An area that Mandatory Binding Arbitration must be eliminated is elder care. It recently took our family a considerable amount of effort to find a good care either in home or a facility that did not REQUIRE binding arbitration clause plus an NDA for family member who now needs 7/24 care.
This industry hires inexpensive and untrained labor that regularly makes mistakes that injure customers.
The "customers" in many cases have dementia or cognition issues.
Mandatory Binding Arbitration is almost always bad for customers. The game board is tilted against them. Arbitrators must be agreed to by both parties, but companies are the primary repeat customers of arbitrators and will NOT select arbitrators that don't usually and regularly find for them.
Binding Arbitration as currently used should be eliminated as an option in all contracts. It should always exist as an option of the parties, but not be binding at the initiation of any service.
Binding Arbitration is a tool of companies to allow them to NOT be accountable to their customers AND prevent that lack of accountability to made public.
A mandatory binding arbitration clause in any contract presented to you should always be a warning flag that the other side does not intend to be accountable.
Never enter into such contracts if you can avoid them.
>Arbitrators must be agreed to by both parties, but companies are the primary repeat customers of arbitrators and will NOT select arbitrators that don't usually and regularly find for them.
Is there any empirical evidence of this? I've done arbitration twice and the arbitrators seemed pretty impartial.
Most people just go with AAA arbitrators, which are well respected.
I've seen my colleges ask for information about potential arbitrators (I'm an lawyer but I don't specialize in arbitration), and never has anyone even suggested that an arbitrator was a company man or anything like that.
We need a low cost alternative to court. Courts apply strict procedural and eventuality rules and engage in broad discovery that really increases the cost of a case. A case costs tens of thousands of dollars in legal fees.
My biggest problem is that arbitration isn't really all that much cheaper than court in many cases now.
I think it would be interesting to have an online arbitration process for disputes under 10 thousand dollars. Both sides upload a memo arguing their side and attach accompanying documentation and evidence including sworn statements by witnesses. The arbitrator decides if a hearing is needed and if it is they do a video chat hearing.
It wouldn't matter if arbitration is just as fair as courts. The real problem is that the arbitration clauses do not permit class actions. This gives corporations license to rip consumers off as long as each individual ripoff is so small that it's not worth it for the consumer to litigate or arbitrate.
Do you feel the online aspect of such a procedure would make things materially cheaper? In other words, are the costs really in the time spend in court, or is it maybe that preparations for oral arguments are much more expensive?
I'm asking because my experiences with Dutch law are very different from what you describe (I have a law degree but I do not practice). Pretty much all civil procedures are done in writing here, and it's quite possible to go through a whole case for (much) less than USD10k (even when hourly rates are > USD200).
Of course, a case about an unpaid utility bill is very different from the example the GP gave, if an elderly patient gets hurt in a retirement home. In such cases you might need days or weeks of expert witness time @ 1 or 2 k per day. But that wouldn't be cheaper if the proceeding were done electronically.
Mandatory arbitration by design is intended to give companies an advantage because it also takes away the consumers right to sue. The arbitration firms are unfairly biased in favor of the companies because if they rule against them then the companies will simply stop using them. Anyone who pushes you into agreeing to mandatory arbitration should be viewed with great suspicion.
then the solution is to have government, public, and industry, appointed boards paid for by fees on the companies who want to use mandatory arbitration
No, if the court system is broken then fix the court system. Class action is not to give the public relief it's to keep companies from taking 1$ from 10 million people when none of them would benefit from dealing with it. For slightly larger issues we already have small clams court which works for mid sized issues. And larger cases can go though the full court system.
To be clear, class action cases hurt firms far more than they help people, but that's their job. If we want to replace them then the government needs to step up and prosecute company's for this stuff.
> “In the 50 years since the advent of modern day class action lawsuits, plaintiffs’ lawyers have made millions of dollars in fees from these suits while consumers often receive little benefit,” the [U.S. Chamber of Commerce] said in a statement.
Cynically, at least part of that is due to all the hurdles and barriers to class action lawsuits that organizations like the Chamber of Commerce have helped erect over the years. There are so many ancillary landmines unrelated to the merits, such as those relating to class certification, that it's often a choice between settling and recovering something, or going forward and getting nothing.
On the flip side of it, there are a lot of really stupid class action lawsuits. What we lack in the U.S. is a good way to really hold companies accountable for small to moderate-size injuries to large groups of people. If someone defrauds a bank for $100 million, the bank can sue and get a recovery. But when a bank defrauds $10 from each of 10 million people, there is often no recourse for those people.
In those $10 from ten million people suits the defrauded people get nothing or a close facsimile thereof, so it's not like class action suits give them "recourse".
This kind of stuff is better handled administratively by federal bureaucrats, of which we have plenty. Torts aren't really adding anything.
I've noticed two companies recently going beyond the typical binding arbitration clause by laying out a less formal "pre-arbitration" step in their dispute resolution process. One of them includes this gem, which to me reads rather customer-hostile:
You and [Us] wish to promptly and fully resolve any
dispute arising in connection with these Terms of
Service in good faith, confidentially, and
informally with minimal transaction costs. Neither
You nor [Us] may make any public statement regarding
any such dispute and/or the existence of any such
dispute except as otherwise expressly provided in
this Section 11.
So if I complain about the service on Twitter due to some problem I'm having, and then I attempt to start resolving the dispute, am I penalized because I made public statements?
Hulu also[1] lays out a pre-arbitration process, but it seems less confrontational.
It is a good idea to enable class action lawsuits against large entities. This court ruling the rule is trying to fix is a loophole that should be closed.
