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aikoto

July 27, 2007 11:16 AM

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Arbitration has been in the news a lot recently. If you didn't know, Comcast just sent out a notice that gives you a tiny window to opt-out of mandatory arbitration. It can semi-easily be done through a web form (meaning that they don't tell you how to enter your account number correctly), but many people won't notice the notice in the normal junk with their bill and still fewer will realize what it means.

[www.jeremyduffy.com]

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yahonza

July 27, 2007 1:20 PM

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I guess I am skeptical of this intitiative. While I agree that arbitration clauses are troublesome and problematic, I am not at all sure that the courts are ready willing, or able to deal with run of the mill consumer complaints.

I can just see a lot of problems with simply prohibiting arbitration. Maybe there is a better way to make it more fair.

Also, our court system is so fragmented, going to the courts might be a good solution in one area, but a poor one in another.

I'd just like to see some more cost/benefit analysis, and alternative solutions.

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yahonza

July 27, 2007 1:36 PM

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Ok, I just went and read the proposed act.

Being a lawyer myself, I am skeptical of courts to deal with most problems. However much fairer courts are, they are incredibly innefficient and slow. And I especially would like to emphasize that results would be inconsistent, depending on where you live.

I am also concerned that simply banning arb clauses will significantly increase the cost of providing services, without a real difference in outcome.

I would rather that we set better and more consistent and fairer standards for arbitration of consumer or employment disputes.

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Mary Marsala with Fries

July 27, 2007 1:43 PM

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@yahonza: That's what small claims courts are for, which usually have automatic jurisdiction of cases involving less than x-thousand dollars (with \"x\" varying by state). They're much smaller and faster and designed for cases that would bog down the bigger courts.

BUT. The point isn't whether courts *ought* to oversee all these cases; the point is whether corporations ought to have the right to *force* the public to use their preferred arbiter rather than a court. I think the answer to that, constitutionally speaking, is an easy HELL NO.

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yahonza

July 27, 2007 1:54 PM

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@Mary Marsala with Fries:

Yes, well, I am taking that into account. Have you ever actually been to small claims court? The last time I represented someone who got sued in small claims court, we spent the most of the day waiting for our case to come up. We got there at 9am and walked out at 2:30pm. Do you want to spend all day in court chasing after a $50 cell phone bill dispute?

Had a different experience? That's why I say it is inconsistent.

Also, you aren't *forced* to enter into any contract, arbitration clause or not.

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July 27, 2007 1:55 PM

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@Mary Marsala with Fries: I wasn't aware you were forced to enter into a contract that waives arbitration.

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July 27, 2007 2:41 PM

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@yahonza: well arbitration is inconsistent also. at best, it's a craps game. at worst, it's like trying to win a coin toss with a double-headed coin (& guess who's calling heads).

i don't buy into the concept of not being forced into a contract either. when virtually every company in every sector of the economy mandates arbitration, your only alternative is not to play at all. that might be a viable alternative in some circumstances, but i highly doubt that anyone would willingly refuse, say, lights, heat & hot water just to maintain their constitutional rights.

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July 27, 2007 2:57 PM

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Companies should not be allowed to stack the deck wholly in their favor. Mandatory arbitration would be fair if arbitration companies were regulated; as it is, the data shows that they find in favor of the company - the company that is signing their paychecks - far and away the majority of the time, and if the findings were not binding and prevented people from going to the courts.

Right now, yes, you can try to avoid mandatory arbitration. You're not forced to sign a contract. But as consumers, we should be concerned that this is becoming standard when doing business with any major company. Are you ready to not get a mortgage, credit card, land line, cell phone, internet connection, cable, or any other services that are for most people a part of everyday life? What if there is no alternative to choose from?

Yes, the courts are imperfect. Yes, they're overworked. But at the same time, would you prefer outsourcing courts to a corporation? Isn't there an inherent problem of interest if the judge and jury can't be appealed, and are paid for by the opposing side?

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Sudonum

July 27, 2007 3:00 PM

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@yahonza:
Couldn't you also say that the possibility of a court date with the time and effort that it involves would/could allow \"cooler\" heads to prevail and reach an agreement? If court is not an option, and the company knows that over 98% of all cases are arbitrated in their favor, why should they be fair with their customers when a dispute arises?

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yahonza

July 27, 2007 3:40 PM

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From a legal point of view, it isn't force.

