another one regarding specifying a jurisdiction for contract disputes (i.e. a defendant-friendly area) but I can't remember the term, so nyah

Skorgu: I think you're referring to choice of law clauses and choice of venue/forum clauses.

Here's an example: Ever read the Amazon Conditions of Use? With your Amazon transaction, you are not only agreeing to be bound by the laws of the state of Washington, but claims in excess of $7500 will be adjudicated only in a King County, Washington state or fed court. Basically, you're giving up your rights to sue in your home venue if you live outside of King County, Washington.

I haven't seen any empirical data on the percentage of arbitration cases that result in favorable rulings for consumers. I suspect that data would be hard to get since there are probably confidentiality agreements that require the parties not to reveal or discuss the outcome of the case.

At any rate, if everyone who bought stuff read their contracts and walked away from deals with businesses who won't negotiate these arbitration and choice of law provisions, companies would be forced to negotiate. Probably about as likely as Dick Cheney showing up at our doorsteps to give us all hugs, kisses, unicorns and rainbows for Christmas.
posted by Dr. Zira at 6:47 AM on November 28, 2007

Dr. Zira, Amazon's clause makes a lot of sense. They do business all over the place, and it would be cost-prohibitive for them to show up in court all over the country. As such, if they allowed any choice of venue, they'd lose essentially every case that was for a relatively small value.

The $7500 cap seems somewhat arbitrary, but it seems reasonable given the sorts of merchandise that people are likely to purchase from Amazon.

This looks reasonably fair to me, especially compared to the increasingly standard 'you have no rights, except arbitration under our arbitrator' clause
posted by Tacos Are Pretty Great at 6:57 AM on November 28, 2007

My company (and a lot of companies) have specifically decided not to require arbitration agreements for employees. The reason is that we win most employment lawsuits on summary judgment, or can settle for nominal amounts. Arbitrators, on the other hand, are notorious for "splitting the baby" in employment cases. We actually come out far ahead in court. Moreover, the perceived advantages of arbitration to employers usually have nothing to do with who ultimately wins or loses, but instead it's the benefit of a faster, less costly process (in terms of attorney fees) than long, drawn out litigation in court.

Also, there is a pretty well-developed body of law that governs what a mandatory employment arbitration provision must contain in order to be enforceable. For example, the arbitrators must be neutral, there must be provisions for discovery, the arbitrator must issue a written decision explaining his or her reasoning, there can't be a limit on the type of damages the employee could recover, the agreement can't require the employee to pay excessive fees, etc.

You may now return to your speculation.
posted by pardonyou? at 7:07 AM on November 28, 2007 [1 favorite]

Civil Disobedient: I was just going to say that according to the last link, you owe Russ Feingold a left nut. Good thing you specified "verbatim."
posted by louche mustachio at 7:10 AM on November 28, 2007

Why is it the state's role to break or amend private contracts between individuals and companies? These individuals are adults, and can read all the fine print, and simply choose not to do so.

Not even worth bothering to respond too.
posted by delmoi at 7:15 AM on November 28, 2007

yet there you are, responding.
posted by garlic at 7:26 AM on November 28, 2007

We Euroweenies are covered by the European Council Directive on Unfair Contract Terms (8-page pdf), which sets out the EU law on the matter.

The relevant bit is:

1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.

Yay, EU!
posted by athenian at 7:40 AM on November 28, 2007

Arbitrators, on the other hand, are notorious for "splitting the baby" in employment cases. We actually come out far ahead in court

Thanks for that pardonyou? I think that the actual anecdotal experiences you bring up with arbitration is more helpful than the article's unfocused outrage at arbitration in general. The article makes it sound like arbitration is like some kangaroo court, particularly the accusation that arbitration makes "individual legal rights all but meaningless." The article would be much more effective if it focused on, exactly as Tacos Are Pretty Great points out - on the specific provisions of these clauses that are unreasonable. The mere fact that they exist in consumer contracts are not unreasonable. Does arbitration tend to disfavor consumers? Maybe, but without some real, objective empirical data and studies beyond just some cursory throwdown of stats or a lawyer quote, the article's assertion here isn't supported very well.

Moreover, the perceived advantages of arbitration to employers usually have nothing to do with who ultimately wins or loses, but instead it's the benefit of a faster, less costly process (in terms of attorney fees) than long, drawn out litigation in court.

This raises another issue I have with the article posted; it seems to throw up a lot of outrage against the cost of arbitration for a consumer, when I reality, it's probably no greater than than the costs of actually litigating the issue in court. Again, this is some shoddy reporting.
posted by Dr. Zira at 7:56 AM on November 28, 2007

Americans, and by that I mean individual, working-class citizens just trying to get by from day to day (translated: about 90% of us) have this general animosity toward being fucked over.

But would working-class citizens be ok with paying considerably higher prices as a result of the ridiculous amount that litigation costs?

It seems to me that what should really be done here is better laws/court decisions regulating arbitration and ensuring its fairness (which after all is just enforcing the terms of the contract fairly).

If private companies want to have a simplified, cheaper version of the justice system, and want to pay for it, is that really so bad?
posted by shivohum at 8:10 AM on November 28, 2007

Dr. Zira yes, that's what I was going for. I recall vaguely an article about one district in IIRC Texas that had far more than its share of national-level torts, due to some fortuitous coincidence of plaintiff-friendly procedures and judges. Alas I have no cite.

What displeases me about these clauses (and the reason I'd never sign a contract containing one for any substantial amount) is the fact that there's just no way a market solution like this is going to be impartial as long as one of the parties has a standing arrangement with the arbitration firm. It's in the company's interest to use the most biased-towards-them firm and the likely confidentiality of private arbitration means shedding light on any biases impossible.
posted by Skorgu at 8:12 AM on November 28, 2007

Seems like lots of well-intended knee-jerk going on here.

