A reform that was supposed to help the average American and cut the costs of litigation ended up being hijacked by the large and powerful.
Now legislation has been introduced in Washington to return the effort to something resembling its original goals.
Arbitration once was touted as a fair, balanced and relatively inexpensive way to settle legal disputes. Instead of going to the expense of a full-fledged civil trial, litigants could meet with an arbitrator and work out a possible compromise.
If arbitration didn’t succeed, one party or the other could always pursue a trial at a later time.
But big, powerful interests soon found a way to make the reform work for them, and against the average man or woman.
It’s called “forced arbitration.” As a small-time business person or consumer accepting a service from a larger company, you might have been compelled to give away your right to go beyond arbitration.
Perhaps you’ve noticed the fine print in service contracts in which you promise to go to arbitration in case of a disagreement with the company, and then to abide by the arbitrator’s ruling. Forced arbitration clauses ban you from filing lawsuits as an individual or in a class-action case.
What once was meant to be an option for you has now become a mandate.
“From cell phone purchases, to nursing home agreements, to gaining employment, consumers and employees are being forced to accept arbitration clauses — and to potentially cede their civil and labor rights — in every aspect of their lives,” complains the national Alliance for Justice, which supports a recent bill intended to reform the reform.
Moreover, arbitration isn’t as unbiased as it once was envisioned to be.
Guess who picks the arbitrator?
The arbitrator is hired and paid for by the “defending” company — a conflict of interest that would not be tolerated in other judicial contexts.
The AFJ noted that “a study of top arbitrators for one major arbitration firm found that they rule for the corporations that hire them 93.8 percent of the time.”
The newly introduced Arbitration Fairness Act declares arbitration agreements invalid and unenforceable if they are obtained through forced arbitration. Indeed, arbitration ought to be freely sought, not mandated, if it is to be both useful and fair.
The bill also provides a way for arbitration to be reviewed by a court if necessary.
Such changes are necessary to restore arbitration to its original purpose. Under current practice, average Americans are being forced to submit to a process that favors the powerful. That is wrong, and must be corrected.