These companies are nothing more that government-protected shams. This is just a way for the court system to shirk its duty to the American citizens. They say courts are over-crowded. They certainly are, when you consider how many drug cases, traffic violations and regular thieves are given the constitutional benefit of our democracy. They all have their 7th Amendment rights in tact, while unsuspecting consumers are stripped of this right in order to protect businesses that dole out shoddy workmanship, bar employee rights and scarf off enormous profits by jacking up interest and fees on credit cards, etc. And now, they want to strip away those rights of the elderly just because they can. Most societies honor their elders. The greatest nation in the world now proposes to strip its elderly of their constitutional rights, just because they are old and ill. These are the people who built this country, fought wars to protect it and parented today’s leaders.

Now, if congress really wanted to do this country a real service, they would pass a law that makes MANDATORY ARBITATION the only relief for murderers, rapist, child molesters, etc. I would gladly arbitrate on than panel! I wonder how many bleeding hearts would jump up and protest that. When the Chamber of Commerce is lobbying arbitration is so wonderful (for its members), then why not take it a step ahead and apply it to the crooks, too.

I hope people like Frank are among those eventually exposed in the sham of corporate run private arbitration. It seems that his side of the issue has never had any qualms about using outright lies to promote their agenda. Sadly, because most of the population has no formal legal education, and little or no personal experience with the legal system, most of the public is vulnerable to that type of propaganda. For consumers who do find out about arbitration, most of the time record of their experience is private or obscure, meaning it hides complaints from other consumers. But word IS getting around that it's usually bad for consumers, and I think the jig is up for Ted and others of his ilk.

Justinian is once again either lying or ignorant about what he's talking about. His attack on me is 100% wrong, and he is the one making false claims.

http://overlawyered.com/2008/06/the-absent-defendant-arbitration-vs-court/

I expect a retraction and an apology, but don't expect Justinian to be intellectually honest enough to do so. He still hasn't retracted his lie about me in his post about FDA funding.

Ted, your ignorance of basic civil procedure leaves me flabbergasted. Here's an excerpt from New York v. Green, 420 F.3d 99C.A.2 (N.Y.),2005 that explains how default judgments work in Federal court:

"Rule 55 of the Federal Rules of Civil Procedure provides a two-step process for obtaining a default judgment. The first step is to obtain a default. When a party against whom affirmative relief is sought has failed to plead or otherwise defend, a plaintiff may bring that fact to the court's attention, and Rule 55(a) empowers the clerk of the court to enter a default against a party that has not appeared or defended. Having obtained a default, a plaintiff must next seek a judgment by default under Rule 55(b). Rule 55(b)(1) allows the clerk to enter a default judgment if the plaintiff's claim is for a sum certain and the defendant has failed to appear and is not an infant or incompetent person. See Fed.R.Civ.P. 55(b)(1). “In all other cases,” Rule 55(b)(2) governs, and it requires a party seeking a judgment by default to apply to the court for entry of a default judgment."

If the claim is not for a sum certain (and if it's seeking attorney's fees, it may not be) you must file a motion for default. Just like I said. And even if it is for a sum certain, you still have to request entry of judgment and provide an affidavit. Just like I said.

Compare that with the NAF rules, which require an arbitrator to "timely review the merits of the claim" and issue a default sua sponte. Just like I said.

I'll be waiting for your retraction and apology.

Justinian's comment demonstrates that he is lying, since his original claim was "An arbitrator won’t require more evidence than a judge will" and he now backs off of that. So we can attribute his insult of me to dishonesty rather than ignorance.

I hate to resort to this, but I now have to question your reading comprehension. I'm not backing off my correct claim that an arbitrator won't require more evidence than a judge will. I was just correcting your incorrect statements that it's harder to get a default in arbitration than in Federal court.

Assuming the claim is for a sum certain, in either an NAF proceeding or an FRCP 55(b)1 proceeding, the creditor will need to produce an affidavit alleging the amount owed. In either proceeding, the only "scrutinizing" that will be done is making sure that the creditor isn't asking for more than the affidavit justifies. And if the claim isn't for a sum certain, FRCP 55 requires the plaintiff to put on evidence over and above the affidavit.The affidavit is just a floor in Federal court, but both a floor and a ceiling in arbitration.

