What is it that we are not seeing? What is it that we have accepted without realizing it? It could be this: nothing less than the systematic theft of our right to go to court and obtain justice against the powerful millionaires and corporations that aggravate us.
These alleged compulsory arbitration agreements, which are usually shown as clauses in contracts, ask people to resort to private arbitration before the courts. They are advertised as cheaper and easier ways to resolve conflicts, but arbitration often favors companies, who often hire the mediator who oversees the procedures. Even worse, unlike state and federal judges, who usually must undergo years of training and experience to get to their positions, private mediators do not even have to be lawyers.
Furthermore, these binding arbitration agreements can often make people unable to file class actions, which are often the only kind of legal action that can really allow individuals to pool their efforts in sufficient numbers to do that a large corporation has to be accountable.
You could have renounced your rights
In recent years, arbitration clauses have infiltrated virtually everything. When you buy a product, make a telephone contract, get a job, open a bank account, apply for a credit card, move to a nursing home, buy a car, undergo surgery and many other typical aspects. Modern life, you often agree to stay out of court (and the same applies to the negligent company).
Generalized arbitration clauses can also have an impact on your civil rights. For example, when a senior Goldman Sachs executive sued on behalf of bankers alleging sex discrimination and when African-American employees at Taco Bell restaurants say they are being denied promotions, courts should ignore their demands because they are tied to a settlement agreement. arbitration, according to a New York Times report.
“Sinisterly, businesses have a good chance of getting out of the legal system altogether and behaving badly without recrimination.” – Federal Judge William G. Young.
This is important because: no judges and impartial jurors, victims of defective products, corporate malpractice, sexual harassment, discrimination, the negligent care for retirees and medical malpractice are to the vagaries of a system that increasingly it is further from offering them relief.
“This is one of the most profound changes in our legal history,” said William G. Young, a federal judge in Boston appointed by President Ronald Reagan, in an interview with the New York Times. “Sinisterly, businesses have a good chance of getting out of the legal system completely and behaving badly without recrimination.”
When all parties submit to arbitration and are ready to be heard on equal terms, this can be a viable way to resolve disputes, but all too often that is not the case at all. Usually, it is a party that apparently has all the bargaining power and imposes it on the will of the other.
In this article, you will learn more about the progressive privatization of the legal system – a transition that is based on the fact that the procedures originally intended to resolve disputes between companies, and that were not supposed to be procedures in which one of the parties, as an individual, was required to participate.
A quick look at the differences between courts and arbitration
In a way, it seems that the traditional judicial system and arbitration processes are similar: a complainant files a complaint against a defendant and each of the parties presents the evidence before, ideally, a judgment is decided, finally and without place to doubts, how the dispute is solved.
Arbitration is often advertised as a cheaper and faster solution for the parties in dispute, which, given the similarity of the procedures, may be attractive to an individual, not to mention the company, which tries to reduce its legal costs.
Let’s say you have previously signed a contract of some kind (or clicked “I accept” when registering for an account or downloading), and are in a position to file a claim against a company. You will have to submit to an arbitration, but what is the big problem? After all, it is similar to going to court, but, apparently, without the hassles. True true?
However, there are some key differences that are impossible to ignore.
The judicial system is a traditional institution with professional qualifications and standards to present evidence and call to witness witnesses, as well as a protocol for the administration of cases, among other things. Decisions issued in a lower court by a judge or jury may be challenged and appealed in the high courts of a State or in the Supreme Court of the United States. The judge and the jury are usually investigators of the facts, and usually when a judge or jury has links to a matter that comes to their knowledge, is refused or is dismissed to avoid conflict of interest. It is a mature, traditional and well developed system in which in most cases it serves individuals, groups and companies alike.
Contrast this with arbitration, which is usually a private procedure, chaired by an arbitration organization (some of these for profit) and are hired by one of the parties to the dispute. (If both parties are not covering the cost of arbitration, it is usually the company that is being sued, and not the individual effectively forced into the arbitration process, the mediator’s client). In some cases, the procedures are even carried out in the offices or legal offices that represent the defendant. Often, the client of the mediator is the corporation against which the claim has been filed.
Unlike the judicial system, arbitration does not have a simple way to appeal the decision.
At least i the United States, arbitration as an alternative dispute resolution to courts goes back hundreds of years. It has been widely used to solve business disputes. Nations, moreover, rely on a mediator to resolve conflicts.
In 1925, when the Federal Arbitration Law was approved, being the first federal law to govern alternative dispute resolution procedures, it was understood that it applied to the field of business. It was not until the mid-1980s that the Supreme Court of the United States began to broaden the scope to cover a wider spectrum of disputes between corporations, their employees and clients, according to the New York Times.
Currently, if a client or an employee wishes to take a company to court, but is bound by the mandatory arbitration clause, the path usually looks like this:
The parties seek the services of a professional mediator, who works for an arbitration organization such as the for-profit organization JAMS, or the non-profit association: American Arbitration Association (the American Arbitration Association ). These mediators act as a judge, and sometimes it is a retired judge, although it can also be a lawyer, or even someone without any kind of legal training, but perhaps has experience in the subject.
Factors such as the selection of mediators, where the procedures will be carried out, who will pay the attorneys’ expenses and whether the outcome of the proceedings will remain confidential, can be determined in the arbitration agreement that you may have signed without realizing. The mediator’s fee is usually determined by the value of the dispute.
Unlike the judicial system, there are no overt appellate processes. If an arbitration process says that the mediator’s decision is binding, then you are probably stuck.