And i agree that the arb clauses, as practiced, are or may be unfair to consumers. But i don't agree that the courts would be in any way better. I also think that it would probably lead to higher rates. I also don't think that anyone is seriously considering whether there might be a third and better solution.

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July 27, 2007 3:42 PM

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The fairness of the courts (perceived or actual) comes largely from the availability of review. The danger with arbitration is that judicial review is so restricted as to be virtually unavailable. I believe that consumers should be given the option of arbitration if speedy resolution is their primary concern, but I would never choose arbitration as a consumer. The legislation appears to foreclose the possibility of consumer arbitration, which may go too far. Nevertheless, I agree with the spirit of the bill and believe that it ultimately is good for consumers.

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yahonza

July 27, 2007 3:45 PM

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That could happen, who knows? And I do think there is an incentive to be fair, if for no other reason than to avoid negative publicity and to stop legislators from stopping the arbitration gravy train.

My overall point is: don't be naive about the fairness or efficacy of the courts. Its a far from perfect system (although i think it is the best in the world).

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yahonza

July 27, 2007 3:58 PM

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@nequam:
I do think the courts are fair, because of the possibility of review, rules of evidence, rules of procedure, and rules of discovery.

All that fairness comes at a steep price, and it doesn't always favor the consumer.

I do think some aspects of arb clauses cross the line. Any one that requires that the arbitration be held in a remote location seems inherntly unfair.

I'd just like to see a more creative solution than a simple ban.

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July 27, 2007 4:13 PM

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@yahonza: I agree. The two best things for consumers are: (1) options and (2) enough information about those options to make an informed choice.

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July 27, 2007 4:44 PM

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I missed the fact the this bill relates to PREdispute arbitration. Therefore, it would not prevent a consumer from suggesting or agrreing to arbitration after the dispute arises. In that light, I think the legislation is a good idea. The consumer will have the ability to choose arbitration of it makes sense for her particular circumstances and the nature of the dispute.

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July 27, 2007 4:45 PM

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@nequam: Should say \"PREdispute arbitration agreements.\"

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July 27, 2007 4:46 PM

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@yahonza: isn't that why congress is taking a look at this? legally, there's no protection under the law for a consumer that willingly submits to binding arbitration. it's apparent that avoiding these clauses is difficult if not impossible, so congress seeks to provide protection.

it makes sense to me in that context. if my only option is to build a shack on walden pond to avoid entering mandatory arbitration clauses...well, that doesn't seem like a very equitable option at all.

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zolielo

July 27, 2007 4:57 PM

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Oh come this was not an update to the previous arbitration post?

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yahonza

July 27, 2007 5:04 PM

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I am sympathetic believe me. But in general I think anything that moves disputes out of the courtroom is a step in the right direction.

Obviously, companies and arbitrators are being foolish in the long run to the extent they make the process unfair - since the practice could be banned.

One other note: if I were cynical, I would think that this legislation is designed to line the pockets of trial lawyers who are missing out on all the billable hours they could be getting from consumer disputes. Hmmm, maybe I should be in favor of it.

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yahonza

July 27, 2007 5:07 PM

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Ah, i don't mean ANYTHING that moves disputes out of the courtroom is good, its just a good idea IN GENERAL. And that is based in large part on my personal experience.

I'd like to see a more creative solution than a ban.

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July 27, 2007 9:33 PM

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Here is a website that will send the letters/emails to your representatives. Perfect for people who don't have the time to look everyone up and write letters.

[www.peopleoverprofits.org]

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July 27, 2007 9:41 PM

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Not sure if that last link I posted is specific for me or not, so here is a better one:

[www.peopleoverprofits.org]

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shelleyp

July 31, 2007 1:22 PM

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People need to remember that all this legislation is doing is removing binding mandatory arbitration clauses from contracts. Or preventing companies from adding such after the fact.

People can still choose to use arbitration to resolve differences. What this does, is provide consumers, employees, home owners, car buyers, and what have you the choice: arbitration or civil court.

As for courts not having the capability of dealing with these issues, most would fit under small claims court, which is very effective in most situations.

Trying to mandate how the arbitration process works would take completely re-writing the FAA, as well as most state arbitration laws. That is significant.

What this does is give people a choice, rather than forces them into arbitration. Then people can pick and choose arbitration companies, if they so desire, and go with ones that have better processes.

This bill is a complete win for everyone who, bluntly, isn't interested in 'loading the deck' in their favor.

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