TorteDeForm

Kia Franklin

Arbitration In the News

Wow. Lots of stuff on arbitration has hit the news stands. Here's a sampling:

Article on arbitration and credit card agreements.

Study shows data the corporate lobby probably doesn't want us to see--courts tossing out arbitration decisions in employment disputes, but only those that harm employers, creating a sense of "snowballing futilitiy for employees." (Here's the article)

WSJ continues its streak of coverage of this issue (here's an overview by Public Citizen) with an article (subscription requ'd) and companion blog post on increased scrutiny of arbitration firm NAF. They quote TortDeform Contributor Paul Bland in this article.

Great letter to the editor in WSJ, "Arbitration is Great but Make it Fair to Both Sides" (subscription req'd). The author tears down a recent editorial that touted results from a Chamber of Commerce poll, touching upon potential flaws in the poll. It also lays out how the Arbitration Fairness Act does nothing to eliminate consumers' choice to go to arbitration, but does everything to eliminate corporations' unfair use of pre-dispute binding mandatory arbitration clauses to force arbitration down people's throats.

Yours truly wrote a letter to the editor in WaPo in response to an Editorial on binding mandatory arbitration, discussing why binding mandatory arbitration is detrimental to consumers’ rights and discussing why Senator Feingold’s proposed bill is the optimal legislative solution.

Kia Franklin: Author Bio | Other Posts
Posted at 12:33 PM, Apr 22, 2008 in Arbitration | In the News | Mandatory Arbitration
Permalink | Email to Friend


Comments

Matthew 5:25 (Biblical reference for arbitration)

Posted by: throckmorton | April 22, 2008 1:34 PM

Wow, Dr. T. That makes arbitration a violation of the Establishment Clause, its coming from religious doctrine. Kia, there you go, enjoin all arbitration clauses are religiously based impositions on a secular nation.

Posted by: Supremacy Claus | April 22, 2008 4:16 PM

Kia--Great letter to the editor on mandatory arbitrations. I'm disappointed that the Washington Post is so misinformed. I represent employees in employment discrimination, retaliation and wrongful termination cases. I am constantly fighting the imposition of these arbitration clauses. Check out the Ohio State Court of Appeals case in Haynes v. Ohio Turnpike Commission. My website is www.sindellattorneys.com. Again, Many thanks and much praise for your commitment to justice, due process and trial by jury!

Posted by: Steven A. Sindell | April 22, 2008 5:47 PM

As I discuss at Point of Law, the Michael Leroy study draws conclusions that its data does not support. But you're just parroting the abstract without thinking.

Again, if binding mandatory arbitration is "detrimental to consumers" then consumers have an easy option: don't agree to it. The businesses that avoid binding mandatory arbitration will then have an advantage in the market. The reason trial lawyers are fighting so hard for legislation is because binding mandatory arbitration is beneficial to consumers, and only by limiting consumer choice can trial lawyers protect their market share.

Posted by: Ted | April 23, 2008 3:03 PM

Ted,
Absurd, absurd, absurd.
Yes, I could in theory just "not agree" to the binding mandatory arbitration agreement in my employment contract (not mine, happily DMI is progressive and doesn't require this). Of course, if I actually want to keep my job, I'd better agree to it.

I could in theory "not agree" to bma in my cell phone contract too. Then when I shop around and find that there are no cell phone carriers that offer no bma and provide service in my area (unless u live in a handful of rural areas in this country), I would probably go back to the company and begrudgingly sign the contract.

Same goes for nursing home contracts. Grandma can totally refuse bma, if she wants to refuse care within a reasonable distance from her family members, spouse, and friends. That's totally her choice.

Thanks for illuminating the evil trial lawyer conspiracy to make choice meaningful for individuals, and not just the tool for a deceitful spin game by corporations that don't want people to have their day in court when people have been wronged.

Posted by: Kia | April 23, 2008 4:09 PM

A contract of adhesion is per se unconscionable. If Grandma does not like the arbitration that is to take place in Fallujah, Iraq, with her paying the arbitrator $800 an hour door to door from California to Fallujah, she may dispute it in court. Grandma and the nursing home chain are unequal parties.

Nursing home executives would be in their smart suits, in court, looking fit after their six mile morning run. Grandma would be wheeled into court, with her attendant and life sustaining equipment, including, a loudly pumping and beeping respirator. She would have properly timed, as during an objection by the defense, lawyer orchestrated coughing and choking fits. Her diaper might have to be changed after an odor induced request for a recess. She would try to stand to swear an oath, and just fall down, perhaps, loudly breaking a bone. That? That would generate a separate claim against the courthouse (please, review the egg shell skull doctrine). I would bet 10 cents on a generous settlement offer without a trip to Fallujah, Iraq.

I consider an unconscionable clause with scienter to be an intentional tort, a form of consumer fraud. I wonder why consumer lawyers have not taken a torts approach to the arbitration clause. Where is all the left wing lawyering imagination?

Posted by: Supremacy Claus | April 23, 2008 5:31 PM

Kia,

You say it is "absurd" that people could choose to avoid mandatory binding arbitration, then immediately admit that you chose to work for a company that does not have such requirements. Why not let employees choose for themselves where they want to work instead of having trial lawyers dictate the terms of employment through government fiat? Maybe some people prefer the higher salaries that can be offered when employers know that legal costs of hiring employees will be lower because of mandatory binding arbitration. I sure would.

Nothing is stopping you from presenting a business plan to George Soros that would offer cell phones or nursing homes without binding arbitration. Why not try to succeed in the marketplace through competition if arbitration is so bad? If every cell-phone company has binding arbitration (a false claim, as a quick Google check of more reputable anti-arbitration lobbyists indicates), it would be because the marketplace prefers the lower costs and better service that binding arbitration makes possible.

I note that you have no response to my refutation of LeRoy. Perhaps you may want to make a correction to your inaccurate post.

For readers interested in arbitration facts, rather than arbitration fiction, see the ongoing coverage at http://overlawyered.com/arbitration

Posted by: Ted | April 23, 2008 6:00 PM

Ted, your comments have moved from absurd to willfully ignorant of the realities most people face as consumers and as seekers of employment.

People don't just turn down a job with benefits, etc., and set about leisurely shopping for an employer that doesn't require mandatory binding arbitration, in this current economic condition we're living in. Nor do they enter into employment thinking they're going to need to go to court, so really they don't see this as a consideration. Or they're misinformed about what the arbitration is... they think it's a better, desirable option.

It also requires a hefty amount of financial cushion while they go about their search for the non-bma contract.

Additionally, some employees work at a place for several years and then BAM, they're hit with a "revision" to their employment contract. They're required to either sign the binding mandatory arbitration (so-called) "agreement" or clean out their desk if they don't like it. Once again, in the face of that option, very few people are privileged enough to operate on principle. Instead, they say, what are the chances I'll need to take my employer to court? And they keep working. Employers exploit this reality.

