Kia Franklin

Business Community Admits Binding Mandatory Arbitration is Unfair…(UPDATED)

...oh, but only when imposed on corporations in dealings with unions.

As an update I wanted to point you to my related post on DMIblog on this issue, in which I give more detail about why EFCA is a good piece of legislation that would strengthen the middle class, and what the difference is between bma in the collective bargaining context and the consumer/employment/little guy context. There I write:

The author [of the op ed] opposes bma when it applies to disputes between corporations and unions. This is a different matter altogether. Unlike disputes between corporations and individuals--i.e., patients, consumers, or individual employees not acting as part of a union--disputes between corporations and unions involve two parties that both have power. This distinction addresses the primary objection that those in the social justice community have to pre dispute bma as they're used against consumers. And because it addresses this concern over the power dynamic, it takes all the fun out of it for corporations, now doesn't it?

According to this opinion in the SF Gate, the Employee Free Choice Act would be bad for big corporations because:

The Employee Free Choice Act contains a mandatory arbitration provision that has received little attention. This arbitration provision presents economic concerns that run contrary to labor's assertions that the bill would rehabilitate the economy.

The bill would permit a government-appointed third party - who has no stake in an employer's business or any understanding of the company's inner workings - to impose a binding two-year collective bargaining agreement upon a company.

Read the full opinion and you'll see it just sounds like an excuse to oppose bma when it doesn't work to corporations' advantage. TD contributors have detailed various altogether different rationale for opposing pre-dispute binding mandatory arbitration in consumer contracts. One thing is that it is pretty much forced on a consumer, who has little choice besides "take it or leave it." Another issue is that when the dispute arises--any dispute, from the mundane to the extreme--the individual has to go before an arbitrator that likely has an ongoing relationship with the corporation, to which the Ms. Sarcastic in me responds, "Now, that sounds neutral!"

Reexamine the benefits of using binding mandatory arbitration agreements, but replace Joe Schmo with Union 123, and the relatively level power dynamic between unions and employers changes the whole song and dance for corporations. They're not so gung-ho for bma any more.

The lesson: the die-hard corporatists insist that pre dispute binding mandatory arbitration is such a wonderful thing... but what they mean is, it's a wonderful thing except when corporations can't use it to bully people around. When they're used in relatively more equal power relationships, they're no good because corporations can't game the system to their advantage. In those instances, corporations prefer the public courts.

Thomas Geoghegan, a labor lawyer, makes the connection between the detest for unions and the support for tortdeforms like the use of pre dispute bma in contracts between corporations and individuals in his book, See You in Court: How the Right Made America a Lawsuit Nation. It's worth checking out.

To read about the benefits of the Employee Free Choice Act, you can visit DMI's website,

Kia Franklin: Author Bio | Other Posts
Posted at 4:16 PM, Dec 08, 2008 in Arbitration | Business Culture | Corporate Lawsuit Amnesty | Corporate v. Human Citizenship | Labor/Employment | Mandatory Arbitration
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The problems with the arbitration provision in the EFCA have nothing to do with the arbitration provisions in consumer contracts. You're confusing this labor law--where government imposes terms involuntarily--with contract law where one is under no obligation to agree to a contract if the overall terms and conditions are unsatisfactory. When government tries to set the terms and conditions of consumer contracts without consumers having any say in the matter, freedom-loving people find that just as problematic.

Separately, once upon a time, progressives made their name for fighting for the secret ballot. It shows how little today's Left actually cares for good public policy, as opposed to naked grabs of power, that they now wish to outlaw the secret ballot with EFCA. This is a bad law that will hurt the middle class, cost jobs, and raise prices--solely to benefit the Democratic Party.

Also, your next to last paragraph shows you don't understand Geoghegan's book.

Posted by: Ted | December 8, 2008 10:06 PM

As much as it tickles me to use that phrase, I can say with all seriousness that I am very much a "freedom-loving" person. Which is why I think protecting unions, and the employees whose freedom will be protected by union efforts, is a good thing.

I know bma in different contexts plays out differently. I'm merely pointing out the irony that big business is opposed to binding mandatory arbitration when they're not the ones imposing it on someone.

Ask the individual and you'll see there is rarely any so-called choice in the matter when it comes to these contracts corporations put together. Especially when we're talking about employment contracts or contracts for important goods and services in which bma has become the industry standard.

Posted by: Kia Franklin | December 9, 2008 9:44 AM

Posted by: Kia Franklin | June 17, 2009 4:03 PM