The New York Times recently ran a three part series of articles “examining how clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court.” Corporations deprive Americans of this constitutional right by putting arbitration provisions in contracts, employment applications, and other agreements that consumers and workers agree to often because they have no real choice or do not understand what rights they are signing away. When consumers and workers submit to these arbitration agreements and the corporations they purchase things from or who they work for violate their rights, they have to bring their claims before an arbitrator, often a lawyer who represents corporations, instead of in court.
We have reported on this practice in the past but the New York Times articles provide numerous examples of the unfairness of forced arbitration. One example involved the sex discrimination case of Dr. Deborah Pierce against the medical group that fired her. One significant concern about arbitration is that arbitrators rely on employers for repeat business and, thus, they have an incentive to rule in favor of employers. Dr. Pierce noticed that when she arrived to an arbitration hearing in her case, the head of the medical group she was suing was having a friendly cup of coffee with the arbitrator. During the arbitration proceedings, among other things, the arbitrator fined the medical group $1,000 for destroying evidence but then billed Dr. Pierce $2,000 for the time it took him to look into the destruction of evidence. The arbitrator ultimately ruled against Dr. Pierce and his arbitration decision tracked verbatim some of the language in the medical group’s briefing.
The New York Times articles also explain how corporations have used arbitration to remove the rights of workers and consumers to bring class actions. Proponents of arbitration argue that individuals can bring their individual claims to arbitration and that class actions are not necessary. This argument does not hold up to scrutiny particularly when you consider it in the context of consumer cases. Many consumer cases involve corporations imposing unlawful fees which, for one individual, are relatively small. In those instances, without the ability to file a class action that bundles many individual claims into one lawsuit, the corporation will basically escape liability because it is not worth it for any one individual to file an arbitration claim for such a little sum of money. As one federal judge put it, “only a lunatic or a fanatic sues for $30.”
We encourage you to read the New York Times articles linked above and speak out about the unfair practice of forced arbitration. If you have an experience with the practice, speak out about it. You can write letters to the editor of your newspaper about it. You can also ask your elected representatives to pass legislation to fix the problem.