Additionally, because arbitrators must grant a default sua sponte while courts must not, a debtor is clearly better off in court if he's planning to default.

At least Federal court, anyway. States have their own rules on obtaining defaults, and I'm sure you know that most debt collection actions aren't filed in Federal court due to their limited subject matter jurisdiction. If you ever come across a list of what the requirements are to obtain defaults across all the states, do send it my way.

Justinian, I think putting it in context will make this easier to understand.

Let's say you've leased a car, and the dealership believes that you owe them money.

In a court, if you don't show up for the proceeding, all that is required is an affidavit by the plaintiff of what is owed. Then, the default is entered and the dealership gets to enforce the judgment for that amount, provided there weren't any procedural defects that otherwise would amount to attorney malpractice.

In arbitration, the dealer will similarly file an affidavit for the amount owed. But here *the arbitrator gets to look at the contract* and actually evaluates the claim. That doesn't happen in court.

Furthermore, while in court a default judgment is *required* when a plaintiff doesn't show up, an arbitrator is *prohibited* from entering a judgment solely because of the plaintiff's lack of appearance. This is not an insignificant difference.

Thus, when you write:

"In either proceeding, the only 'scrutinizing' that will be done is making sure that the creditor isn't asking for more than the affidavit justifies"

you miss the mark with both respects: a judge doesn't scrutinize whether an affidavit asks for too much; an arbitrator in "review[ing] the merits" under Rule 36, will look to more than whether the plaintiff is asking for too much, but also whether the plaintiff should get anything at all.

Lawyer, I appreciate your civil tone. I think you're misunderstanding the differences between defaults in arbitration & court, though.

A default in court isn't required merely because the defendant doesn't show up. It's granted if and only if two things happen: First, the plaintiff must ask for it. In contrast, an arbitrator will give it automatically. Second, the relief the plaintiff requests must be justified by the pleadings. A judge will look at the pleadings and make sure the plaintiff is entitled for relief. For example, if I sued Ted for "disagreeing with me" and attempt to get a default, I won't be awarded anything because it's not against the law to disagree with me.

This is the same extent that an arbitrator will go to in "reviewing the merits." I've seen the document submitted for debt collection arbitrations: merely an affidavit alleging that the defendant owes some particular sum of money. No payment history or copy of the contract is submitted. The arbitrator in granting a default merely assumes that Big Credit Card Company, Inc. isn't lying.

It's also harder to get a default in arbitration overturned than in court. So while we can argue about whether arbitration is a good deal for consumers who show up, it's not a good deal for consumers who don't show up.

(This is all premised on states using FRCP rules for defaults. Some states may make it easier or harder for plaintiffs to obtain defaults in court than in arbitration.)

The moral to the story is that if you're sued or taken to arbitration - SHOW UP.

I've written several posts about my concerns with adhesion arbitration clauses - and I've read now the back and forth on this at overlawyered, here, and at Simple Justice - and now I'm reminded of something that happened to my dad years ago when he was trying to argue with a lawyer about what to put into a rental agreement. There were certain provisions that my dad objected to - and the other lawyer would say that the way they worked was exactly what my dad wanted to happen. So my dad would say - fine, if it works exactly the same way, then you won't mind wording it my way to make me happy and since it works the same, you should have no objection. But of course, he objected. Over and over. of course, that was a big red flag that actually it did NOT work the same, otherwise, why argue against it so strenuously?

That's what I think of now - why argue so strenuously to get adhesion arbitration upheld if it did not confer some large advantage - one larger than just any alleged cost or time savings (because after all, such things, if true, would only make it easier for people to complain - a lawsuit is expensive and difficult, right?) Particularly why argue for the adhesion contracts to be upheld - because if arbitration is so much cheaper and so much fairer to consumers, you'd expect them to volunteer for it without any adhesion clauses. After all, even if there is no arbitration clause in the contract at all, if you have a dispute with someone, you can right then and there make an agreement to settle the dispute with arbitration. If it is so great, consumers would opt for that even absent any contractual provisions at all. So obviously businesses think they are getting something out of it, and I think I can guess what that probably is.

