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End Forced Arbitration Now, Groups Tell Congress

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WASHINGTON, D.C. – A newly formed coalition is calling on Congress to stand up for employees and consumers and ensure companies are held accountable for misdeeds by passing legislation to end forced arbitration.

The Fair Arbitration Now Coalition’s goal is to pass the Arbitration Fairness Act (H.R. 1020). Participants represent consumers, employees, homeowners, franchise holders and more. They range from Public Citizen, the National Association of Consumer Advocates, the National Employment Lawyers Association and the American Association of Justice to the National Consumer Voice for Long-Term Care, Home Owners for Better Building and the Leadership Conference on Civil Rights.

The creation of the Fair Arbitration Now Coalition comes as the big business versus citizen battle heats up on Capitol Hill. Many industry groups are actively lobbying lawmakers, pressing them to allow businesses to continue what many consider a predatory practice.

Forced arbitration clauses are hidden in the fine print of employment, cell phone, credit card, retirement account, home building, nursing home and assisted living contracts, to name a few. Just by taking a job or buying a product or service, individuals are forced to give up their right to go to court if they are harmed by a company. Because the private system of forced arbitration benefits companies and disadvantages consumers and employees, more and more industries are using the tactic of forced arbitration to evade accountability.

"The Arbitration Fairness Act does not seek to eliminate arbitration and other forms of alternative dispute resolution agreed to voluntarily after a dispute arises," the groups wrote last month in a letter to lawmakers. "Its sole aim is to end the unscrupulous business practice of forcing consumers and employees into biased arbitrations by binding them long before any disputes arise."

The coalition is also supporting the Fairness in Nursing Home Arbitration Act (H.R. 1237 and S. 512), which would eliminate mandatory binding arbitration clauses from nursing home contracts.

The Fair Arbitration Now Coalition will hold a press conference and lobby day on Wednesday, April 29, with more than 50 consumers, employees and their representatives, who can speak about the injuries people suffer when they are forced into arbitration in an attempt to hold companies accountable for wrongdoing.

The coalition also has launched a Web site, www.FairArbitrationNow.org, explaining what forced arbitration is, outlining the kinds of contracts in which forced arbitration clauses appear, providing links to news articles and telling stories of arbitration horrors. In addition, a blog keeps readers up-to-date on the latest arbitration news.

To read the letter sent by the groups, go to https://fairarbitrationnow.org/content/letter-support-arbitration-fairness-act-hr-1020.

H.R. 1020 – The Arbitration Fairness Act of 2009: Protect Consumers from Abusive Mandatory Arbitration Clauses!

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Buried in the fine print of credit card billing inserts, cellular phone service disclosures, employee handbooks, health insurance plans, and franchise agreements, mandatory arbitration clauses eliminate Americans’ access to the courts, forcing them instead into a costly, private legal system that favors corporations.  Lenders use these hidden clauses to protect themselves against lawsuits for credit card terms and fees that are buried in the fine print, and car loans and leases with exploding interest rates. Especially in these economic times, it’s time to put an end to this practice that takes advantage of people who are just trying to make ends meet.

Employers and businesses like to say that people have a choice to use arbitration or go to court – but they don’t.  If someone refuses to sign a contract with forced arbitration but still shows up for work or uses a product or service, they lose even the option of going to court.  Even if they never read the clause – which is usually buried in the fine print – they are forced to use a private legal system of arbitration instead of getting their day in court and a fair jury trial. Americans should never have to give up their rights just to do the everyday things in their lives.

How Consumers are Hurt by the Fine Print

When corporations impose arbitration in non-negotiable contracts, using their bargaining power to take away people’s legal rights, it becomes an abusive weapon. Arbitration can be a fair and effective method of dispute resolution when parties voluntarily agree to arbitrate. Instead, corporations have created one-sided forced arbitrations that burden consumers and deprive them of equal justice under the law.