I think a major point that has been missed here is that a) no one has proven or even really asserted that there is a significant difference in the outcomes between trial and arbitration b) it is MUCH cheaper to arbitrate rather than pursue a civil action through the courts c) In my admittedly quick reading, no proof was offered regarding the assertion that companies which have judgments against them do not rehire the arbitration firms. Anecdotal only.

I assert that there is not a major difference between outcomes and the disparity in judgments is basically due to the fact that losing parties case had no merit in 95+% of the cases. 4% of the time a legal wrinkle requires an unfair outcome, and 1% of the time there is some collusion or conspiracy. A well-intentioned arbitrator is expected to follow case law, just like a judge, and if the law doesn't support the plaintiff in an arbitration case, it won't in a trial.

Its not that I do not believe that there are no abuses in arbitration. No miscarriages of justice in trials, people? I'd have to see some more proof of conspiracy to believe that there is a concerted effort on the part of 'big business' to 'deny people the right to sue' What tin-foil hat crap. We need more trial lawsuits from stupid consumers like we need '4 more years.'

I have to believe that its much like disgruntled employee lawsuits, sure there are plenty of times a person has a reasonable right to feel like they have been treated unfairly, but isn't it your experience too that they mostly just deserve what they get OR even if its unfair, its not illegal? I wish I had some data on this... but I don't.

Am I missing something obvious?
posted by sfts2 at 8:14 AM on November 28, 2007 [1 favorite]

If private companies want to have a simplified, cheaper version of the justice system, and want to pay for it, is that really so bad?

Ummm... fuckingYES? "Versions" of the justice system?

VERSIONS. Of the JUSTICE SYSTEM.

Christ.
posted by XQUZYPHYR at 8:16 AM on November 28, 2007 [6 favorites]

One of the other things not mentioned so far is that one of the "very limited" reasons a court can review and overturn an arbitrated settlement is if the arbitrator wasn't impartial.

Here's a summary of the law in Minnesota, by a lawyer. The money shot:

Minn. Stat. §572.19 - Vacating an award.

"Subdivision 1. Upon application of a party, the court shall vacate an award where:
(1) The award was procured by corruption, fraud or other undue means;
(2) There was evident partiality by an arbitrator...or corruption...or misconduct prejudicing...any party;
(3) The arbitrators exceeded their powers;

I would be very surprised if most other states weren't similar (I know it is in a few other states). Therefore, if the arbitrator in the Coffee Beanery case was as partial as the woman describes them, she has more than enough grounds to go to court and try to have it overturned. If she doesn't, it's because she has really, really terrible legal advisors (in which case she'd be fucked in a regular court just as thoroughly).

The apparent love here for the civil court system is interesting (and by 'interesting' I mean bizarre) given how biased that system's outcomes are to the party with the most money to spend on their legal team, and how open it is to various forms of manipulation via delaying tactics and 'siege campaigns' where you just run the other person into bankruptcy.

Binding arbitration is essentially the market solution to the utter failure of the civil court system to produce decisions at less than crippling cost and ludicrously long timeframes. It's basically a bunch of people throwing their hands up in the air and saying "the system is too broken to use, so we're going to make another one." If you want to get rid of it, the easiest way -- and the way that doesn't run into the (legitimate, IMO) 'nanny-state' objections over right-to-contract -- is to fix the courts through tort reform.
posted by Kadin2048 at 8:18 AM on November 28, 2007

Ummm... fuckingYES? "Versions" of the justice system?

VERSIONS. Of the JUSTICE SYSTEM.

Christ.

Wow. You act like there's something particularly sacred about our courts, something divine and ethereal. Of course, there isn't. There are compromises in who the judges are, what evidence gets in, what kinds of lawyers people get, what kinds of appeals are taken, and so on and so forth, and many of these compromises are made for reasons of administrative efficiency and not for the purposes of truth-finding and vindicating rights.

So there's already a lot of cost-benefit analysis going on.

Moreover, our "justice system" is probably severely suboptimal in a lot of emotional disputes, like many divorce cases, where processes like mediation probably leave both parties feeling considerably more in charge of their destiny and able to deal with subtle psychological issues.

So our justice system and its public, court-based nature is hardly the only solution to all problems. "Rights" are not always absolute, and people waive them all the time in return for cash -- in this case, cheaper prices.

The question is whether or not for many commercial disputes, the efficiencies gained from using arbitration are worth the problems. They might well be, especially if the arbitrators' neutrality could be better ensured.
posted by shivohum at 8:30 AM on November 28, 2007

And actually, Kadin makes a really good point about existing statutes ensuring neutrality...
posted by shivohum at 8:32 AM on November 28, 2007

shivohum writes "But would working-class citizens be ok with paying considerably higher prices as a result of the ridiculous amount that litigation costs?"

Is that the way the market was before arbitration clauses became standard in consumer contracts? Because I don't see a huge price drop. I'd like evidence that there is a significant impact on prices before taking such an assertion at face value, particularly considering how many people are saying arbitration costs the same as litigation.
posted by krinklyfig at 8:43 AM on November 28, 2007

I don't understand how binding arbitration doesn't violate one of the most central tenants [sic] of contract law: you can't sign away your rights.

I'm not sure it's that simple. Some rights can't be signed away, such as your right to life, or your children's lives. Others, apparently can: when you sign a non-disclosure agreement, for example, you're giving up some of your free speech rights, and as far as I know NDAs are pretty non-controversial, even around here.
posted by DevilsAdvocate at 8:50 AM on November 28, 2007

Let me just pick a few nits here:

(2) There was evident partiality by an arbitrator...or corruption...or misconduct prejudicing...any party;

Corruption need not be evident to be problematic. Every decision that is not entirely cut and dried must be a judgment call, some of which will go one way and some another. But a pattern of small prejudices can tip the scales substantially a la the NBA. Individual calls can be fair while the aggregate can be manifestly unfair.