"Particularly why argue for the adhesion contracts to be upheld - because if arbitration is so much cheaper and so much fairer to consumers, you'd expect them to volunteer for it without any adhesion clauses."

As has been explained on Overlawyered, DBB, consumers cannot realize cost-savings from arbitration clauses unless they agree in advance to engage in arbitration. It's how honest consumers can signal to the business that they won't engage in frivolous litigation. Unless every consumer agrees to it, the consumers can't get the savings, because the ones who opt out will bring a class action in the more expensive litigation environment.

http://overlawyered.com/2008/02/the-war-on-arbitration-jamie-leigh-jones-tracy-barker-halliburton-v/#more-5864

Ted - so only dishonest consumers ever file class action lawsuits? Is there such a thing as class-action arbitration? If not, and if arbitration clauses preclude class actions, what is to stop business from coming up with a scheme to, say, cheat every one of their 10 million customers out of 10 dollars? That amount makes it not worth it to sue or even do arbitration singly - the business illicitly makes an extra $100 million and is basically immune from suit over it (wholly immune if there are arbitration clauses). So is that what this is about? Eliminating class action lawsuits?

And I also note that you frame it as showing that honest consumers won't engage in frivolous litigation - well, doesn't it pretty much prevent anyone from engaging in ANY litigation (since arbitration is near impossible to appeal in court)? The hidden assumption there seems to be that all lawsuits are frivolous. Wouldn't an honest consumer not engage in a frivolous suit even absent an arbitration clause? You do realize that filing a frivolous lawsuit subjects you to penalties, not the least of which is having to pay the other side's attorney fees. Of course, you don't get those if the suit is not frivolous. Also, you are pretty much guaranteed to lose a frivolous lawsuit and collect nothing on top of that. A truly frivolous suit will just be thrown out of court at the first motion for summary judgment. Again, the plaintiff gets nothing from that. And it isn't very hard to write a motion to dismiss for a suit that is truly frivolous, so it doesn't cost the defendant that much - particularly if the motion is written by in-house attorneys who are paid a salary to do exactly that.

And I don't recall offhand, but is your link about Jones and Barker about the women that were raped by Halliburton employees and then held prisoner by Halliburton employees and now find that Halliburton employees are immune from prosecution for those rapes? Or are those some other people? I admit I haven't really researched that, though I heard about it somewhere.

"Is there such a thing as class-action arbitration?"

Yes. Indeed, it is the official policy of the AAA to refuse to honor clauses purporting to disclaim class-action arbitration rights.

I can't help but notice that your objections to arbitration all stem from fundamental misunderstandings of the arbitration process and of the argument for arbitration. Again, read what I've written on the subject, as your questions are answered there.

"Halliburton employees are immune from prosecution for those rapes"

For example, this is completely fictional, as documented on Overlawyered. Did you read the link?

Ted: "It's how honest consumers can signal to the business that they won't engage in frivolous litigation."

So in other words, the real beneficiary of mandatory arbitration clauses are the businesses who can't be sued by consumers - just like I've argued in the past.

Ted: "Indeed, it is the official policy of the AAA to refuse to honor clauses purporting to disclaim class-action arbitration rights."

Do you know if the NAF has a similar policy?

Ted - your arguments for arbitration treat what is optional as if it were a legal requirement - in other words, most everything you say is great about how arbitration clauses work is totally at the whim of whomever writes the adhesion arbitration clause and so it could change tomorrow. If all of those things were mandated by law, I'd put more stock in them.

It is good to know that class-actions are still possible, but I wonder how it really works in practice.

And as far as the rapes, I don't claim to know what happened - that's why I asked. I do know I saw at least one individual (not sure if it was one of the two people named in your link) who stated that she was raped and was held - are you saying she is lying?

Ted, you call yourself an expert in arbitration, so answer me this:

Does or does not the FAA require that if one party in the arbitration disputes the existence of an arbitration agreement, it is then up to the other party to take the matter to court to determine whether the arbitration does, indeed, exist?

If this true, then why would NAF continue arbitration proceedings when one party formally disputes the existence of an arbitration agreement.

Can you answer me this, also.