  • Privatizing Justice.  Arbitration is a private system without an impartial judge, jury, or meaningful appeal.  There is no public review of decisions to ensure the arbitrator got it right.  Federal law does not require that arbitrators have legal training or even follow the law.  We need to a system that is transparent and accountable to the public for a change.
  • Eroding Legal Protections.  Mandatory arbitration means giving up the most fundamental legal protection: the right to equal justice under the law.  American heroes fought hard for dozens of laws that protect them against discrimination based on age, sex, religion, race, disability, and unequal pay for equal work, such as the Civil Rights Act and the Equal Pay Act.  But these laws are meaningless if unenforceable in court.  It’s time to close the arbitration loophole that gives employers the right to ignore civil rights.
  • Imposing High Costs. People deserve their day in court without going bankrupt to have it. But arbitration can cost thousands of dollars that most Americans can’t afford, especially in these tough economic times. Companies can force individuals to travel thousands of miles on their own dime to arbitrate. And if they lose – which happens the majority of the time – there is a good chance they’ll have to pay the company’s legal fees too. Americans deserve a fair shot at getting justice.
  • Weakening Civil Justice Safeguards. Forced arbitration strips employees and consumers of their basic constitutional rights, such as a jury trial by their peers, an impartial and qualified judge, to discover evidence for their case, to appeal or to bring a class action lawsuit.  In fact, arbitrators’ decisions must be upheld even if they disregard the law. Americans deserve judges who believe that the constitution provides for fair and equal justice for everyone in America, not just for the wealthy and powerful.

H.R. 1020, the Arbitration Fairness Act of 2009

When Congress enacted the Federal Arbitration Act (FAA) in 1925, its goal was to allow an alternative forum for commercial parties on equal footing to resolve their disputes. The Arbitration Fairness Act of 2009, introduced by Rep. Hank Johnson (D-GA), reflects the FAA’s original intent by requiring that agreements to arbitrate employment, consumer, franchise, or civil rights disputes be made after the dispute has arisen. 

The bill would amend the FAA to prevent the use of pre-dispute mandatory arbitration clauses in consumer, employment and franchise agreements. This legislation would not prohibit arbitration. 

  • This legislation will ensure that the decision to arbitrate is truly voluntary and that the rights and remedies provided for by our judicial system are not waived under coercion. 
  • This legislation would allow pre-dispute mandatory arbitration to continue in most business-to-business agreements.  
  • This legislation would not apply to collective bargaining agreements.  

The Arbitration Fairness Act would restore traditional market principles to the arbitration industry: giving consumers a choice to arbitrate creates a market in which arbitration companies have to compete for their business, instead of simply catering to corporations. When arbitration is post-dispute—and therefore voluntary—arbitration companies must offer a fair process that both parties would choose willingly.

The Arbitration Fairness Act of 2009 is supported by a broad coalition of groups, including: the AFL-CIO, SEIU, Consumer Federation of America, Alliance for Justice, Center for Responsible Lending, American Association for Justice, Leadership Conference on Civil Rights, National Association of Consumer Advocates, National Consumer Law Center on behalf of their low-income clients, National Consumers League, National Employment Lawyers Association, Public Citizen, U.S. PIRG, NCCNHR: The National Consumer Voice for Quality Long-Term Care, and Consumers for Auto Reliability and Safety.

Please Support the Arbitration Fairness Act of 2009

Ten Reasons to Ban Forced Arbitration

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1) You cannot hold companies accountable. Forced arbitration allows companies to play by their own rules and escape accountability when they harm consumers and employees.

2) You cannot sue for discrimination, harassment, abuse, retaliation, or wrongful termination.

3) Arbitrators are not required to follow the law.

4) You cannot sue for negligence, defective products, or scams.

5) Legal recourse is not allowed.

6) You cannot appeal an arbitration decision.

7) Arbitration is a private system without an impartial judge.

8) There are no juries in arbitration.

9) There is no public review to determine whether the arbitrator got it right.

10) Forced arbitration prohibits class action lawsuits, an important way for consumers and employees to band together to fight injustices.

 

Now tell us your reason to ban forced arbitration

This Week in Arbitration

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NPR has a two part piece on home construction in Texas – Did Builder’s Clout Trap Couple In Dream Home? and Critics: Texas Agency Favors Builders Over Buyers. The first part focuses on Bob and Jane Cull, who spent 13 years fighting Perry Homes in arbitration and in court; the couple actually won in arbitration, but Perry Homes appealed all the way up to the Supreme Court and finally won. It looks like binding mandatory arbitration is only binding if the consumer loses.

 
More arbitration news, after the jump.

 
Here’s some bad news: the U.S. Supreme Court ruled for the employer in 14 Penn Plaza LLC v. Pyett, finding that even statutory rights (in this case, the plaintiffs alleged age discrimination) could be forced into arbitration if the collective bargaining agreement called for it. (Full opinion here)
 
The Searle Civil Justice Institute at Northwestern University School of Law released a report by Kansas Law professor Chris Drahozal saying that consumers received “some relief” in 53.3% of arbitration claims. You can read the full report, or check out the Chicago Tribune’s coverage. Public Citizen has a response on their Watchdog Blog. Contrasting Professor Drahozal’s findings with the Public Citizen’s report detailing how consumers lost 94% of arbitration cases in California is left as an exercise for the reader.
 
