Arbitration is a dispute resolution alternative that aims to keep court costs down and quicken the time it takes to reach an agreement between two parties. Originally, arbitration was used to settle matters between two companies on equal footing. Today, arbitration is used by large corporations against consumers who are at a blatant disadvantage, having few resources and no power in the industry. While arbitration was first intended as an alternative for parties in mutual agreement of using arbitration instead of taking matters to court, these days millions of consumers are forced into it without even realizing it. Talk to an attorney if you believe you are bound by an arbitration clause in your personal injury case.
Where Can I Find Arbitration Clauses?
Arbitration clauses are hidden in contracts of everything from the terms and conditions of your credit or debit card to your cable, internet, or Netflix subscription. If you are a fan of shopping online, you may be surprised to know that Amazon’s Conditions of Use subjects shoppers to binding arbitration to resolve disputes. Even some healthcare providers hide these in the paperwork you have to fill out before a doctor will see you. Nursing homes and adult care facilities may also include arbitration clauses in their contracts, although changes to the laws allowing this are currently in progress.
How does Arbitration Hurt?
When a powerful entity such as a hospital is pitted against a single consumer, it rarely works out well for the consumer in the end. Arbitration is cheap for the company that mandates arbitration, and it is a high-cost pursuit for the claimant who wishes to proceed with the complaint. The “neutral third party” who is in charge of deciding an appropriate course of action is usually a retired judge, a judge who does arbitration as a source of extra income, or a lawyer trained in arbitration. These arbitrators have usually been hired several times by the same company and have a chummy relationship with the company, automatically inserting bias into the supposedly “neutral” nature of their position. Ultimately, forced arbitration is currently an accepted way for companies to strip consumers of their legal right to sue.
High Costs to Pursue Claim
To begin the arbitration process, claimants must pay filing fees. These fees are usually hundreds of dollars (around $750 or higher) and do not cover the arbitrator’s hourly charges. An arbitrator may charge between $200 and $300 per hour. Although the arbitrator’s hourly charges are usually split between parties, it varies on a case by case basis. Such high costs alone usually keep individuals with valid complaints from taking action because many simply cannot afford to.
Bias in Arbitration
Arbitrators cater to the businesses who rely on them to keep them out of court. They market exclusively to businesses, and panels — not juries — are made up of corporate leaders and their lawyers. Knowing that the business is a repeat consumer of arbitration, arbitrators do not have any incentives to be fair and rule in the consumer’s favor, even if the evidence heavily weighs against the company. In the rare event that a consumer is awarded a sum for their trouble, it is usually a much smaller sum — about 20% of what they would have received in court.
Restricted Evidence
Discovery is the process by which litigants obtain evidence in the possession of the opposing party. In arbitration, discovery is not automatically granted. This means that the consumer is not always able to present evidence against the company that did them harm. Many businesses draft arbitration clauses to impose severe restrictions on the claimant’s ability to obtain key evidence.
No Class Actions
The majority of arbitration clauses not only bar consumers from taking their claims to court, they bar consumers from teaming up with others in similar situations and filing a class action suit. These suits are the best remedy or far-reaching scams that cheat individual consumers in small amounts. Most individuals lack the resources to fight fraudulent practices over small sums, so it makes sense for several plaintiffs to pursue just one lawsuit that addresses all the similar issues.
Travel Expenses
As the consumer, you are required to pay for travel costs to meet with the arbitrator and the opposing party in their venue of choice. It is not uncommon for consumers to have to travel long-distance just to have their cases heard. If you have a complaint against a company like eBay, you will be required to fly to San Jose where the company is headquartered.
Double Standards
If you sign an agreement that contains a mandatory arbitration clause, it does not mean that the business that did you harm cannot exercise its right to sue you. This is best exemplified in cases in which employees forced into arbitration cannot sue their employers, but their employers can sue them in court for accepting a position at a competing company.
Your Case Does Not Become Public Record
If you decide to pursue arbitration and your case is resolved, others in your situation will never be able to find out how it worked out for you. The public can always review court proceedings, but arbitration proceedings always remain confidential. Arbitration decisions can only be accessed by the businesses to know which arbitrators have ruled in their favor. In arbitration proceedings, no legal precedents are considered to make decisions, and decisions by arbitrators do not set precedents to guide the company’s future conduct. In effect, companies are never truly “punished” for wrongdoing.
While arbitration takes away your right to sue in court, it does not take your right to acquire strong legal representation. In fact, working with a knowledgeable attorney in a personal injury case can elevate your chances of a positive result.