The choice shouldn't be between leaving one's job and signing away one's rights. It should be a choice about which disputes you are willing to take where, and as you note with the nursing home example, parties of unequal bargaining power should be able to make this choice fully informed of what's at stake.

People should be able to decide whether they will go to arbitration after the dispute arises--is it a sexual harassment case or is it a case over a $10 credit card overcharge? Different stakes, different levels of risk.

Posted by: Kia | April 23, 2008 6:17 PM

It takes an unemployed worker 20 weeks to find a job, up 50% since the 1970s.

In that position, how many people do you know that would refuse a job based upon binding mandatory arbitration?

And does the fact that they're willing to sign on the dotted line justify their exploitation?

Posted by: Anonymous | April 23, 2008 6:32 PM

"And does the fact that they're willing to sign on the dotted line justify their exploitation?"

One problem with this type of reasoning is that it assumes that people are bedrudgingly signing the B.M.A. agreements, wiping away their tears.

Fact is, very, very few people sue their employers, as a percentage of the workforce. We can use those great Marxist buzz-words like "exploitation" all we want, but at the end of the day if you never sue your employer, the fact that you signed an arbitration clause doesn't matter. Most people sign them and forget about them. (Unless, of course, they consult with a trial lawyer who chides them for losing their chance at millions from a Mississippi jury.)

Thus the suggestion that, of all the things that sucks about being a full-time employee, the arbitration clause is the "exploitative" part, is so out of touch with reality it's nauseating.

"People should be able to decide whether they will go to arbitration after the dispute arises. . . ."

Ah, but you don't think people should be able to decide whether bind themselves to arbitration *before* the dispute has arisen, do you Kia...("Mommy, why won't they let you sign the arbitration clause?" "Because, sweetie, the think-tank people are smarter than us.")

Finaly, isn't it funny that in all this heated rhetoric about arbitration, we have yet to see any evidence that arbitrators are worse at their jobs than our traditional litigation system...

Posted by: Middle Class | April 23, 2008 7:23 PM

This is entertaining but ultimately flawed and out of touch logic. It's like saying your First Amendment rights don't matter if your speech is never limited, or your right against unlawful searches doesn't matter because chances are, you will never be the victim of an unlawful, warrantless search. This is truly flawed thinking.

Besides, people DON'T decide to bind themselves to binding mandatory arb. First of all, most of these contract clauses are snugly tucked into a contract somewhere that people just don't read. So there's little chance of deliberation and given that a dispute hasn't arisen at the time the contract is signed, this isn't on the average person's mind. It certainly isn't on my mind when I'm purchasing a cell phone or signing up for my gym membership.

But secondly, people don't affirmatively choose, yes, I do want binding mandatory arbitration. They either take the clause imposed by the corporation or they vote with their feet. There's no real decision being made. They can't say, "Tell you what, Mr. CEO, cut my pay by 5% in exchange for my right to sue your butt if you ever do something illegal to me." That's plainly and simply not how it works.

The thinktank people don't think they're smarter than anyone. We just think the corporate lobby has been devastatingly clever in fooling most of us-of all education levels and political orientations-that our rights don't really matter that much, that we can be bought or sold, and that corporations should be able to reign free and create a privatized system of justice that they can pick and choose to use depending on their convenience.

Posted by: Kia | April 23, 2008 8:22 PM

I have read these comments and am surprised to read that people still attempt to justify all pre-dispute mandatory arbitration clauses on contract law principles. The fundamental principle of contract law is a "meeting of the minds." The fundamental issue regarding arbitration is the Supreme Court's interpretation of the Federal Arbitration Act. In our system, Congress is the forum to pass judgment on whether the Supreme Court's interpretation is good policy. All of the proposals before Congress recognize that people are free to waive their constitutional rights, and such waivers happen all the time in many different contexts. The ordinary standard for such waivers is whether they are knowingly made with after being informed of the consequences. Because of the Supreme Court's interpretations of the FAA, waivers of the right to trial by jury, and all that this entails, are being enforced despite undisputable evidence that such waivers were not made knowingly, and not made with full knowledge of the consequences. The court system is saying that it must follow what Congress has stated it wants, and right now Congress is being asked whether this is what it really wants. This debate is simply about whether Congress is happy with the current application of the FAA. In this debate, the acknowledged truth is that no "meeting of the minds" occurs regarding pre-dispute binding mandatory arbitration clauses in form consumer and employment contracts. To claim otherwise is to attempt to influence the political process with lies.

Posted by: Tom Domonoske | April 23, 2008 11:11 PM

This language about "choice" from "Ted" is a little Orwellian.
The last time I checked, the top ten credit card issuers (and probably 29 of the top 30) all had binding arbitration clauses with bans on class actions. What's the choice? Not to have a credit card? Good luck in the modern world without a credit card -- try to rent a car, stay at a nice hotel, change a plane reservation, buy something over the internet, etc. If by "choice" Ted means "you can give up a series of constitutional rights or you can live like an Amish person in a pre-modern choice, that's a really kick ass choice. I'm sure that most Americans would be intensely grateful to have a corporation lay out for them this terrific "choice" they've been given.
In a number of states, EVERY nursing home of any size has a mandatory arbitration clause. So in those states, there really is no choice. Just die in the parking lot, or go without medical care in a relative's house, or sign away your constitutional rights. Another super generous choice, courtesy of Ted.
Hey, Ted, has anyone told you that you have a pre-Dickens idea of what a "choice" is?
****
This freedom of choice/sanctity of contract rhetoric sounds great in a textbook. To my clients, it sounds like being over a barrel, and it makes them intensely angry. It will be interesting to see if the Congress will keep toeing the line of the wealthiest lobbyist and their paid academic supporters who generate this touching language about choice, or if they'll start to hear the anger in the voices of their constituents.
I haven't heard many members of Congress bragging to the PUBLIC about their great courage in voting for the bankruptcy bill. By the way, did you see the New Yorker piece on this the other day? It turns out that giving hundreds of millions of dollars to banks doesn't lead to reduced costs for consumers. While the credit card industry's profits jumped by 30%, and a handful of CEO creeps are walking away with literally tens of millions of dollars, interest rates haven't fallen to consumers and punitive overlimit and late fees have actually jumped quite a bit.
*****
Ted, if your protestations of things that aren't true get any more ridiculous, you may start to challenge Saddam's late P.R. guy who held press conferences announcing that the Americans were nowhere near Baghdad while CNN's cameras picked up smoke in the background.

Posted by: Paul Bland | April 23, 2008 11:28 PM

I look forward to Paul Bland's complaints against the auto industry that they refuse to sell him a three-wheeled car and he doesn't have any choice there. That a contractual provision is universally recognized to benefit consumers and thus becomes standard in the industry is evidence that consumers are better off, not that intervention is needed.