On to the good news: The U.S. Supreme Court found in favor of the consumer (AP, Law.com) in her dispute with her credit card company in Vaden v. Discover. Discover sued Betty Vaden in Maryland state court in 2003; when she filed a class-action counterclaim, Discover tried to force her suit into arbitration – while leaving their own suit against her in court. (Full opinion here)
 
The Montana Supreme Court rejected an arbitration clause that was added in a “bill stuffer” notice. (Full opinion here)
 
In another victory for consumers, the 9th U.S. Circuit Court of Appeals found a T-Mobile arbitration agreement’s class action waiver “substantively unconscionable and therefore unenforceable.” (Full opinion here)
 
A bill to prohibit pre-dispute binding mandatory arbitration clauses in consumer contracts has been introduced in Maine.
 
A Pittsburg woman has won the right to have her sexual discrimination case heard in court, after the 3rd U.S. Circuit Court of Appeals found that since she was never informed of or agreed to the company’s arbitration agreement, she was not bound by it. (Full opinion here)

 

The Arbitration Fairness Act: Myths and Facts

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H.R. 1020 would permit parties to choose arbitration voluntarily, but prohibit corporations from forcing consumers into expensive, secretive, and biased arbitrations.

 
Myth: H.R. 1020 prohibits arbitration.
 
Fact: H.R. 1020 encourages voluntary arbitration; it only prohibits corporations from forcing mandatory clauses on consumers without their having a chance to negotiate the terms and often without their knowing about it.
 
Consider this example:  When admitting his father into a nursing home, Charles Miller Jr. signed a lengthy contract that, unbeknownst to him at the time, contained a binding mandatory arbitration clause. His father was not seen by a physician until three weeks after his admission, during which time he lost 19 pounds and suffered from dehydration and pneumonia, all of which led to his death. Charles Miller Jr. filed a claim against the nursing home corporation, but a court held that because he had signed this contract, he would be forced into arbitration for his claims against the nursing home, under the terms the nursing home corporation chose to put into the contract. Because Charles Miller Jr. had unknowingly signed a contract that contained a mandatory arbitration clause before any dispute had arisen, he was bound by its terms, no matter how unjust.
 
 
Myth: Most consumers favor binding mandatory arbitration. 
 
Fact: Consumers favor voluntary arbitration and being given the choice to arbitrate. Would an employee with a claim against Halliburton want Halliburton deciding how her claim should be handled? Would a homeowner with a claim against his home contractor want the contractor deciding how his claim should be handled?
 
The Chamber of Commerce’s recent study, which purported to show that voters did not support HR 1020, asked voters: “If you could choose the method by which any serious dispute would be settled between you and the company, which would you choose?” (Emphasis added.) But what they didn’t tell these voters is that binding mandatory arbitration takes away a consumer’s choice. Under the current system, consumers are not allowed to choose which option is best for them. They are not allowed to choose to file a claim in court nor are they allowed to choose who the arbitrator will be, or even what state they will have to arbitrate the claim in. Instead, they are forced into an arbitration system that is set up to favor the corporation and trample on the rights of the consumer. When consumers are given the choice to arbitrate after a dispute has arisen, they gain bargaining power and are better able to enter into an arbitration system that is fair. 
 
Myth: Arbitrators are neutral, unbiased decision-makers.
 
Fact: Binding arbitration favors corporations because only corporations are repeat users of arbitration companies.
 
If an arbitration company wants to be used in a company’s mass consumer or employment contracts, the arbitration company has a huge financial incentive to appear favorable to those businesses in arbitration proceedings. Why would a company choose an arbitrator that rules against them? 
 
 
Myth: Arbitration is cheap and more accessible to consumers. 
 
Fact: Arbitration is so expensive that most consumers will not be able to pursue their claim against a corporation because they can’t afford the costs of the arbitrator.
 
Under mandatory arbitration clauses, consumers must pay steep filing fees just to initiate a case—seldom less than $750 – and pay their share of the arbitrator’s hourly charges, which are routinely $400 or more per hour. All these fees must be deposited in advance and almost always amount to thousands of dollars. In addition, arbitration clauses often allow the corporation to choose the location, regardless of how inconvenient or costly travel will be for the consumer.
 