However, what troubles me is that a sweeping policy change such as this, going against a Supreme Court precedent, should passed as a law by elected lawmakers, not a rule dictated by unelected bureaucrats. Even worse, this so-called "Consumer Financial Protection Bureau" is an independent agency of government with no effective oversight or subject to the usual checks and balances of a government agency. This Bureau has already been sued for abusive practices.
I have yet to come across a healthcare provider -- physician, dentist, optemetrist -- who does NOT have a binding arbitration clause in their agreement. How do you avoid signing one when it has become the de facto standard?
Let's say you sign up for one of these arbitration clauses, and then the doctor chops off the wrong leg because they were smoking crack.
In England there are a bunch of different regulators (Care Quality Commission; British Medical Association; the trust that runs the hospital) and also law for compensation.
Are people saying that you'd have no option but to go through this arbitration system? And that it would all be secret?
(I'm not suggesting the English system is good here - it's often described as terrible if you have a complaint.)
Hypothetically you could cross out the arbitration clause and say you don't want it. That often works for landlords and the crazy provisions they put in their leases. But doctors tend to be more sensitive to fear of litigation since they are often targets, so they might tell you to screw off.
What are you worried about though? Malpractice claims aren't forced into arbitration. The clause in healthcare is really just going to cause disputes about billing to go into arbitration.
I actually did ask about this at one doctor's office, and they let me know I was welcome to decline the arbitration clause (the document even noted that option), but that the doctor would refuse to see me. This has appeared to be the case with every doctor I have found over the last few years.
This is common. With Elder Care, if you did not agree to a Binding Arbitration agreement that usually also included a non-disclosure agreement that you would never disclose why you were seeking restitution via the only vehicle you contractually agreed too... arbitration you would not be accepted for any care options.
> What are you worried about though? Malpractice claims aren't forced into arbitration. The clause in healthcare is really just going to cause disputes about billing to go into arbitration.
Being denied due process? A contract is a contract, you don't just assume a clause won't be used.
Correct. If you waive "due process" via binding arbitration you also lose the ability to sue for malpractice. Do not be stupid do not sign contracts that require binding arbitration particularly if they also require non-disclosure of why you invoked arbitration as your only option BECAUSE you agreed to it in the contract you signed.
While they are at it they should also require companies that pop up new terms of service to show side by side the old and new terms with any changes highlighted.
I think having a publicly available history link that displays every TOS and Privacy Policy and the dates they were inforce isn't too much to ask. Maybe a last ten years thing is applicable (not retroactive). Users don't keep copies of the TOS they agreed to at the time of signup/registration as they expect it to be available from the service/corp/org.
I think asking for a visible diff is asking for trouble, but being able to manually see how their TOS changed over time and how often it changes would be an objective way to ensure customers can make informed decisions, if they wanted to take the time.
Edit: Available on request is a usability anti-pattern to deter consumption of information. I don't think it would be outrageous to require previously public legal documents to remain publicly available.
If the government got into the habit of regulating conveniences back in the 1970s, we'd have ("Contracts must be typed with this type of ink, and signed with this type of ink so that it scans well", "Contracts must use this size paper to be easily scannable") and the entire business of e-signing documents would've never happened because there'd be so many legacy usability requirements.
You'd be faxing forms to hip new startups to agree to their terms, signing your name next to every major paragraph, until somebody successfully pushes a new form of contract signing through the government.
Are you saying that the whole mess of EULAs and click-through agreements and obscure web site TOSs and the rest could have been avoided? What a missed opportunity!
Given the extent contracts are abused by the powerful to exploit the weak, I'm thinking your suggestion might be an improvement over the current situation.
Private arbitration serves two related purposes (as far as I can tell):
1. Cheaper court costs overall
2. Less ability for one party to impose huge costs on the other at little cost to themselves (any time such an imbalance exists, it can be used like extortion to force a favorable settlement).
If we solve those problems with public courts, I don't see any need for mandatory arbitration.
Fix the courts. Arbitration is not a a fair fix. At least if a case has merit and the aggrieved can find an attorney who will take the case on contingency. Attorneys don't take contingency cases that they don't think they can win. That is the best check against frivolous cases.
I would love for this to be an issue consumers could spearhead, but most consumers only care about things like this once they get into legal trouble. It's the same issue with prisoner's and privacy rights. I try to avoid mandatory arbitration whenever possible, but there simply isn't enough consumer advocacy around it. I'm convinced companies like FB could add whatever they want to their TOS and most fb'ers wouldn't blink. Writing to the companies about issues you see in their TOS or Privacy Policy probably does more than simply avoiding them or writing your representative.
This has saturated all markets to the extent that you can't simply choose a company that doesn't require private arbitration. If you want to even play Minecraft, you have to agree to Microsoft's binding arbitration first. At least there's always Minetest I guess.
While putting limits to this practice is good for the consumer, I think they should also have a threshold to bring on frivolous lawsuits against these companies. Death by a million microcuts.
Do keep in mind that large companies have a very strong incentive to push stories of entirely legitimate lawsuits as 'frivolous'. The McDonalds coffee case is a classic example.
This industry hires inexpensive and untrained labor that regularly makes mistakes that injure customers.
The "customers" in many cases have dementia or cognition issues.
Mandatory Binding Arbitration is almost always bad for customers. The game board is tilted against them. Arbitrators must be agreed to by both parties, but companies are the primary repeat customers of arbitrators and will NOT select arbitrators that don't usually and regularly find for them.
Binding Arbitration as currently used should be eliminated as an option in all contracts. It should always exist as an option of the parties, but not be binding at the initiation of any service.
Binding Arbitration is a tool of companies to allow them to NOT be accountable to their customers AND prevent that lack of accountability to made public.
A mandatory binding arbitration clause in any contract presented to you should always be a warning flag that the other side does not intend to be accountable.
Never enter into such contracts if you can avoid them.