WELL, FOR BUSINESSES IT'S GOOOOOOOOD.
Updated: Jan 22
But for John & Mary Doe, It’s BADDDDDDD.
It is, because it strips them of a constitutional right.
And because arbitration usurps the jurisdiction of our almost 300 year judicial system, also makes it horrendously BADDDDDDD! A lot more on this appalling aspect follows below.
First, though, what is it about arbitration that in the last 50 years or so, has propelled it to the prominent, independent, unaccountable role it now has in American jurisprudence?
But which at the same time, blinds us as to its egregious down-sides.
Well, setting aside that arbitration no doubt pleases businesses with the decisions it gives them, a principal factor in its tremendous rise is that it resolves disputes quickly. Yet quick decisions don’t necessarily equate to justice.
Nonetheless, arbitration has helped our overburdened court systems reduce their case loads. (Though a better way to speed things up would be to hire more people for our courts)
Now, there’s one facet of arbitration, which has been a enormous factor in its fantastic growth.
But it's hideous for the public:
That’s its secretiveness. Using it, businesses can hide their dirty linen. That is, they can keep under wraps, wrongs alleged against them. In particular, for one thing, they can obscure the discrimination and sexual harassment claims of women.
And to help them conceal such claims, arbitration binds claimants to confidentiality.
Another bad thing about arbitration’s secretive ways is that it can foment and obscure corruption within a business’ walls. It also can enable perpetrators to continue practicing illegal acts in obscurity.
However, in stark contrast to arbitration’s secrets and locked doors, when grievances against businesses are filed in court, they’re public. The press has access to them. And since “Light scatters the roaches,” as we all know, this has a sanitizing, therapeutic benefit for society.
OK, all things considered, does arbitration in the net analysis render justice?
Well, as you’ve probably already concluded, the answer is a great, big NO.
But before we go further into this, since arbitration is so much a part of our worlds, and it’s not going away anytime soon, you need to know more about how it works.
First though, let’s tackle this nagging question:
How can arbitration take away from citizens a right that our country’s Founders granted them in the Constitution’s 7th amendment. It says that if a citizen has a grievance against a party for more than $20, he or she can sue that party in a jury trial.
Thus, it seems outrageous that big businesses can so easily take this right away from citizens. So, just how can they do this?
Well, they do it by twisting your arm, coercing you. In effect, they tell you if you want their product, their service, that is, you want something from them, then you have to sign their contract to get it. Even hospital emergency rooms or urgent care facilities might require you to sign such an agreement before they’ll treat you.
Anyway, on their contract’s last two or three pages, in fine print and complex language, you agree to relinquish your right to a jury trial. And instead you agree to resolve any grievance you might have against this company by arbitration.
And by implication, they tell you if that’s not OK with you, “Just forget buying our product, getting our service, or whatever it is you want from us.”
So, what have our courts, including the U.S. Supreme Court, said when such contracts have been appealed?
In effect, they’ve said: “Tough. If you wanted to keep the right to trial by jury, you shouldn’t have signed that contract. You had a choice.”
Ok, all that said, let’s take a close, simple look at what arbitration boils down to, what it realistically is:
Let’s say you, A, and another person, B, have a financial dispute. You claim B owes you a lot of money. And to resolve things, you two have agreed to let a third person, C, decide things.
Now, B uses C regularly to decide disputes against him. And he pays her for her services. So, because she naturally wants to continue getting B’s business, she, of course, is biased for him.
That simple example should help you understand arbitration. And at the same time it exposes a major flaw in the process: bias for repeat clients.
Then there’s this crucial problem with arbitration: The contract in which you agree to arbitrate, specifies that any decision an arbitrator makes, is binding, final. You can't appeal it. That means if the arbitrator makes a legal mistake that results in an obviously wrong, incorrect decision, you cannot appeal it in a court of law. It’s conclusive. You must accept it.
So, talk about unfairness, man oh man.
In contrast, any legal mistakes made in jury trials, can always be appealed. Now, that’s justice.
Add to all that, some arbitration contracts have unfair additional provisions. Like no matter where you live, to have your claim heard, you must travel to Los Angeles. Whereas, others, are more reasonable in that they’ll do them in a teleconference.
Such additional provisions can vary greatly with the fine print.
But almost always the fine print specifies certain steps you must take to file a claim. Most require that you do so through the American Arbitration Association, New York, NY or JMAS Resolution Center, Irvine CA. And these two companies have a host of regulations, fees you have to pay up front, and other requirements that are quite complex and can be mind boggling for a Mary Dokes.
So much so, that when she reads and tries to understand them, she’ll get frustrated, discouraged. And she’ll likely belly up, drop her complaint. And, of course, for the company against whom she was complaining, that’s “Mission accomplished. Thanks to arbitration.”
Now here’s more on the bummer that I’ve already touched upon in that simple example I gave above. But since it’s so critical, I now want to really emphasize it: An arbitrator who hears a particular case, often repeatedly decides claims involving the same company against whom you’re complaining. This makes her anything but objective. Needless to say, she wants to continue arbitrating future cases involving your opponent. Whereas, the possibility of her ever getting future business from you, an ordinary citizen, is likely zilch. Thus, it’s logical that such bias for repeat clients influences outcomes.
OK, so now you know. Arbitration is just super for businesses. And by demanding it, many times they can avoid accountability altogether for wrongs. But on a rare occasion, let’s suppose a Bob Jones has the courage, drive, and funds to tackle a company in an arbitration hearing. But his chances of getting justice are slim to none. This is because what he is up against, in effect, is like having his opponent’s “brother-in-law,” as the decision-maker. That’s a substantial cancer in arbitration that scorns justice.
Now, considering all these negatives, is there anything we can do to lessen arbitration’s dire effects for average people?
Nope, not really. I'm so sorry, but I have no silver bullet. However, at least, you now understand what you’re up against.
And the reality is that as long as our courts have a hands off attitude, average guys and gals are up a creek.
And by the way, some arbitration contracts are as horrifically coercive as this: A 10 year employee is told in so many words, “If you ever have a dispute with us about your employment, sign this agreement to arbitrate with us, or get another job. [In other words, YOU’RE FIRED]. That you have mortgage payments, car payments, and credit card debts, that’s tough. Those are your problems, not ours.”
Can you imagine a poor soul facing that kind of choice? It’s a gun-to-the-head proposition.
Finally, there’s this crushing, overwhelming reality:
Arbitration is a business enterprise. But should it be? That is, should justice be a money making proposition?
In any case, its authority to resolve disputes comes from adhesion contracts (those where one party is in a dominant or controlling position). Or it evolves from flat-out gun-to-the head contracts. And this authority transcends our traditional legal system’s jurisdiction over them.
In other words, arbitration operates independently, free from the bounds of almost 300 years of our laws. It’s able to decide controversies as it sees fit and even disregard well established legal precedents. Or putting it another way, arbitration scorns and usurps our system of law.
The shocking proof of this, is that its decisions cannot be reversed, overturned, not even by the U.S. Supreme Court!
So, in sum, the arbitration system has NO obligation to uphold America’s laws. As said, this is because it has no accountability, again, not even to our highest court. This is absolutely APPALLING that we permit this.
Yes, that our highest court fails to recognize what this unfettered system is doing to America’s legal system, is excruciatingly disappointing to say the least.
Oh, oh, from above, I'm hearing stirring:
It's our Founders. They're frowning.
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