Again: no one is stopping you from taking a business plan to George Soros to introduce an arbitration-free credit card, and giving consumers more choices. If arbitration doesn't make consumers better off, and if credit card companies are really gouging, then you can not only provide a better service to consumers, but make a tidy profit doing so, with plenty of money left over to promote the interests of the litigation lobby in some other way.

That you instead spend Soros's money on taking away choices from consumers and making them worse off just goes to show that you understand that consumers, given the choice, would prefer mandatory arbitration.

Posted by: Ted | April 23, 2008 11:48 PM

Ted, your points about choice are totally backward. Binding mandatory arbitration clauses limit choice for several reasons. Foremost because most people don't know about them or understand them. When you shop for a credit card, do you read and compare the fine print disclosures for several different cards -- which might mean tens of thousands of words? Can you even get the full disclosures in advance of signing up? Do you do the same work when getting a cell phone, auto loan, brokerage account, and on and on and on? If consumers did this, we'd be too busy reading and trying understand complicated legalese to do anything else. It's an absurd to claim that people can, do, or should have to read these things.

Even if people read and understood them, these clauses are rarely negotiable anyway. And saying the consumer can just go somewhere else is totally insufficient. When your employer says, "agree to give up your right to sue me or you're fired," it's hard to claim most people -- people with bills to pay, kids to feed, on a career path they like -- have a remotely fair choice in the situation.

Even if the "choice" on pre-dispute binding mandatory arbitration were more of a real choice, it's still bizarre to claim that the choice is offered at a remotely appropriate, fair time: well before the consumer has any of the relevant facts about possible future disputes, when they are in the midst of making a completely different, possibly difficult decision (which credit card, loan, job, etc.), and have no reason to think hard about dispute resolution -- to choose whether to go to arbitration. You claim that outlawing binding mandatory arbitration takes a away choice, but that is totally backward: It guarantees that consumers retain their choice so that they can make it when it matters and they understand it better.

It's amazing that you claim that giving consumers a choice is some harmful scheme by trial lawyers. Unlike the businesses that force arbitration on consumers, lawyers cannot force clients to walk in their door. If people prefer arbitration, they will go there instead. There is something hilarious about people like you and the Chamber of Commerce working so hard to convince Congress and the media that consumers prefer arbitration -- in order to justify forcing it on them! If consumers really prefer arbitration, why is big business afraid of giving them a choice in the matter?

Posted by: David Arkush | April 24, 2008 9:20 AM

"You claim that outlawing binding mandatory arbitration takes a away choice, but that is totally backward"

David, et. al.,

It's pretty clear that "outlawing" binding mandatory arbitration "takes away a choice." Hence the "outlaw" part of your sentence. If it didn't eliminate a choice, nothing would be "outlawed." This really shouldn't be that difficult to grasp. It's definitely not "Orwellian." It's English. It's what "choice" means. Before: consumers can opt to bind themselves to arbitration. After: consumers can NOT bind themselves to arbitration.

This is not to say that all choices should be allowed. Clearly we, as a society, ban certain choices all the time.

Thus, the debate here *should* be about whether the [X] benefit of "outlawing" consumers' abilities to bind themselves to arbitration is worth giving up the [Y] benefits of allowing them to continue to do so. But until you acknowledge that there is *some* cost to banning b.m.a. honest debate can never ensue. You'll just end up posting on blogs in perpetuity, arguing past each other. But if you think accusations regarding the "corporate lobby" and "Saddam's P.R. guy" are helpful in deciding the fate of arbitration clauses, go ahead...

Posted by: Lawyer | April 24, 2008 11:26 AM

Ted wrote in part: "That a contractual provision is universally recognized to benefit consumers and thus becomes standard in the industry is evidence that consumers are better off, not that intervention is needed."

Ted misrepresents the truth. Pre-dispute binding mandatory arbitration clauses in form contracts are not universally recognized to benefit consumers. For instance, new car dealers have already testified under oath to Congress that such clauses are unfair to the weaker party and should be banned.

"Lawyer" above repeats the acknowledged false assertion that people choose "to bind themselves to arbitration." In this context, the word bind is a legal phrase with its roots in contract law and the meeting of minds. The Supreme Court's interpretation of the Federal Arbitration Act is what binds people to these clauses, not their choice to buy a car or use a credit card. The only group of people that have freed themselves from that unfair bind are new car dealers regarding their weaker position in their franchise contracts with car manufacturers. Any party who claims nothing is wrong with pre-dispute binding mandatory arbitration clauses in form contracts must first explain the car dealer's sworn testimony to the contrary to Congress.

I do agree that people in this debate are talking past each other and that is in part on different definitions of the words being used. In theory, anyone could claim that any person is alive because they have not chosen to stop breathing, but the law does not view choice in this way. It really does no good for one side to say "he chose" and the other side to say "he did not choose" without first coming to some agreement by what is meant by the word "chose."

Posted by: Tom Domonoske | April 24, 2008 4:37 PM

Now, now Ted… I know you have a tough job selling the idea that somehow binding arbitration is beneficial for the consumer. I can’t help but wonder what corporate entity holds your preconditioned mandatory binging arbitration employment contract over your head to promote abusive binding arbitration clauses for big business?

I realize you have a tough job but, to write such illogical stuff like; “let employees choose for themselves where they want to work” and when referring to binding arbitration in the purchase of a new car as a contractual provision that is universally recognized to benefit consumers??? Careful Ted, if you can’t spin the fairness of Binding Arbitration any better than that, you just might have a tough time choosing where you want to work.

You might not have a choice where you want to work, raise your family and have to buy a new house with a mandatory – builder friendly – binding arbitration clause in the contract that limits your choices when the house begins to sink, leak and fall down around your ears. It is only then will you discover that the warranty is worthless and that Tort Reforms robbed you of basic consumer rights, and that in 99% of the binding arbitration cases, builders prevail because of their repeat arbitration business.

Realistically what is the incentive to produce a quality product, to build a house right the first time, if the builder knows they will triumph in arbitration and have no liability for the defective product?

I remind you it was the passage of Car Lemon Laws in all 50 states that today assures more reliable cars that come with legitimate and enforceable warranties. However that is about the change since it’s nearly impossible now to buy a new car without a binding arbitration clause in the contract, which specifically states that the buyer must agree to give up all rights provided under that state’s Car Lemon Law. Now how does that benefit the consumer Ted?

Binding Arbitration clauses were never designed to protect consumers but to limit virtually all liability for Cooperate America to successfully produce defective products and services without consequences. It’s simple – If arbitration is fair and so good for the consumer then why require that it to be mandatory?