The real problem I see is the lack of transparency here. I don't quibble with arbitration as an entity or even as a default, but there has to be a level of public awareness and oversight to ensure that the scales are indeed evenly weighted.
posted by Skorgu at 8:54 AM on November 28, 2007

There is at least one reported decision (.pdf) in the Coffee Beanery matter, in which a federal district judge rejected the franchisee's arguments about (among other things) the partiality of the arbitrator and confirmed the award. So there was in fact an opportunity to raise these points in court; it just didn't turn out the way the franchisee wanted. The decision also notes some facts that make the franchisee's situation a little less sympathetic; e.g., they had a clear opportunity prior to the arbitration to rescind their franchise agreement (which they were trying to do in the arbitration) but for whatever reason they declined to do so.
posted by brain_drain at 9:01 AM on November 28, 2007

The decision linked to by brain_drain is essential reading.

Among other things, the federal court explains that Deborah Williams herself (or her company, to be precise) was the one who initially demanded arbitration to settle the dispute, and had done so a full year before the Maryland government got involved and made any findings.

Also, for what it's worth, this was not a little consumer versus a giant company - it was a franchise agreement that Williams signed in Michigan after flying there from Maryland to visit Coffee Beanery's corporate headquarters. If you're flying to another state to sign a business contract, is it so unfair to hold you to the terms? It's not like you're just clicking on some button on amazon.com approving text that you haven't even read.

As to Williams' being bankrupted by the arbitration process - fine, let's assume the ruling by the arbitrator was unfair. You think the legal process in court has never bankrupted anyone? Pursuing a complaint through a lawsuit is almost guaranteed to be much, much more expensive than arbitration. And that is why you will find many lawyers who don't like the growth in arbitration - it tends to put them out of a job!

This is not to say that arbitration agreements are never unfair, of course, but let's be realistic about what, practically speaking, the court system can do for consumers, and also a little more skeptical about the details of anecdotes before we cut off anyone's heads.
posted by chinston at 9:41 AM on November 28, 2007

I don't understand how binding arbitration doesn't violate one of the most central tenants of contract law: you can't sign away your rights.

Yes, you can. I am a lawyer, and here is some free legal advice for you: Please don't sign any more contracts until you have accepted this truth.
posted by chinston at 9:47 AM on November 28, 2007 [1 favorite]

In the late 90s/early 00s we were outraged at people filing and winning frivolous, six-or-seven-figure lawsuits against any corporation worth any amount of money.

Now we are outraged that corporations have taken steps to ensure that pretty much nobody can sue them in any meaningful capacity.

We seem to have reached a stalemate.
posted by Ziggy Zaga at 9:53 AM on November 28, 2007

xthlc: The problem isn't that the arbitration clauses exist (they're perfectly legal), it's that EVERYONE DOES IT.

That's a very convincing argument: market failure requiring government intervention. But do we have evidence for it? I suspect Tacos is right in arguing that no-one will win sales by guaranteeing that you can sue them in a normal court. But what about things like "no quibble guarantees"? Those show companies competing to provide more goods and services to customers. Maybe limitations on arbitration could be limited to markets where there is a failure (e.g. cars) and not markets where there isn't (e.g. televisions)? Arbitration certainly increases business certainty, which is not generally a bad thing.

I'll hold my hands up and admit I'm a cosseted Brit with lots of protective laws in this regard, and while I resent the implication that I'm not able to make my own decisions I do also appreciate their protections. But I worry sometimes that I'm just being weak and selling my right to freely enter into private contracts for a mass of potage...

My apologies if I came across as trolling above: it wasn't intended. I value getting many sides of the debate in MetaFiler, and I didn't see the right-wing one. Many thanks for the reasoned responses.
posted by alasdair at 9:53 AM on November 28, 2007 [1 favorite]

Arbitration is a fine means for resolving disputes provided the parties to the arbitration stand on more of less equal footing.

That said, there are abusive arbitration practices that often turn up in consumer cases which really forclose any viable options for the average consumer caught up in a dispute with a savvy corporate opponant.

Try Googling " National Arbitration Forum debt collection" and you'll get a sense of what I'm talking about.
posted by mygoditsbob at 10:13 AM on November 28, 2007

This is yet another piece of diseased rot into the body both politic and economic that is the gift of the...financial services and the credit industry.

Like a nasty case of herpes, the credit card industry is the gift of corruption that keeps on giving.
Binding arbitration would almost be laughable in how hard it gives consumers the finger, if it wasn't such a serious issue. And it needs to be stopped now because if you think the sliminess is going to stop there you're wrong. So many fucked up abusive techniques adopted by businesses in the last decade have come thanks to the credit card industry. It's a race to the bottom and they will continue to poison all areas of business, until a serious punch in the face is applied by Congress or the incoming President. Considering how much they own the Congress I don't have much hope that anything will change. Only thing I can see towards the positive is that any politician (D or R) against reigning in the financial services and the banks and credit card Co.'s needs to be handed a pink slip come next election and needs to be informed of that now in the most uncertain of terms, with no small print required.
posted by Skygazer at 10:15 AM on November 28, 2007

chinston writes "As to Williams' being bankrupted by the arbitration process - fine, let's assume the ruling by the arbitrator was unfair. You think the legal process in court has never bankrupted anyone? Pursuing a complaint through a lawsuit is almost guaranteed to be much, much more expensive than arbitration. And that is why you will find many lawyers who don't like the growth in arbitration - it tends to put them out of a job!"