If one party begins the proceedings with a claim form with an attached page showing an arbitration clause--the clause only--and nothing more than a signed affidavit to facts (signature of which is a photo copy from a person who no longer works for the company, both of which are pointed out by the opposing party), if the arbitration company actually looks at the documents submitted, wouldn't you assume that they must, by all that's right and legal, either refuse to continue the proceedings, demand additional supporting material, or rule in favor of the opposing party?

In addition, if the opposing party asks to see the entire document in which the arbitration clause resides, and the company returns an agreement for another company, with a completely different arbitration clause, based on law in another state, that actually names a different arbitration company--all of which are pointed out in response--wouldn't you think that if the arbitration company actually looked at the documents it must, by all that is right and legal, rule against the company who brought about the initial arbitration process? In fact, wouldn't the company actually be committing fraud with its arbitration proceedings? And if the arbitration company _still_ rules in favor of the company, wouldn't it be, in effect, an accomplice to that fraud?

I mean, how do you explain that the initial filing lists a photocopy of an arbitration clause naming NAF attached to the claim, yet documents provided by the company show a completely different arbitration clause, this one naming AAA as the arbitration company? How could the arbitrator continue, or even rule, when there is such an obvious conflict in the documents provided?

I don't know of any civil court that would make a default judgment based on such shoddy paperwork. Why is it, do you suppose, that NAF has no problem with fraudulent documentation if, as you say, the company's arbitrator actual reads the document?

Oh, by the way, the arbitrator's name is Robert Angstead, and he practices law in Missouri. Just to be fair since I wouldn't want the other side on this discussion not to have a chance to be represented.

Ted: "It's how honest consumers can signal to the business that they won't engage in frivolous litigation."

JL: So in other words, the real beneficiary of mandatory arbitration clauses are the businesses who can't be sued by consumers - just like I've argued in the past.

Justinian is being dishonest again by failing to acknowledge the fact that meritless litigation raises costs to all consumers, honest and dishonest alike. It is telling that he apparently believes he cannot win an honest debate, and has to resort to mischaracterizing his opponents' arguments.

Shelley: "Does or does not the FAA require that if one party in the arbitration disputes the existence of an arbitration agreement, it is then up to the other party to take the matter to court to determine whether the arbitration does, indeed, exist?"

No. The other party has the option of taking the matter to court under 9 USC § 4, but is under no requirement to do so.

DBB: "And as far as the rapes, I don't claim to know what happened - that's why I asked."

And I told you -- look it up on Overlawyered, where there are five or six lengthy posts on the subject that answer all of your questions. I'm not repeating myself in the comments section of a blog that has twenty readers.

Ted: No. The other party has the option of taking the matter to court under 9 USC § 4, but is under no requirement to do so.

Actually, several courts disagree with you, including recent decisions by the Arkansas Supreme Court (see MBNA v. Banks or MBNA v. Danner), the Kansas Supreme Court (MBNA v. Credit), in South Carolina's Court of Appeals (see MBNA v. Christianson), and this is just a start.

You're a lawyer so I don't have to remind you that our legal system is based on the concept of checks and balances. In the arbitration process there are two checks on the arbitration proceeding. The first is whether there is an arbitration agreement or not, the second whether the award should be confirmed and turned into a judgment.

Again, I'm not a lawyer but all things being equal, the first check is to ensure that I don't say to you: hey Ted, we have an arbitration agreement and I'm going to take you to NAF or AAA or JAMs, and there's not a damn thing you can do about it. You would then be at the mercy of an arbitrator who may or may not, depending on whim, decide in my favor, and without having to provide any justification or legal basis on which to do so.

Or an arbitrator who discounts, completely, the fact that I provided not one but two different and conflicting arbitration agreements, neither of which proves we actually have an agreement.

I don't know about anyone else, but that doesn't make me feel warm and cozy.

"Justinian is being dishonest again by failing to acknowledge the fact that meritless litigation raises costs to all consumers, honest and dishonest alike."

Ted regrets proving my point about the real benefit to arbitration, so he now resorts to his famous "Liar, liar" defense.

As I've explained before, it's more expensive for a business to take consumers to arbitration for delinquent accounts than it is to take them to court, thus debunking his claims that businesses use arbitration to keep collection costs down. I've even personally seen examples in which businesses ignored mandatory arbitration clauses and sued delinquent customers.