Posted by: Janet Ahmad | April 24, 2008 7:36 PM

"However that is about the change since it’s nearly impossible now to buy a new car without a binding arbitration clause in the contract, which specifically states that the buyer must agree to give up all rights provided under that state’s Car Lemon Law. Now how does that benefit the consumer Ted?"

They can get a lower price. Lemon laws are largely designed to benefit attorneys at the expense of consumers, and I'd be thrilled if I had the option of choosing not to bind myself with such an inefficient legal regime and instead contract for a more sensible warranty.

It's obvious that mandatory arbitration clauses are better for consumers: you don't think GM would love to take business away from Toyota if they thought that consumers would prefer not to have arbitration? MasterCard and Capital One spend millions on advertising: there's a reason they don't instead try to differentiate themselves through "No Mandatory Binding Arbitration" ads. Consumers (at least the honest ones who aren't going to bring abusive lawsuits that raise costs for the rest of us) prefer having the lower prices that mandatory binding arbitration permits.

Again, if mandatory arbitration clauses don't benefit consumers, no one but no one is stopping you from starting up businesses that don't have the arbitration clauses and advertising all the ways that your businesses are better than the businesses that do have mandatory arbitration clauses.

The fact of the matter is that you don't want consumers to have that choice. You want to force consumers to do things in the manner that most benefits trial lawyers, whether they want to or not. It bothers me, like it bothers most Americans, that I pay thousands of dollars extra in goods and services because of the waste that trial lawyers bring to the economy, and when businesses try to attract honest consumers who want to opt out of that system, and consumers are thrilled to have the opportunity, the lawyers and their flacks complain like mad. Which is why we have legislative attempts, paid for by the litigation lobby, to eliminate mandatory arbitration clauses.

Janet incorrectly implies that arbitration means that consumers lose. Which isn't so: even Kia Franklin posted about an arbitration where the consumer won, but the civil justice system took the victory away (at least until it's reversed on appeal). Arbitrators rule for consumers as often as the civil court system does. The only difference is that, because arbitration is cheaper and less random and quicker, it's harder for trial lawyers to bring extortionate meritless lawsuits. The only people arbitration hurts are the dishonest ones.

Posted by: Ted | April 24, 2008 11:57 PM

Now, now Janet, no need to resort to ad hominem attacks.

Funny, isn't it Janet, that everyone here works for some employer with an agenda -- including you, Janet -- and Ted is the only one who gets accused of parroting his employer. Remove the speck from thine eye, Janet.

But seriously, can we get rid of the whole the-terms-of-arbitration-agreements-aren't good-for-consumers strawman? To put it simply, nobody claims that arbitration agreements are, by their terms, good for consumers. By nature, they only apply when the consumer doesn't want to go to arbitration, so they can't be good by their terms. What's argued is that THE COST SAVINGS IS PASSED ON. Feel free to address the argument. Or don't.

For example, if you've ever done anything remotely dangerous, like bungee jumping or horse-back riding, or joined a gym, you've signed an agreement saying you've assumed the risk inherent in the activity. Of course, nobody argues that these clauses are, by their terms, beneficial to consumers. By their nature they only come into play by limiting the cash paid to a plaintiff. But without these clauses the liability insurance would be almost cost-prohibitive, and the activites would be much more costly, if they existed at all. I am certain that various people are willing to exchange signing the waiver for having to pay less to engage in the activity. Thus, consumers benefit not by the terms of the waivers, but by their *existence.*

So then, Janet, imagine a Tort Deformer asking "if [risk assumption clauses] are so good for the consumer then why require that [they] ... be mandatory?"

Imagine a risk-assumption clause, or arbitration agreement, that wasn't binding...Such a contract cannot exist legally, and is in any event pointless.

For example, I will sign any contract that says I have to give the other party a million dollars "if I want to when they ask me for it." That's a non-mandatory arbitration clause.

Posted by: Lawyer | April 25, 2008 12:17 AM

Ted: "Arbitrators rule for consumers as often as the civil court system does."

You speak with surety, Ted. Please provide a link or links for the data to back up this claim.

Lawyer: "What's argued is that THE COST SAVINGS IS PASSED ON." Actually, this is your opinion on what the argument should be about. Not everyone agrees. However, focusing specifically on your issue: can you quote instances where cost savings have been passed on to the consumer? We already know that this isn't true with nursing homes, and have the data to back this up. There was an article last week about arbitration agreements being required by organizations that provide obstetric services, and specifically the medical communities have stated that they've not received a drop in liability insurance costs based on these yet, and many doctors and medical organizations have dropped these arbitration agreements because, to quote them, the negatively impact on the patient experience.

Can you cite, specifically known instances where cost savings have been passed on to consumers because of arbitration agreements in contracts? Since you bring this up as an argument, frequently, one must suppose you have at least anecdotal data to support the debate, on one side or the other. The bungee jumping example is an example of waiving rights to sue in case of injury, but arbitration isn't usually part of these types of waivers. And this discussion is about arbitration and binding mandatory arbitration agreements.

If there is no data, there really can't be any debate. All we have, then, is nothing more than an exchange of opinion. A frequent exchange of opinion, but opinion nonetheless.

Posted by: Shelley | April 26, 2008 11:10 AM

Answering the question posed to Lawyer, see

IFC Credit Corp. v. United Business & Indus. Federal Credit Union (7th Cir.); Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir.1997); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir.1996); George L. Priest, A Theory of the Consumer Product Warranty, 90 Yale L.J. 1297 (1981).

See also my law review article on the topic.

The cost savings is passed on. That's elementary Economics 101. The burden is on you to show that the cost savings isn't passed on, and the laws of economics don't apply.

Posted by: Ted | April 26, 2008 1:12 PM


Shelley,

The argument is: (1) in competitive marketplace, where more than a company realizes a cost-reduction, that cost-reduction is passed to consumers through competition with that company's rivals; (2) the markets for credit cards, cell phones, etc., are competitive; and (3) mandatory binding arbitration clauses save companies money. Ergo, money saved through mandatory binding arbitration clauses is passed to consumers in their primary markets.

The above is not simply my "opinion" because within any opinion is a value judgment, which obviously the above lacks. The above is just a simple, run-of-the-mill argument.

Raising the burden of proof on an opponent is not a viable response to an argument. To refute my argument you have three (3) options. You can: (i) refute the economic theory that companies' cost-reductions are passed on to consumers through competition; (ii) refute the notion that arbitration saves companies money; or (iii) show that the markets in which arbitration clauses are primarily used are not competitive.

Any type of response that does not attempt (i) through (iii) above does NOT address the argument and is thus relatively pointless babbling.

As usual, I look forward to hearing from you.

Posted by: Lawyer | April 26, 2008 1:27 PM

Ted, the cases you quote don't provide specifics as to money saved and passed on to the consumer, specifically because of arbitration agreements, do they? All of these, except for the last paper you mention are online and there's nothing quantifiable that I can find attached to each. Perhaps if you have links to actual numbers you should consider providing these rather than tossing out a few cases. As for the Yale professor's paper, the first item I found on it was criticism of his analysis, so I don't think we can assume what was said elicited general agreement.