But the primary difference is that arbitration isn't subject to review, and the proceedings are kept secret. There are situations where arbitration is probably the best tool to resolve a dispute, but not when dealing with consumer fraud.
posted by krinklyfig at 10:16 AM on November 28, 2007 [1 favorite]

creeping corporatism.

karl marx had the right diagnosis but the wrong prescription. concentrations of money take on a life of their own, and a mind and a voice of their own. they serve the interest of perpetuating and increasing the concentrations, an interest which is in conflict with the interests of mefites, americans and humans everywhere.

one thing among all others stands in their way, it is their principal adversary now. we americans have a quaint old document, mostly honored in the breach, called the constitution. throughout our land there are a great many courthouses which operate in compliance with the terms of this quaint old document. these courthouses are the palaces of your rights as an american and a human. they are the only places in the world where you can advantageously confront concentrations of money and hold them to account. our seventh amendment provides for trial by jury in civil matters, and if your pleadings and motions are in proper order, you can engage these concentrations before a jury in a fair fight.

the concentrations don't like this, of course, and they will do anything they can to take your courthouse key away from you. if you give it to them, you will never get it back. i'm just appalled to see the tools and fools for these concentrations carrying water for them here in this commentspace.
posted by bruce at 10:24 AM on November 28, 2007 [1 favorite]

chinston writes "Yes, you can. I am a lawyer, and here is some free legal advice for you: Please don't sign any more contracts until you have accepted this truth."

Well, there are situations where this applies, such as in many states' landlord/tenant laws. In many states, the tenant cannot sign away basic protections which would contradict the law. IOW, the landlord can't enforce a clause that stated that no children are allowed to live with the tenant in the state of NM, as that's a violation of state law.
posted by krinklyfig at 10:27 AM on November 28, 2007

These individuals are adults, and can read all the fine print, and simply choose not to do so.

And if every contract for cell phone service, automobile purchase, home purchase, etc etc has a binding arbitration clause, the individual is supposed to what, choose not to own a cell phone, car or home?
posted by schoolgirl report at 10:29 AM on November 28, 2007

So if there's really, absolutely no difference between outcomes from binding arbitration and going through the courts, no sirree, not here, absolutely not, why are companies so adamant about signing you up for it? Their legal costs? I view legal costs to corporate legal departments as a really nice incentive not to dick with people too much, because their employees/customers/whatever can cost them money even if some technicality or legal fancy footwork prevents them from collecting. Corporations have been doing that to consumers for decades, it's nice to see them on their toes for a change. Binding arbitration changes even that. There's very, very, very little risk to companies from binding arbitration, and it shows in how many companies want to do it. If it was fair, they'd be terrified of it -- and rightly so.
posted by InnocentBystander at 10:32 AM on November 28, 2007

alasdair writes "I'll hold my hands up and admit I'm a cosseted Brit with lots of protective laws in this regard, and while I resent the implication that I'm not able to make my own decisions I do also appreciate their protections. But I worry sometimes that I'm just being weak and selling my right to freely enter into private contracts for a mass of potage..."

I'm not sure why this is such a problem. At least in the US, the judicial system adjudicates contract law when there is a dispute, which is covered by applicable state laws. That's how our system is designed. It's not as if this is some overreaching consumer protection or anti-corporate stance.
posted by krinklyfig at 10:53 AM on November 28, 2007

krinklyfig writes "the judicial system adjudicates contract law when there is a dispute"

... adjudicates contracts ...
posted by krinklyfig at 10:54 AM on November 28, 2007

I like the Chamber of Commerce spokesman's unflinching support for the little guy...

"Efforts to force people to hire attorneys for even the smallest dispute are wrong," he says, noting that consumers don't need a lawyer in arbitration.

Honestly, who do you think you're going to be up against when you do first-resort arbitration against a corporation? The lawyer may not be actually present and racking up billable hours, but Smilin' Keith from Consumer Relations didn't put together their argument. It might also belatedly occur to you that the non-degreed non-lawyer arguing against you has still been doing this thirty times a year for the last few decades.
posted by ormondsacker at 10:58 AM on November 28, 2007

But the primary difference is that arbitration isn't subject to review, and the proceedings are kept secret.

It's not true that arbitration is subject to no court review - that's what the decision brain-drain linked to is. That's 18 pages written by a federal district court reviewing the arbitration decision that went against Deborah Williams. That said, the scope of that review is "VERY LIMITED", as the OP put it.

In many states, the tenant cannot sign away basic protections which would contradict the law.

Yeah, you're right. I was maybe being a little terse. My point was just that there is nothing inherent in the concept of a right or in contract law (at least in the U.S.), that bars you from waiving or signing away rights. Contracts can create rights but they can also extinguish them.

There's very, very, very little risk to companies from binding arbitration, and it shows in how many companies want to do it. If it was fair, they'd be terrified of it -- and rightly so.

On the point of whether binding arbitration is necessarily, by its very diabolical nature, a tool of the corporate overlords wielded only to oppress the noble and virtuous consumers of America, it is worth considering that many large companies specify binding arbitration in contracts they sign with other large companies. Now, you might view that as a fairer set-up than BigCo versus Consumer, and yet companies still want it, even when they're involved with an equally sophisticated party. Arbitration is simply, in general, a cheaper method of dispute resolution than lawsuits.

Again, I'm not saying that arbitration is the bee's knees or anything, but yeah, it has definite advantages for consumers as well as companies. Some of these comments are just woefully uninformed and therefore impotent, except in the direction of making a potentially good cause look ridiculous.
posted by chinston at 11:00 AM on November 28, 2007

Nice post, by the way.
posted by chinston at 11:03 AM on November 28, 2007

Anyone here that is arguing that somehow the move towards binding arbitration as a means of dispute resolution versus a trial approach has obviously never been sued or sued anyone where the prospect of arbitration was possible. It is an unambiguously good thing. Now, the point of the OP was that the ubiquitous nature of industry wide force for adoption may be another matter. But one that should be addressed by market forces such as public ridicule and rejection, not more laws or hysteria. Just don't buy the shit.

Its also funny to see people trot out the Constitution as an argument against this. Its not a matter of constitutional law, you don't have a constitutional right to enter into a business arrangement with anyone or they, you.

Only a moron would think that it is cheaper or fairer to submit to binding arbitration versus a civil suit.

"If it was fair, they'd be terrified of it" Ridiculous.