The public may never know that a corporation was sued for offering dangerous products, an employer for sexual harassment or systematic racial bias, or a doctor for medical malpractice, because of secrecy, unlike civil and public proceedings that take out in the courts. That, in case you win, of course.
On the other hand, the amount of money you can get, or the kind of justice that is imposed, can be silenced if you win, but there is a huge chance that you will not be able to win. In addition to everything, mediators are often paid by corporations and for this reason they are their clients. What is the incentive for a mediator to fail against a client that can offer business continuity?
An arbitration for a lifetime: from the newborn unit to the nursing home, and even to the cemetery
In the early 2000s, Wall Street lawyers pioneered a way to force individuals to arbitrate and made them waive their rights to class actions in countless claims against banks and other organizations of the financial sector, according to the NY Times.
Since then, thanks to the decisions of the Supreme Court of the United States in 2011 and 2013, the scope has been extended.
Private schools, funeral homes, nursing homes, doctor’s offices and hospitals, as well as employers, have used clauses to protect themselves against court disclosures in a variety of disputes, according to the New York Times.. In the world of consumer goods, this may simply be a way to open a box that forces you to take your claim individually in a forum that will not allow you a level playing field against a huge and financially powerful corporation.
In addition to causing headaches to consumers who are overburdened with abusive and unexplained fees, as well as the business practices of their banks, telephony providers and cable television, the epidemic of arbitration also extends to issues of life and death., like taking care of your family.
“Physicians in nursing homes may not care for a patient with severe ulcers from being in bed and who requires immediate attention, until their guardian accepts the arbitration.”
In one of these cases, a lawyer, who was the legal guardian of a 90-year-old woman with dementia, was stunned when she received a fax from the nursing home in Illinois where she lived: the doctors in the nursing home refused to treat their ulcers for being in bed, which required immediate attention, unless the lawyer accepted his arbitration, according to the NY Times.
Another example that the Times provided involved an obstetrician-gynecologist’s office in the Tampa area that requires patients to relinquish their right to take doctors to court if natural childbirth, in a failed cesarean section, happens. In addition, according to the Times, at the Evergreen Cemetery in Chicago, families technically agree to arbitration when they bury their loved ones there.
But what about the banks? Should not people be allowed to join in a collective action to deal with what appear to be nefarious and widespread business practices, such as suspicious rates that provide billions a year, or the huge scandal at Wells Fargo in the United States? What employees involved opened two million false accounts on behalf of their clients?
In the case of Wells Fargo, the arbitration agreements that the account holders signed when opening their legitimate accounts could have prohibited them from facing the bank in the courts at a collective or individual level. This is so long as anyone who opened an account with the bank was accepting an “excessively broad” arbitration agreement, according to Michael Hiltzik of the Los Angeles Times.
When the account holders tried to take Wells Fargo to court for these false accounts (which the employees had created by forging their signatures to meet their fees), the courts had to discard those requests. The bank argued that even though the accounts were false, they had been extracted from legitimate accounts that the victims had opened, “in which they had agreed to submit to any future dispute with the bank through a mediator,” according to written by Hiltzik.
Although the bank had to pay $185 million in fines to officers in Los Angeles and the federal governments, that may have been seen as an exclusion of the thousands and thousands of Wells Fargo clients whose lives were negatively affected by the accounts false in his name.
How do we get out of this disaster?
It is easy to feel that there is nothing we can do about this, but that is not the case. You have some power in this situation, and there are always legislators looking for a way to fight against these binding arbitration agreements.
Consumers refuse to get stuck in financial arbitrage or that mobile phone contacts can compare prices in companies that do not use them. Mid-sized banks and credit unions are more likely not to force arbitration, according to Consumer Reports.
On the other hand, you can try to resign. Some agreements allow a grace period in which you can renounce arbitration, but usually a great job is done to try to hide that fact. It may be laborious to try to evade the legal jargon of consumer agreements, but it is worth it if you have the opportunity to waive arbitration.
You can also try to make your voice heard. Consider the case of General Mills, in which consumers learned that they were being forced into compulsory arbitration just by downloading coupons or participating in a company sponsored raffle, which sparked a scandal and General Mills ended up changing the course.
There is the opportunity to, at least, try to combat these mandatory arbitration clauses at a legislative level.
For example, the United States Senators: Kirsten Gillibrand, D-NY and Kamala Harris, D-Calif., Together with Cheri Bustos, D-Ill., Have presented a bill that could eliminate the mandatory arbitration clauses in the employment contracts.
Lawmakers say that forced arbitrage, and the silence it entails, have made it harder for women to fight against sexual harassment and discrimination based on gender in the workplace, a fact that has come to light in months Recent If we take into account that up to 56 percent of American workers are subject to compulsory arbitration, according to the Economic Policy Institute, this kind of legislation can have a big impact.
There has also been activity on the financial side of the spectrum. The Consumer Financial Protection Office issued a rule that prohibited companies from forcing people to waive their right to collective actions in murky financial negotiations. However, Congress and President Donald Trump overruled this in October, eliminating what was an effective method to hold large companies accountable.
Even so, in the future it is possible that the public pressures the legislators, so that regulatory entities can re-examine this rule, resuscitating a tool that consumers can use so that any consumer exploited by credit card companies, Banks and other financial institutions can obtain justice.
There is also an activity in the governments of certain States, more specifically in California. Driven by the cancellation of the CFPB, Golden State legislators are going against mandatory arbitration clauses in an attempt to protect consumers, employees and anyone who has been forced to give up their right to sue. The success of this remains to be seen, but California often leads the way when it comes to policies.