Lawyer, you're talking economics but you're not giving specifics. I appreciate the skill with which you reframe these discussions into those most comfortable to you, but I don't necessarily agree that these are the proper discussions, or that you've necessarily provided any kind of material on which one can even have a decent discussion.

I also remember taking logic in college, and your conclusion does not necessarily follow from the given premises. Nor do I agree with the truth of your premises, either.

First of all, I don't think we can agree that industry, generally or specifically, passes on cost savings to the consumers. I don't even agree that cost is the primary factor influencing all buying decisions, and most industry is aware of this.

I also don't agree with your statement that BMA necessarily saves companies money. We have no data on which to form a definitive conclusion that BMAs do save most companies money.

Then you mention about the markets being competitive for credit cards, but neglect to mention that as far as I know, all credit cards have arbitration agreements. Therefore if all credit cards have an arbitration clause, then the clause themselves aren't considered a competitive component. If they were, then we would see significant differences in these clauses across the industry, including credits cards offered without the clauses.

In actual fact, the very sameness and ubiquitous nature of these clauses is counter to your argument that they are an element of the company's competitiveness. The very nature of competition would imply differences. I see no substantial differences in the arbitration clauses.

In addition, the factors that increase a company's edge competitively are usually marketed quite strongly by companies. I don't think I've ever seen a credit card commercial where the first thing touted is the presence of the arbitration clause. Can you point out a credit card company who offers customers cards with and without arbitration agreements, as a bid for that company to be more competitive?


"Any type of response that does not attempt (i) through (iii) above does NOT address the argument and is thus relatively pointless babbling."

You sign yourself a "lawyer". Really, is this how you conduct an argument in court? In other words, reframe the discussion and then immediately consign any part of the discussion outside of your artificial parameters to be 'babble'?

Silly person.

Posted by: Shelley | April 26, 2008 3:09 PM

Shelley, I posted substantial details in answer to your questions, but the post never appeared, so I won't waste further time here. Check the Overlawyered site, where we've been over this time and time again in the arbitration section.

Posted by: Ted | April 26, 2008 9:43 PM

Ted you said:
”They can get a lower price. Lemon laws are largely designed to benefit attorneys at the expense of consumers,”

Again, your agreement is totally illogical. The passage of the car lemon law gave an incentive to manufacture a quality product right from the beginning, which eliminated the need for litigation. The lemon law rules are simple, the manufacturer has a limited amount of time and number of opportunities to repair the vehicle; if not the manufacturer/dealer must buy it back. A copy of the law is even displayed for public view at the dealership and the process is very simple. So… who needs an attorney when there is a lemon law?

You have to be kidding Ted… you said:
“Again, if mandatory arbitration clauses don't benefit consumers, no one but no one is stopping you from starting up businesses that don't have the arbitration clauses and advertising all the ways that your businesses are better than the businesses that do have mandatory arbitration clauses.”

Benefit of binding mandatory arbitration (BMA) for the consumer? As illogical as the analogy is you still have my attention.

KB Home the nations 5th largest builder has offered a BMA choice. The fact of the matter is KB Home is this only builder prohibited by an FTC federal consent order from requiring BMA of its buyers. To get around the federal consent decree KB home now offers a 10-year warranty without BMA or a 12-year with BMA as a “CHOICE” (as they say) to the buyer. Funny thing, KB isn’t bragging about its 12-year BMA customer "choice" because no one is buying it.

Ted said…
”Arbitrators rule for consumers as often as the civil court system does.”

I second Shelly’s challenge to you; “please provide a link or links for the data to back up this claim.” The fact is the BMA process is held in secret behind closed doors, out of the eye of public scrutiny for a reason. Industry doesn’t want the extent of its consumer dissatisfaction known. Again, if arbitration is fair and so good for the consumer then why require that it be mandatory and conducted as top secret?

Once again, BMA clauses were never designed to protect consumers but to limit virtually all liability for Cooperate America to successfully produce defective products and services without consequences.

Regarding the notion that “the cost savings is passed on”….
At the risk of being redundant, most people understand that the value of a product is driven by the market. Case in point, the homebuilding industry enjoyed enormous profits as they utilizing BMA to limit liability for construction defects and never passed the savings on to the consumer. In fact the opposite is true.

The history is clear. Thirteen years ago (1995) NAHB promulgated a “Builder Contract” for use by its membership nationwide, which contained a BMA clause that buyers had to agree to if they wanted to purchase a new home. For millions of families the doors of the courthouse were closed as the quality of home construction declined, while over inflated house prices and profits went through the roof and the CEO bonuses grew to infamy.

Now, look at what builders are selling their new houses for today – that is the real market.

Posted by: Janet Ahmad | April 26, 2008 9:47 PM

Ted, any discussion with you inevitably ends up with you stating you "don't want to waste your time here" and attempting to drag us all back to your weblog--usually following some note about comments either being edited or filtered or "lost". I don't know how you are as a lawyer, but I've been weblogging for seven years and such behavior is considered both boorish and rude.

I have no interest in "trotting" back to your place, where open dialog is not only not welcome, but where you're known to edit other people's comments to suit your own interests.

If you can't maintain a dialog in comments, perhaps you shouldn't start one. That way the rest of us won't waste our time.

And I agree with Janet: your statement about the lemon laws really reflects on your legal training. Seriously.

Posted by: Shelley | April 26, 2008 11:15 PM

My assessment of the lemon laws reflects an accurate assessment of their economic effect, which is a wealth transfer from consumers and auto manufacturers to attorneys. Which is why the litigation lobby is the one who lobbies for them.

"I don't think I've ever seen a credit card commercial where the first thing touted is the presence of the arbitration clause."

No, they tout the lower prices and higher benefits that the arbitration clause permits the credit card company to offer because their legal expenses are lower. Can you name a credit card that touts the absence of an arbitration clause?

"I second Shelly’s challenge to you; “please provide a link or links for the data to back up this claim.”"

I posted links. It didn't appear on the website here, a frequent problem with my posts here when I try to post links, presumably because of overaggressive spam filters. It's also available at Overlawyered in the arbitration section.

Shelley, you claim to want to look at the data, and when I tell you where you can find the data agglomerated in one place, you don't want to look at it. Of course not: you don't actually care about evidence, you just want to insult people who disagree with your anti-consumer agenda.

Everyone else is welcome to go to Overlawyered to see the information that Tort Deform doesn't want to post.

Posted by: Ted | April 27, 2008 9:04 AM

Ted your claims are inaccurate, misleading, hurting your creditability and big business efforts to force BMA on consumers.