There is very little risk to companies because in general, the ones bringing the lawsuits have not a leg to stand on. People sue corporations ALL the time for NO reason. Its the time-honored deep pocket principle. It makes perfect sense for industries producing/selling lower cost goods (yes even cars can be considered lower cost goods) to limit their potential exposure to frivolous lawsuits. Everyone wants checks on a corporate entity, but there is no corresponding check on the private entity. The profit to each party (dealer/manufacturer) on a normal car is on the order of $1000. How much lawyer will that buy?
posted by sfts2 at 11:09 AM on November 28, 2007

I just called Schumer's office about S. 1782: Arbitration Fairness Act of 2007 that would amend the Federal Arbitration Act to get rid of mandatory, pre-dispute arbitration clauses in all consumer and employment contracts.

Asswipe (i.e., Schumer that spineless Mukasy approving shithead that he is) doesn't know how he's going to go with it yet.

It's been read twice and referred to the Committee on the Judiciary. (They deal with contracts).

Below are the Senators on the Judiciary Committee:

Patrick J. Leahy
CHAIRMAN, D-VERMONT

Edward M. Kennedy
D-MASSACHUSETTS

Arlen Specter
RANKING MEMBER, R-PENNSYLVANIA

Joseph R. Biden, Jr.
D-DELAWARE

Orrin G. Hatch
R-UTAH

Herb Kohl
D-WISCONSIN

Charles E. Grassley
R-IOWA

Dianne Feinstein
D-CALIFORNIA

Jon Kyl
R-ARIZONA

Russell D. Feingold
D-WISCONSIN

Jeff Sessions
R-ALABAMA

Charles E. Schumer
D-NEW YORK

Lindsey Graham
R-SOUTH CAROLINA

Richard J. Durbin
D-ILLINOIS

John Cornyn
R-TEXAS

Benjamin L. Cardin
D-MARYLAND

Sam Brownback
R-KANSAS

Sheldon Whitehouse
D-RHODE ISLAND

Tom Coburn
R-OKLAHOMA

You can find their phone numbers from the links here.

If any of these Senators represents your state, please call them (if not pick the one closest to your state) and tell them you support and are watching very closely: S. 1782: Arbitration Fairness Act of 2007 and it is crucial that it get out of committee with minimal alterations to be voted on in the Senate.
posted by Skygazer at 11:40 AM on November 28, 2007

sfts2 writes "Everyone wants checks on a corporate entity, but there is no corresponding check on the private entity. The profit to each party (dealer/manufacturer) on a normal car is on the order of $1000. How much lawyer will that buy?"

Part of the problem is that it strips the option of litigating from the customer as a requirement to buying a car. It treats the customer as a potential problem before there is a reason to believe there will be a problem. If these agreements are so great and save everyone so much time, money and hassle, why did dealerships get a law passed that prevents arbitration clauses in their contracts with the manufacturers? If it's good enough for the customer, isn't it good enough for the dealership?
posted by krinklyfig at 12:19 PM on November 28, 2007

Probably about as likely as Dick Cheney showing up at our doorsteps to give us all hugs, kisses, unicorns and rainbows for Christmas.

I don't care what he's carrying. DO NOT WANT.
posted by bitter-girl.com at 12:22 PM on November 28, 2007

and as far as I know NDAs are pretty non-controversial, even around here.

I wouldn't say that.

For example, many members of the video game press sign those things as a matter of course, basically putting them on the side of the companies against their readers.
posted by JHarris at 12:26 PM on November 28, 2007

Wow. You act like there's something particularly sacred about our courts, something divine and ethereal.

There's not. But there damn well should be, jerk!

sfts2: What, are you trolling?!
Anyone here that is arguing that somehow the move towards binding arbitration as a means of dispute resolution versus a trial approach has obviously never been sued or sued anyone where the prospect of arbitration was possible. It is an unambiguously good thing.

No, there are very few unambiguous good things in this world, and I greatly doubt unavoidable, justice system-avoiding arbitration by arbiters picked by one of the parties that are "impartial" but in practice side with the side that picked them 90+% of the time are AN UNAMBIGUOUS GOOD!

The flood of 'c'mon arbitration ain't so bad" posts here is increasing my core temperature. Could there actually be a thinking person who thinks it's a good idea? At least in our bankrupt-the-litigants system the party overseeing the case has an interest in being actually fair, and arbitration, as the article pointed out, isn't cheap either.
posted by JHarris at 12:35 PM on November 28, 2007

Relax JHarris . Take control. Find your neutral space.

(and don't feed the Trolls. They say stupid contradictory shit on purpose. The cognitive dissonance gives them away. It's like BO).
posted by Skygazer at 12:44 PM on November 28, 2007

I don't understand how binding arbitration doesn't violate one of the most central tenants of contract law: you can't sign away your rights.

Of course you can. What a silly thing to say. On a personal note, I have found that crossing out the bad parts of adhesion contracts is a very rewarding experience. I recommend everyone try it.
posted by norm at 1:27 PM on November 28, 2007

My one significant experience with binding arbitration, as a consumer, was quite favorable. Arbitration was immensely easier than filing suit and I was very satisfied with the outcome.

The satisfaction was not entirely monetary. Having a corporation's lawyer in Delaware (usury capital of the world) call and ask what they can do to have you dismiss your claim kind of warms the heart a little.
posted by exogenous at 1:35 PM on November 28, 2007

Could there actually be a thinking person who thinks it's a good idea?
don't feed the Trolls.

Does this really advance the debate? Or make you look good? Do you really think you're learning something by closing yourself off to new ideas like this? Or are you so sure of your knowledge, after having studied the issue for decades, that you have nothing left to learn?

For some actual data and arguments, see something like Comparing Cost in Construction Arbitration & Litigation.
posted by shivohum at 1:44 PM on November 28, 2007

JHarris

You string one compelling argument and reasoned rebuttal after another. Moving on...

Arbitration actually often levels the playing field between deep pocket entities and others. The arbitration process is fairly structured and compact, while the lawyers of deep pocket litigants have numerous ways to delay, obstruct, and create a barrier to resolution of any dispute.

