Kia Franklin

Update: Arbitration Hearings

Last week, TortDeform guest contributors Jordan Fogal and Paul Bland appeared in front of Congress to give their testimony on how consumers are negatively affected by mandatory arbitration agreements. Their testimony was critical for informing representatives about how the issue impacts the average American (Testimony available here), as they consider a number of bills that relate to arbitration agreements. Introduced bills include:

• HR 1443 (Consumer Fairness Act of 2007) (Gutierrez-D-IL) which would make mandatory arbitration clauses in consumer contracts an unfair and deceptive practice;
• HR 1519 (American Homebuyers Protection Act) (Gonzalez-D-TX) which would prohibit mandatory arbitration in homebuilding contracts;
• S 221 (Fair Contracts for Growers Act 2007) (Grassley-R-IA and Feingold- D-WI), to provide for fairness in livestock and poultry contracts. This bill may become law as part of the Farm Bill; and,
• S 1133 (Taxpayer Abuse Prevention Act) (Akaka-D-HI) to prohibit mandatory arbitration in predatory tax refund anticipation loans.

Unfortunately due to an A/V error the link to the hearing was removed. The testimony was really helpful. If folks have not already, they should consider reading it. Below is an excerpt from Ms. Fogal’s moving and passionate testimony:

[S]ome people still believe the “spin” that arbitration is as fair, cheaper, and faster than going to court. Arbitration is not fair; it is not cheaper; but sometimes, it is a whole lot faster. I have known people who were filed on by their builder, shoved through “fast track” arbitration; and came out the other side in less than 90 days owing the builder money! … Why aren’t we all outraged?

We have always voted and taught our children to take this privilege seriously. My husband has served on jury duty and even grand juries. Would you believe, after being denied our right to a trial by jury and being in the middle of arbitration, we both received jury summons. We are good enough to serve on the juries but not good enough to get a trial of our own.

And Mr. Bland’s testimony provides an excellent summary of the information everyone should know about arbitration agreements. An excerpt from his testimony:

A large and rapidly growing number of corporations are requiring millions of consumers and employees to give up their rights to a trial by jury and to bring cases in the U.S. public civil justice system, and instead submit all of their legal claims to binding mandatory arbitration.

Most consumers have little or no meaningul choice about submitting to arbitration. Few people notice or realize the importance of the fine print that strips them of rights; and because all the corporations in entire industries are adopting these clauses, people have no choice. They must give up their rights as a condition of buying a car, opening a bank account, or getting a credit card, etc.

Private arbitration companies are under great pressure to devise systems that favor corporate rpeat players who draft the arbitration clauses (and thus decide which arbitration companies will receive their lucrative business). For example, arbitrators who rule against corporations and in favor of individuals are often blackballed from serving as arbitrators in future cases. Also, some arbitration companies have undertaken advising campaigns aimed at prospective corporate clients which make a number of inappropriate promises of favorable treatment.

Visit the Judiciary Committee website for more.

Posted at 5:15 PM, Jun 20, 2007 in Permalink | Comments (1) | TrackBack (0)