The Car Lemon Law was supported by the auto industry when it passed in all 50 states because the manufactures concluded if they built a safer, well built car with a bump-to-bumper warranty it made good business sense. Most important it cut out the high cost of litigation.

Don’t ask the consumer to give up a simple car lemon law. It’s a simple process that doesn’t need an attorney but in most cases there is no dispute because the car is usually repaired under the warranty.

Again, show some statistics about BMA cases – the fact is BMA cases are all top secret, not to be found in public records. The question is why force BMA on consumer if it is so good consumers would welcome it.

Posted by: Janet Ahmad | April 27, 2008 12:54 PM

"Again, show some statistics about BMA cases – the fact is BMA cases are all top secret, not to be found in public records."

False. BMA cases in California are public record, and show consumers do better there than they do in court -- the same result every honest empirical study has concluded.

"The question is why force BMA on consumer if it is so good consumers would welcome it."

BMA isn't forced on anyone. Consumers can choose to agree to it, or go to a business that does not agree to it. BMA is a way for consumers to signal that they won't engage in frivolous litigation. It solves the collective action problem. This is all discussed at Overlawyered and in my law review article, so I won't repeat myself here.

Posted by: Ted | April 28, 2008 10:42 AM

"BMA isn't forced on anyone. Consumers can choose to agree to it, or go to a business that does not agree to it."

Please name a cell phone company that does not require BMA.

Posted by: Kia | April 28, 2008 11:04 AM

"Please name a cell phone company that does not require BMA."

Virgin Mobile.

Posted by: Ted | April 28, 2008 1:10 PM

Ted:
I've never heard of Virgin Mobile. Where does Virgin Mobile do business.

"BMA isn't forced on anyone. Consumers can choose to agree to it, or go to a business that does not agree to it...False. BMA cases in California are public record, and show consumers do better there than they do in court"

Can you tell me what major track builder does not have BMA in its contract,warranty or 3rd party warranty, other than KB Home that is prohibited by a federal consent order?

Posted by: Janet Ahmad | April 28, 2008 3:50 PM

"I've never heard of Virgin Mobile. Where does Virgin Mobile do business."

Virgin Mobile does business all over the United States. Simply go to http://www.virginmobileusa.com
to compare rates, phones and plans.

Posted by: Sir Richard Branson | April 28, 2008 4:44 PM

Janet: I don't know what a "track builder" is. In any event, I think I've exhausted my quota of free consumer advice as I've adequately demonstrated that Kia doesn't know what she's talking about, but feel free to contact http://www.glgroup.com/Council-Member/Ted-Frank-146137.html to set up an appointment, and I'll be happy to speak with you on the phone at my normal billing rate.

I note that Kia *still* hasn't posted my April 26 post with links to relevant Overlawyered posts.

Posted by: Ted | April 28, 2008 5:06 PM

Actually, other of the cellphone companies are adopting the idea of dropping arbitration clauses. The whole purpose of the clause for cellphone contracts was to prevent class action lawsuits. That failed, and going to arbitration for smaller claims is actually more expensive for them then having the people just use the small claims court system.

In other words, BMA hasn't helped either the cellphone business or consumer.

The same cannot be said of credit card companies. I do not know of any major US credit card supplier that doesn't have arbitration clauses in their cards. In fact, there's a certain class action lawsuit about this right now.

It's also becoming impossible to buy a new home now without getting hit with an arbitration clause (as Janet mentions--look the phrase "track builder" up next time). Ditto with new car, or new job. The latter is particuarly troubling because the Supreme Court has ruled that arbitration law trumps equal opportunity, which to me is obscene for a country that touts "equality".

Ted your statement about public records in California is fallacious. First of all, the state actually had to sue NAF to get its records, and then it only begrudgingly provided raw data that had to then be analyzed. There was nothing in the data, though, that supports you claims that arbitration has been better overall for the consumers in California over litigation. Nothing.

As for your statement about Kia not allowing you to advertise on her site, no sympathy. The only reason you're here is to lure people back to your space where you can control every aspect of the "dialog". You're not here to truly engage in debate. Why on earth should she give you such a forum? You certainly wouldn't reciprocate.

As for your current ad soliciting clients for your business, I don't know about your state, but there are rules governing such behavior, isn't there? As for your statement about "free consumer advice", wow, is that what it is. And here we thought you were interested in actually engaging with people in comments. I don't know about Janet, but as I mentioned earlier, webloggers have names for people like you, and they aren't flattering.

(My apologies to Tort Deform in negative engagement with Ted.)

Posted by: Shelley | April 29, 2008 10:39 AM

Shelley has already admitted that she hasn't looked at the evidence and doesn't want to look at the evidence, so her attack on me for supposedly getting the evidence wrong is as fictional as the rest of her prejudiced paranoia against freedom of consumer choice and against arbitration clauses that benefit consumers.

Anyone who has actually read the extensive list of cites at Overlawyered, however, knows that I'm correct.

Posted by: Ted | April 29, 2008 3:29 PM

There you go again Ted promoting yourself and your website.

My mistake Ted, you are correct that Virgin Mobile does not have a BMA clause, because Virgin Mobile doesn’t have a contract. It is a prepaid cell phone service. All the others do. Consumers either prepay for service or agree to BMA; otherwise they don’t get a cell phone.

Again my mistake; I need to be more specific when engaging in debate with a lawyer about major track “HOME” builders. The fact is all major track homebuilders and most small homebuilders have BMA clauses in their contracts and alleged warranties. There is no consumer choice.

Ted is quickly running out of ways to justify and skirt around the inaccuracies of his spin that BMA is good for the consumer, that they have a choice, and that savings associated with BMA is passed on to the consumer. His arguments have not passed the common sense test yet.

It’s a tough job trying to promote abusive BMA on behalf of business. After all, it’s difficult selling the idea that somehow BMA is beneficial to the consumer even if they can't afford arbitration and the principles of law do not apply in the process.

When making bold unsupported statements and playing the red herring game Ted obviously feels that is his strong suit. His comments illustrate the lengths at which supporters will go to promote Tort Reform and BMA to limit liability for defective products and services.

Following Shelley’s lead, I want to also offer my apologies to Tort Deform for my part in the negative engagement with Ted.

However in the end, this debate may serve us well in recognizing that the augments in support of BMA/Tort Reforms are weak. This debate illustrates the self-serving reasons why big business invests so heavily to eliminate consumer protection through Tort Reform and promotion of BMA as good for the consumer.

So… it’s time to get back to the substance of the abusiveness and ubiquitous nature of BMA in consumer contracts.

Posted by: Anonymous | April 29, 2008 4:48 PM

"Ted is quickly running out of ways to justify and skirt around the inaccuracies of his spin that BMA is good for the consumer."