My boss (one of the Forbes 400 - meaning one of the 400 richest individuals in the world) was just involved in an arbitrated suit with a former employee. Time from initiation to hearing and judgment - about 6 months. How long do you think she could have delayed a trial, given that she is worth somewhere north of $800m? I testified in this case. I don't think the arbitrator was biased here, although she did find for the defendant - the plaintiff's case CLEARLY was merit less. Anecdotal I know.
posted by sfts2 at 2:08 PM on November 28, 2007

Shivohum, perhaps you can find something a bit more objective then a study that was underwritten and Copyrighted by the American Arbitration Association May-Jul 2007.

I looked it over and true to form it is entirely business centric. Seems the arbitration industry's bread and butter lies in cutting legal costs for corporations, not looking after the rights of consumers.

Next.
posted by Skygazer at 2:10 PM on November 28, 2007

Sigh. So many of you have swallowed the tort reformers' propaganda that it's probably going to take a pretty extreme swing to bring matters back to something resembling justice. Arbitration works quite well with sophisticated parties and/or a complex legal issue that could be difficult to explain to a jury. In consumer disputes, it's little more than a tool for business to disarm the consumer of some of the few basic weapons the consumer has.

What progress was made in consumer disputes was largely due to a series of consumer protection laws that were passed in most states in the 1960s-80s. These laws made it possible for consumers to bring complaints to court, but only after they demonstrated that they had tried to resolve the matter through non-judicial means first. They awarded attorney fees to encourage private lawyers to take the cases without having to do so on contingency. In the last 20 years, it's been the policy of the big business community to strip away the powers of these acts in various ways-- AND to take advantage of the Federal Arbitration Act to avoid court entirely.

My experiences with consumer arbitration led me to believe that there was an inherent bias in favor of the business, because the arbitrator's paycheck depended on being chosen by the parties, and when you have the same party having to choose lots of arbitrators, they're going to choose the same ones. When the arbitrator and opposing counsel referred to each other by their first names and asked about each other's families, I knew the fix was going to be in, and that's what happened.

There are actually far fewer consumer and personal injury lawsuits in the nation's courts than there were 10-20 years ago-- but there are more lawsuits. That's because business versus business litigation has exploded (good example-- aggressive, proactive patent litigation, used as a business tool), and perhaps the biggest "growth" area in litigation, suits filed by the thousands by credit card lenders against defaulting borrowers (especially now that the borowers can't use Chapter 7), and even more disgusting, suits by vulture capitalists who buy the credit card debt for pennies on the dollar.
posted by missouri_lawyer at 2:46 PM on November 28, 2007 [4 favorites]

and perhaps the biggest "growth" area in litigation, suits filed by the thousands by credit card lenders against defaulting borrowers (especially now that the borowers can't use Chapter 7), and even more disgusting, suits by vulture capitalists who buy the credit card debt for pennies on the dollar.

What, exactly, is "disgusting" about a credit card company (or even a debt collection company) suing a borrower who doesn't pay their debt? How else is the company supposed to collect its money? If a company never sued to collect money it was owed, how long do you think it would take before its borrowers just stopped paying?
posted by pardonyou? at 2:55 PM on November 28, 2007

What, exactly, is "disgusting" about a credit card company (or even a debt collection company) suing a borrower who doesn't pay their debt?

Maybe because they actively pursue the creation of borrowers who can't pay off their debt through strategic campaigns that impose draconian penalties, 32% default APR's (that trigger off even if you miss a payment on another card), booby trapped 0% introductory rate schemes, constant offers in the mail of more credit products and checks etc.

So when some person who's had to tap a card out for medical reasons can no longer make the payments, they're hauled off, NOT TO A PUBLIC INSTITUTION THAT CAN GIVE THEM A FAIR HEARING, But a kangaroo court "arbitration hearing" wherein the arbitrator might as well be an employee of the credit card Co and will rule in their favor 94% of the time usually adding even more penalties and fines on top of what the borrower already owes and ruining their lives.
posted by Skygazer at 3:16 PM on November 28, 2007 [4 favorites]

Next.

Here you are. Enjoy and enjoy some more. Yes, they're put out by pro-arbitration folks. But the sources they reference aren't. And they refer not just to rights but to money.

There is, of course, another side to the argument that, for example, Public Citizen makes in a study, though of course the study has serious flaws (like not comparing arbitration outcomes against litigation outcomes for similar cases, but simply looking at them in a vacuum).

You see, it's not as simple an issue as you'd like to make it out to be.
posted by shivohum at 3:30 PM on November 28, 2007

not just to rights but to money.

That should be the other way around ;).
posted by shivohum at 3:35 PM on November 28, 2007

Yes, you can. I am a lawyer, and here is some free legal advice for you: Please don't sign any more contracts until you have accepted this truth.

So the Rumpilstilskin clause I mentioned above would be perfectly A-OK? I understand that you can sign away property rights (physical, intellectual, filial, etc.), but how does one go about signing away their right to use the legal system? I mean, isn't that sort-of a contradiction, since it's the legal system itself that would be upholding such a deal?
posted by Civil_Disobedient at 4:33 PM on November 28, 2007

how does one go about signing away their right to use the legal system?

Something like this:

In the event of any dispute between the parties arising under this agreement, such dispute shall be resolved by arbitration in accordance with [identify applicable rules/laws/arbitral bodies]. The arbitrator[s] shall be selected by [describe process]. The hearing shall be conducted in [location], unless both parties consent to a different location. The decision of the arbitrator shall be final and binding upon all parties.

As to your more general question, people sign away their rights to use the legal system all the time; e.g., when you settle a case, you generally waive your right to bring any further lawsuits on the same facts, in exchange for money or some other form of compensation. The legal system would likely grind to a halt if people were unable to waive their rights to seek judicial relief.
posted by brain_drain at 5:00 PM on November 28, 2007

Shivohum: You see, it's not as simple an issue as you'd like to make it out to be.