All of the evidence indicates that businesses prefer mandatory arbitration because they don't want to be sued at all - especially if the suit has merit. Ted claims to be a consumer advocate, fighting to keep our prices low because "meritless litigation raises costs to all consumers." The generous corporate donations that pay his salary also raise our costs, but I don't see him arguing for caps there.

I wouldn't have to point out that you're lying if you didn't lie so often. Why are you posting instead of reading "The Product Liability Mess" so you can apologize for criticizing my accurate characterization of a book you haven't read?

"As I've explained before, it's more expensive for a business to take consumers to arbitration for delinquent accounts than it is to take them to court, thus debunking his claims that businesses use arbitration to keep collection costs down."

You've asserted it, but you haven't explained it: it's factually false, like most of your claims.

"The generous corporate donations that pay his salary also raise our costs, but I don't see him arguing for caps there."

Unlike litigation, my salary does not remotely increase marginal costs to consumers, and the vast majority of it isn't paid by corporations. But when has Justinian ever let facts get in the way of an ad hominem attack?

Ted, I'm not going to waste my time explaining to you the costs of arbitration again. I've already posted here about it and demonstrated that the filing fees in arbitration are substantially higher than fees in court, and that attorney time in either procedure will be comparable. Thus, the costs of taking consumers to arbitration for collections is more expensive than taking them to court. Especially since most collections proceedings end up in a default.

If you have evidence that my cost figures are wrong, produce it.

It's not litigation that raises consumer costs, it's the tortious conduct of the businesses that increase consumer costs. Litigation is a result of the tortious conduct. Rather than focusing on reducing litigation, why not focus on reducing tortious conduct? Probably because tortious conduct is profitable. See "buying the tort."

Oh, and considering how many times this week you've called me a liar, you're on shaky ground when you accuse me of engaging in ad hominem attacks. Especially since I merely pointed out that a portion of your salary comes from corporations that stand to benefit from the policies you argue for. Just because it makes you look biased doesn't make it a lie, Ted.

Why are you posting instead of reading "The Product Liability Mess" so you can apologize for criticizing my accurate characterization of a book you haven't read?

Pointing out that something you said was knowingly false is not an "ad hominem attack."

Justinian, having been proven a liar on his original claim that I was raising costs to consumers, pretends he instead made a different lie. If my opinions are for sale, why am I at a thinktank instead of making several times more in private practice? If my opinions are dictated by my employer, why do I write policy pieces disagreeing with other AEI scholars?

Justinian continues to ignore the evidence that arbitration is cheaper than litigation and continues to fail to address the argument I've actually made. Whether he does this out of dishonesty or lack of reading comprehension is unclear.

More importantly: why are you posting instead of reading "The Product Liability Mess" so you can apologize for criticizing my accurate characterization of a book you haven't read?

I am a named plaintiff in "The People of the State of California, acting by and through San Francisco City Attorney Dennis J. Herrera vs. NAF, FIA Card Services, and Columbia Credit Services."

Two real estate agents falsely represented a timeshare contract. MBNA would not cancel or place the transaction into dispute. MBNA acknowledged receipt of my letters and faxes before the 60-day deadline to place the transaction into dispute and then denied that my letters and faxes were received within 60 days. The NAF would not reply to my request to know my arbitration case code number, i.e., was it the same case code number for cases the selected arbitrator decided 99.8% in favor of the credit agencies? The NAF would not reply to my request for the date, time, and location for the arbitration (never has been provided). MBNA’s attorney, Wolpoff & Abramson did not acknowledge my acceptance of the NAF’s option for a Document Hearing where I reside. Wolpoff & Abramson did not acknowledge an invitation for mediation and MBNA said it is too late for mediation. With no notice of the date, time, or location for the arbitration, the NAF awarded MBNA’s attorney the disputed amount plus $4,200.10 in attorney’s fees. Wolpoff & Abramson provided a copy of MBNA's apology to the NAF for not responding to the NAF's request for additional information before the NAF's judgment. Wolpoff & Abramson mailed correspondence to my new address and then claims that they served (still no proof of service) time-sensitive legal documents to my old address.