Janet, nobody, not even Ted, is saying that BMA is necessarily *good* for the consumer. What Ted and other rational, sane, economic-types are saying is that *there are benefits to BMA that this site won't tell you about.*

BMA will invariably be bad from the perspective of certain consumers. Those people, obviously, are those who lose out when they're not able to enter traditional litigation after signing a BMA clause.

On the other side, certain consumers will gain through the availability of BMA clauses. Specifically, those who get a better deal or contractual terms because BMA saves companies money.

Ted's just trying to point out this second part.

It's a pure value judgment to say that we *should* ban BMA. But you have to weigh the benefits versus the costs to society. A flat ban on BMA clauss imposes costs on the wide majority of consumers who never sue, in the name of easing court-access to those who would have wanted to use the traditional litigation system, but signed a BMA clause. (Secondarily, there will be other costs through the reduced value in the companies that once-used BMA, and the increased burden on the court system.)

And, of course, lawyers will gain, because they'll be better equipped to use the threat of a rogue jury and detracted discovery, and extort millions from companies through an otherwise invalid legal claim. (Secondarily, yacht and luxury home builders will benefit).

Is it worth it? That's up to democracy. But, I guarantee that if instead of fighting homebuilders, you witnessed first hand the tactics used by lawyers to bring meritless suits to extort millions from companies you'd probably have a different view.

Or at least be willing to acknowledge that there are two sides to every coin.

Posted by: Lawyer | April 29, 2008 5:44 PM

I continue to tell Ted that if a comment isn't showing up, commenters EMAIL ME DIRECTLY and let me know this. Those who understand the way I run this blog know I will address this concern (probably a problem with CAPTCHA). Ted would rather jump to conclusions and personally attack me by implying that I have the incentive and/or time to strategically hide his comments. I have neither.

I have significantly less experience in this profession than Ted does. I do however know the difference between empty rhetoric and double-speak about the so-called "choice" for consumers to be bound by take-it-or-leave-it contract terms that railroad you out of court and into a system that often costs more than going to court and provides less protection to you in exchange. One exception to the binding mandatory arbitration rule in cell phone contracts does nothting to address this empty rhetoric about so-called "choice".

At any rate, having supposedly shown I don't know what I'm talking about, I wish Ted luck as he proceeds to the dozens of much more experienced individuals who know a great deal about consumer law and arbitration clauses in particular (some of them being contributors to this blog).

Posted by: Kia | April 29, 2008 6:43 PM

"However in the end, this debate may serve us well in recognizing that the augments in support of BMA/Tort Reforms are weak. This debate illustrates the self-serving reasons why big business invests so heavily to eliminate consumer protection through Tort Reform and promotion of BMA as good for the consumer."

A good point, and probably the reason I'm not just letting go in this thread.

Ted, your cases you quoted do not back up your statement. There's absolutely nothing quantifiable, or based on any form of measurement in any of the cases. I don't have access to the last paper, and from criticism I've read of it, I have no interest in paying our hard cash for access to the paper. Oh, and you don't go to my web site to get an answer. Is that concise enough for you?

Lawyer, you ignored my response above. You write:

"A flat ban on BMA clauss imposes costs on the wide majority of consumers who never sue, in the name of easing court-access to those who would have wanted to use the traditional litigation system, but signed a BMA clause."

You've not proved this. In fact, we can use the cellphone industry as an example where BMA fails across the board--to the businesses, as well as the consumers.

We have no quantifiable evidence that any company--any company--has ever passed on savings from BMAs to their clients. Or that the businesses would be charging more without the arbitration clauses. There is nothing that one can point to and say, "There is proof." We have, in the end, nothing more than your opinion. And frankly, you sign yourself as "Lawyer"--who are you that we're supposed to trust your opinion?

You mention about lawyers and meritless cases, but that is the price we pay for a truly free and open legal system. In addition, there are checks and balances on these abuses. I bet if we really looked at the legal system, we would find out there really aren't that many malpractice suits, there isn't that much money involved, the cost to companies really isn't a significant proportion of their income. If any of this were true, then why are so many of the 'abused' so damn wealthy? And why are the 'abusers' so damn poor?

Two sides to this coin? No. With the decisions by the Supreme Court, the incredible abuse based on BMA, the almost frighteningly close call to completely losing our legal rights, this is one issue that one can't see "the other side". Not unless you're one of those abusing the BMA.

Posted by: Shelley | April 29, 2008 6:43 PM

I’m sorry I forgot to sign in the last time so my post showed up as Anonymous.

Thank you Lawyer, you said it very well. “BMA will invariably be bad from the perspective of certain consumers. Those people, obviously, are those who lose out when they're not able to enter traditional litigation after signing a BMA clause.”

That is exactly what we have been saying for years. When BMA is mandatory as a condition to buying a house – the biggest purchase of a lifetime – there is no return policy or option when a family gets stuck with a lemon.

It is more difficult to get a license to drive a car in Texas than to register (no license required) as a builder. Pay $150.00 a year, provide a social security number, and include the standard BMA clause in the sales contracts and presto anyone is a Texas builder and free of liability.

Wait,it gets worse.

It has been nearly 6 long years since “Bob the Builder” Perry and his builder friends bought, built and now operate the Texas Residential Construction Commission (TRCC). The state agency offers, no help for aggrieved homebuyers, instead its MANDATORY process forces homeowners into a costly protracted legal disputes ending in abusive BMA that most can not afford.

At the risk of being redundant… Realistically what is the incentive to produce a quality product, to build a house right the first time, if the builder knows they will be victorious in arbitration and have no liability for the defective product? A new home warranty is worthless and Tort Reforms rob consumers of basic rights, and in 99% of the binding arbitration cases builders prevail because of their regularly scheduled repeat arbitration business.

There is no traditional litigation after signing a BMA clause in homebuilder contracts and no option to omit it from the contract.

Posted by: Janet Ahmad | April 30, 2008 1:55 AM

"There is no traditional litigation after signing a BMA clause in homebuilder contracts and no option to omit it from the contract."

Janet:

I hear your conerns. As one can imagine, it's probably nothing short of a nightmare to have purchased a home only to find aspects of it defective.

So, on the one side we've got homeowners who would like traditional litigation, and on the other there are some homeowners who would be willing to bind themselves to arbitration in exchange for whatever benefit the homebuilder would likely give in exchange.

So the question is: what's the legislative solution?

How about this: a law that requires home-builders to offer a contract without the BMA clause. Then, if they want to offer a contract with a BMA clause, it has to be presented simultaneously to the buyer, so that they can "choose" between the two.

That way, no consumers are really bound to accept BMA. And, it will be clear what incentives the builder has to give in exchange for it. (Say what we will about builders, but they sure are good at giving incentives...)

Heck, you could even require some type of statement be presented with the BMA contract, explaining in detail what it is etc., so that lay-persons can understand it. The sky's the limit.