Excuse me sir, but this is a load of classic industry group obfuscation and poo. You know guns don't kill people, People kill people and a raise in the minimum wage puts a damper on economic activity etc.

In other words it's pure horseshit. These studies you link to are the arbitration industry sponsored nonsense provided to the republican (and perhaps Democrat) scum bags on the Senate Judiciary Committee by lobbyists that they are going to point to, to in order to confuse the issue and make it seem as if as you say it's not as simple as it looks and will be (I always love this one) a burden on business and cause the loss of jobs yadda yadda yadda and so won't someone think of the poor wittle billion dollar corporations that will be hurt if people they have a contractual responsibly towards have the right to pursue their actual rights and protections.

No this is issue is not as complicated as all that . If arbitration is so cost effective and better for all parties involved than why make it binding? Why not let each party in a dispute decide what's best on a case by case basis and if it's arbitration than so be it. If not...off to the judge they go. Why treat the consumer or the employee like a potential criminal? Why is BA in such small writing on agreements? Why not be upfront about it? Why has it covered service agreements from credit to cell contracts to car dealerships like an embarrassing stink no one really wants to talk about so they simply create the FALSE perception that it's not really a big deal and it's just the way business is done nowadays so shut up and just sign the papers already!!.

That's not very nice is it?

It's a rigged game Shivohum and I'm wondering why it's so hard for you to see that? Full disclosure dude. Do you work for or are you connected to an industry that uses binding arbitration agreements?
posted by Skygazer at 5:18 PM on November 28, 2007

Some empirical data - scroll down to "California law provided study data". This study suggests BMA's are not fair to consumers (in the context of debt collection actions):

In the 19,300 cases that were decided during the time period, consumers prevailed only 4 percent of the time, while businesses won 94 percent of the time. Winners were not listed in the remaining 2 percent.

A more friendly and comprehensive take on BMA's in the context of employment disputes is here from the American Bar Association (admittedly old from 2003).

Even if BMA is cheaper, faster, and fair to consumers, its very existence is still wrong. You shouldn't have to sign away your right to a day in court in order to get justice because justice takes too long and costs too much.
posted by R_Nebblesworth at 5:35 PM on November 28, 2007

I know I'm late to this thread, but here's what I'll say: Whenever you sign a contract, the shadyness of the contract increases proportionally with the shrinking size of the font.

Theres a reason why those Binding Arbitration clauses are written in 4-point Times Roman -- and its not because your credit card company wants to save trees.
posted by Avenger at 6:50 PM on November 28, 2007 [1 favorite]

Interesting, disturbing stuff. Thanks for this.
posted by Smedleyman at 7:38 PM on November 28, 2007

'Mark of the beast' comes to mind.
posted by Smedleyman at 7:41 PM on November 28, 2007

You know guns don't kill people, People kill people and a raise in the minimum wage puts a damper on economic activity etc.

Uhh... there's truth to both those propositions (even if it's not dispositive of the issue). Lots of perfectly smart, non-gun-industry-connected people think gun ownership does not increase criminal violence, and most economists think that raising the minimum wage DOES cut jobs. But, for the latter proposition, the question is whether the # of jobs that are lost are worth the higher standards of living. They might well be.


These studies you link to are the arbitration industry sponsored nonsense provided to the republican (and perhaps Democrat) scum bags on the Senate Judiciary Committee by lobbyists that they are going to point to

I feel like you're a person who's come to his conclusion beforehand and nothing can be said to sway you. What do they call those? Oh yeah, ideologues. Why not actually engage with the arguments, instead of constantly attacking the source? That's what Freerepublicans do. I hope you're not trying to imitate them.

(I now predict apoplectic rage building up because I've attacked the dogma. I'm trying to be civil, but it's hard when you have such an enormous sense that you're right and that the world is JUST SO STUPID AND CORRUPT AND WOULDN'T THEY JUST LISTEN TO YOU FOR ONCE THEN EVERYTHING WOULD BE BETTER).

so won't someone think of the poor wittle billion dollar corporations that will be hurt if people they have a contractual responsibly towards have the right to pursue their actual rights and protections.

But you're ok with consumers having higher prices for "rights" the vast majority will never exercise. Is that right?

If arbitration is so cost effective and better for all parties involved than why make it binding?

Obviously the courts are better for the consumer *if they have a problem*. Consumers don't have to pay anything for court, and there's little chance the loser will pay attorney's fees! So who would choose arbitration once they had a claim? No one. But the question is what they would prefer ex ante.

It's a lot like organic food: people claim to want it, but most will not actually pay for it.

Why not be upfront about it?

Perhaps because it's actually not a big deal to 99.999% of the customers out there? The vast majority of people will never file claims of this sort.

Full disclosure dude. Do you work for or are you connected to an industry that uses binding arbitration agreements?

Haha. Classic. Again, the stereotypical conspiracy-theorist dogmatist comes out. Are you a big fan of Noam Chomsky, too?

No, I don't work for nor am I connected to an industyr that uses binding arbitration agreements.

Are you a member of the plaintiff's bar? :)
posted by shivohum at 8:18 PM on November 28, 2007

shivohum: Uhh... there's truth to both those propositions (even if it's not dispositive of the issue).

Baby, I am pro guns. Only thing I'm calling attention to there is the smoke and mirrors obfustication industry groups throw up to confuse an issue. Also for what it's worth screw the noise involving a raise for the minimum wage taking food out of anyones mouth, are you for real or what? Heaven forbid someone makes $5.75 an hour. Nigga please...

This comes from the Public Citizens (Founded by Ralph Nader) sources you you cited:

Imagine this: you’ve invited someone to join you at a restaurant for drinks and hors d’ouvres—it
could be a date, or a colleague. You’ve been seated and the waiter is on his way, but you need to
leave the table for a moment. You ask your companion to order some wine and an appetizer.
When you return, you find that, instead of getting a glass of chablis and oysters, your companion
has ordered a bottle of Dom Perignon champagne and a plate of beluga caviar. The waiter brings
a check for $600, about $570 more than you had expected to pay.
A quite similar situation faces consumers, non-union workers, small investors, franchisees, and
contract farmers who have unwittingly signed on to binding, pre-dispute arbitration clauses.
They have entered into transactions relying on the good faith of others, assuming that the seller,
employer, or business partner would not charge to them the equivalent of a $500 bottle of
champagne. But when a dispute arises, they find that it will be resolved through an expensive
private legal system designed for large, wealthy corporations, not for individuals of modest
means.

Right. Read that again if you need to.

I now predict apoplectic rage building up because I've attacked the dogma.

Oh yeah. Sorry to not meet your expectations of ignorance.

Shivohum continues on with: I feel like you're a person who's come to his conclusion beforehand and nothing can be said to sway you.

But you're ok with consumers having higher prices for "rights" the vast majority will never exercise in a court of law. Is that right?

Yeah. Same way with that the fact that we have freedom of speech and assembly and religion even though the vast majority will never exercise it, dickweed.

I say: Why not be upfront about it?

Shivohum responds with: Perhaps because it's actually not a big deal to 99.999% of the customers out there?

Yeah but it should be and that's besides the point. What's wrong is wrong.

Shivohum No, I don't work for nor am I connected to an industyr that uses binding arbitration agreements.

Are you a member of the plaintiff's bar? :)

Nope. Not a plaintiff or an attorney, just someone who's aware of what's going on and trying to open peoples eyes to it even though they're too preoccupied with the hard realities of keeping body and soul together in a time that is so hard on the individual.

I see no way to side with the credit card Co's. or the arbitration association on this friend. You might as well be pro-slavery. I'd like to say more but my better half says I need to remain civil.
posted by Skygazer at 9:06 PM on November 28, 2007

This comes from the Public Citizens (Founded by Ralph Nader) sources you you cited

Did you not understand that I was trying to provide BOTH sides of the argument? It's called intellectual honesty. The fact that I cited this study doesn't mean I agree with it (and I said as much when I cited it). Anyway, the silly hypothetical would only be remotely valid if 1/10,000 people got the price bump, and if everyone else got a discount on their meal for the risk. And if even those could simply decline the champaigne and caviar entirely and lose a fraction of the money (analogous to simply declining to sue). And if even those who didn't would get the money back if they "won" their "menu arbitration."

Same way with that the fact that we have freedom of speech and assembly and religion even though the vast majority will never exercise it

Yes, the right to dispute credit card bills in court as opposed to in front of an arbitrator is definitely of the same importance as the right to practice your religion without fear of persecution. That sounds right to me.

Yeah but it should be and that's besides the point.

No, it is the point. Otherwise why not have the justice system geared to finding truth at all cost, without regard to money? It's fine for capital punishment cases, but do we want to spend $500,000 in taxpayer money and higher prices on a consumer dispute case? Do you?

I also don't think it's true that everyone reasonably expects to have a "day in court" for every little dispute. I think most people would be fine with a reasonably fair arbitrator and a transparent process. And I think there should be laws ensuring that (indeed, there are).

And anyway, people don't actually get days in court -- not usually. Most everything settles.

As long as these things hold true, I don't see that there's anything particularly important here that needs to be proclaimed "up front."

I also notice that you could not address my point about why it doesn't make sense to let consumers pick arbitration after they have a claim. Thanks for the tacit agreement.

You might as well be pro-slavery.

Thanks for this. Yes, supporting the legality of binding arbitration is on the same level as dragooning people into a lifetime of forced servitude.

This will give observers a very good sense of the perspective behind your arguments.
posted by shivohum at 9:46 PM on November 28, 2007

shivohum: "I'm trying to be civil, but it's hard when you have such an enormous sense that you're right and that the world is JUST SO STUPID AND CORRUPT AND WOULDN'T THEY JUST LISTEN TO YOU FOR ONCE THEN EVERYTHING WOULD BE BETTER"

I read what you wrote here and nothing is now better; even more, I find your reasons disturbing, very much so. Does this make me stupid and corrupt as you say the rest of the world is? Fine. This planet has lots of people in it that keep SHOUTING that they are right and everyone else (99.99% of the world) is wrong (or corrupt, or stupid). Most will, eventually, be declared insane.
posted by omegar at 10:13 PM on November 28, 2007

Alright shivohum I'm not questioning the fact that you're a decent human being, but BA is so extreme.

Hey...Perhaps we can come up with a fair and humane way to deal with it all together. Your opinion is definitley valued (as I hope mine is. Some times MF can be like whistling in th dark in spite of the obviousand amazing brain power (cf Missouri lawyer above us in this thread ) Don't you worry shivohum we'll make this good. You have some great points to make and that need tro be addressed . Righ now I'm just too sleepy...ZZZZZ. Be well and good night
posted by Skygazer at 10:45 PM on November 28, 2007

Perhaps we can come up with a fair and humane way to deal with it all together.

Fair enough...

Your opinion is definitley valued (as I hope mine is.

Absolutely. It's why I responded :).
posted by shivohum at 6:24 AM on November 29, 2007

when you settle a case, you generally waive your right to bring any further lawsuits on the same facts, in exchange for money or some other form of compensation

Yeah, I see what you're saying. I guess I'm having a hard time wrapping my head around when you can and when you can't do this. I think we'll agree that a "I-get-to-kill-your-parents" clause wouldn't be enforceable... I just don't know enough about the law to understand where the line is drawn.
posted by Civil_Disobedient at 3:57 PM on November 29, 2007

Why not make it legal only if there' a clause stating arbritration has to be neutral? i.e. Rules by intl assoc of abriritratios, anf the agency themselvs with no substantive ties to either party?
posted by lalochezia at 4:59 PM on November 29, 2007