The problem is, the current "Arbitration Fairness Act" bans ALL BMA. That's unnecessary; it's like using a power-saw to untie one's shoes.

I think, as a general rule, it is frequently more preferable to place boundaries around peoples' contracting ability, rather than flat-out banning certain contracts all together. You run a risk, in my opinion, of throwing the baby out with the bathwater.

Sound acceptable?

Posted by: Lawyer | April 30, 2008 12:33 PM

Lawyer:
First, it’s the BMA pre-dispute requirement that concerns me as a condition to a sales contract.
If arbitration is really good for some consumers then they will agree to use it after the dispute arises to resolve their differences. Most people can understand the common sense of that thinking.

Second, after watching the predatory lending and outright mortgage fraud by the building industry to exploit families utilizing incentives to con them into using their mortgage company or affiliated lenders and Title Company, the public trust is gone. Personally, after 8 years of having to helplessly stand by watching massive mortgage fraud go unchecked, my threshold of trust for most new homebuilders is understandably gone.

Any incentive by homebuilders to entice buyers to agree to a pre-dispute BMA in light of today’s mortgage crisis could well be see more like just another industry scheme akin to organized crime. I don’t think it would be an appropriate consideration particularly now.

One thing is sure; the abusive use of BMA clauses by the homebuilding industry has greatly damaged its reputation. While consumer arbitration may at one time have been a good idea in theory as an alternative to the courts, I am afraid that even the mention of BMA is now seen as unfair for the consumer, even if voluntary. And, I think that is what might be a genuine fear of the propionates who struggle to paint a picture that BMA is good for consumers. I believe the effort to promote BMA as good for the consumer would be ill advised.

However, that doesn’t mean this dialog should end. Recognizing the problem is the first step to solving a problem.

Posted by: Janet Ahmad | April 30, 2008 5:57 PM

"I continue to tell Ted that if a comment isn't showing up, commenters EMAIL ME DIRECTLY and let me know this."

So, nu, it still hasn't shown up.

Posted by: Ted | April 30, 2008 10:19 PM

Ted:
Stop stop whining and post it again or just send it to Kia or it me and I will post for you.

Posted by: Janet Ahmad | May 2, 2008 1:25 PM

As a math and science and computer guy not a Legalese speaker I didn't even know what a BMA clause was until I came here. People complain all the time when I use computer jargon to explain something yet feel ten pages of fine print written in psodo-Latin English legalese mumbo jumbo is appropriate for my employment contract I'm FORCED to sign in order to be employed get insurance credit card bank account etc.
From now on I'm not even going to try to simplify my language for you non-technical legal types. If you can't understand a simple Fourier transform or the simple mathematics of calculating tangent velocities of counter rotating objects I should be able to take you for all your worth right? Because I spent my time advancing the human condition as an engineer instead of being a legal parasite I'm a lower class member of society not deserving of the rights I unknowingly signed away. I mean thats the whole logic of most of the legal arguments I have heard. If your not a lawyer and don't understand the language you shouldn't participate in modern society by getting credit, cell phone, car, home etc.
The BMA clause is an obvious attempt at circumventing the constitutional rights of individuals for personal gain. Any company that uses such a clause in a contract must be considered suspect if they have a BMA clause they must be worried about lawsuits right, they must be doing something Illegal if they have this clause written in to protect themselves against our system.

Thanks for the warning, here's one for you legal types, This country used to run on roads and laws, now it's run on computers. Every day computer geeks like me get stronger and word smiths and smarmy lawyers get a little weaker. one day you will look back and wonder why you bank account is empty you credit rating is ruined you house and car are repossessed you medical records "forget" that you are allergic to X and you suddenly have a long criminal record and arrest warrants you were unaware of.
Sorry you should have read through all that computer code on that program you ran on your PC before signing the EULA............

hmm... I think I'm going to start putting legal stuff in my computer code like "if this product is used in a law office 10% of all profits go to me" Better start learning C++ and JAVA if you expect to be a part of society, get a credit card, by a home etc...

Turn about is not only fair play, it's a lot of fun.

By reading this sentence you agree to name all your children BILL GATES and send 50% of before tax income to.....

Posted by: Thomas | May 28, 2008 9:55 PM

Isn't "Ted" the one who banned people with opposing views from a pro-arbitration forum earlier this year? It's nice that the anti-mandatory-arbitration folks let him voice his views here. Kind of says a lot about which side in this issue is interested in fairness.

I've come close to having to arbitrate a dispute. Because I was able to get out of the arbitration clause and sue, I was able to negotiate a settlement for nearly ALL my damages, and didn't have to go to trial either.

The difference between being able to sue and having to arbitrate, therefore, was financial ruin, or financial soundness.

I've since met and talked with others who've been through the arbitration process with a corporation's set up. Overwhelmingly it's a bad experience. Common complaints are that there were undisclosed fees, the arbitrator ignored their evidence, and that if they "won" they got pennies on the dollar of their actual damages. The award, regardless of who wins, is not explained, the law isn't followed, and often the arbitrator failed to disclose a conflict of interest. In fact, the whole set up is a conflict of interest because arbitrators do repeat business with the companies, not with the consumers.

Also, since it is private, arbitration hides thousands of complaints from public view, clearly against public interest, especially when consumers are expected to do near detective level work to research before purchasing.

There is such mounting evidence that private, industry-run arbitration is a sham on consumers that anyone who hears both sides of this issue would be nuts to still think arbitration is better than retaining one's right to sue. Notice that I said "retaining one's RIGHT to sue," I didn't say that they are sue-happy. That right is important leverage, that an arbitration clause takes away. Most people do not want to go to trial and most do not have to because most can settle their dispute well before that, if they can just retain their rights.

Definitely always try to get out of any arbitration clause. But in many industries it's industry-wide and you can't. In this day and age you can't be competitive in many careers if you don't have a cell phone, computer, etc. You need transportation--a car--and you need to either buy or rent a house. When you buy a product, or a house, or car, your "warranty" is something you get after purchase, and an arbitration clause in it is non negotiable. This is why it has gotten out of hand; it's not negotiable. Industries have made sure you have no choice and not all courts have seen this as a contract of adhesion. So, the FAA needs to be fixed, the Arbitration Fairness Act passed. Those in industries who abused arbitration have only themselves to thank. It was their own greed and lack of ethics that got us to this point.

Posted by: Cindy | May 29, 2008 5:51 PM

"Isn't "Ted" the one who banned people with opposing views from a pro-arbitration forum earlier this year?"

No.

And my views haven't been fully aired here, because my comment with several links to evidence of the benefits of arbitration and refuting Public Citizen's report still hasn't appeared.

Cindy merely parrots the one-sided arguments of the litigation lobby without fairly addressing the arguments against her case.

Posted by: Ted | May 30, 2008 6:41 AM