 
Myth: Arbitrators are like judges; they have to follow the law and publicly state the reasons they made their decision.
 
Fact: Arbitrators are not bound by any laws. They do not have to follow the law and they don’t have make public or even provide to the consumer any explanation for ruling the way that they did.
 
Most arbitration clauses require that proceedings be kept confidential, even if the case raises important public policy issues. As a result, only the corporation can track past decisions and know which arbitrators have ruled for them. In addition, arbitrators do not set or follow judicial precedent, something our judicial system requires to ensure consistency and fairness in legal proceedings. 
 
 

 

Coalition Support Letter for Nursing Home Arbitration Act of 2009

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March 5, 2009

 

United States Senate

Washington, DC 20510

 

Dear Senator:

 

Binding mandatory arbitration clauses are forcing the elderly and those with disabilities and their families to waive their constitutional right to seek redress in the courts when a nursing home resident suffers harm. These clauses are typically buried in contracts signed by families during one of the most stressful events in their lives – entrusting the care of a vulnerable loved one to strangers – and the clauses effectively compel family members to consent that they will waive the legal rights of a loved one if she or he is injured or dies from neglect or physical abuse while in the facility. The contracts are presented on a take-it-or-leave-it basis, and leave families in the impossible situation of having to sign a contract or forgo nursing home care altogether, a decision that most families are not in the position to make. The undersigned organizations urge you to support the Fairness in Nursing Home Arbitration Act of 2009 (S. 512/H.R. 1237), which would invalidate pre-dispute mandatory arbitration provisions in nursing home, assisted living, and other long-term care facility contracts.

Sixty percent of nursing home admissions are from a hospital and occur after a medical emergency, such as a stroke or broken hip. Individuals are often pressured to accept the first available bed without any opportunity to evaluate the care provided or consider other possible options, and research conducted at Brown University shows that hospitals are more likely to place African Americans in the worst nursing homes. When they unknowingly sign away their right to sue the facility, most families have had no experience with the severity of injuries their loved one could suffer if the facility neglects its responsibility to protect them – such as pressure sores that lead to infection and amputation of limbs; suffocation on bedrails and other restraining devices; physical and sexual assault; renal failure from dehydration; malnutrition; and death from fires in unsprinklered buildings. Some courts have even enforced arbitration clauses included in contracts signed by nursing home residents who were illiterate or had advanced dementia.

Countless government studies show that in spite of improvements in nursing home regulation and enforcement, state regulators still under-cite the seriousness of deficiencies in which residents are harmed; levy fines that are little more than the cost of doing business; and allow facilities to operate year-after-year with serious, repeat problems. Assisted living is poorly regulated in most states, although assisted living residents often have physical and mental disabilities similar to those of nursing home residents.

Mandatory arbitration clauses only further this crisis by serving to protect providers from accountability for bad care. By allowing the provider to pick the arbitration company with which it routinely does business and the rules of the arbitration, the system is set up to heavily favor the provider and leave the family with little or no hope of obtaining justice for their loved one. 

Families should not be required to sign a contract containing a pre-dispute mandatory arbitration clause as a condition of admission nor participate in an arbitration process that they have little or no control over, especially when the dispute involves the suffering and death of their parents and other loved ones. The Fairness in Nursing Home Arbitration Act would end the practice that forces many to do so.

 

Sincerely,

 

National Organizations

 

Alliance for Retired Americans

Alzheimer’s Foundation of America

American Association for Justice

American Federation of State, County, and Municipal Employees

Assisted Living Consumer Alliance

Communications Workers of America

Consumer Federation of America

Center for Justice & Democracy

Center for Medicare Advocacy

Citizen Works

Consumer Action

Consumers for Auto Reliability and Safety

Consumers Union

Hartford Institute for Geriatric Nursing

Homeowners Against Deficient Dwellings

Home Owners for Better Building

Leadership Conference on Civil Rights

National Academy of Elder Law Attorneys

National Consumer Law Center (on behalf of its low income clients)

National Employment Lawyers Association

National Association of Consumer Advocates

National Association of Local Long-Term Care Ombudsmen

National Association of Social Workers

National Association of State Long-Term Care Ombudsman Programs

National Women’s Health Network

NCCNHR: The National Consumer Voice for Quality Long-Term Care

National Senior Citizens Law Center

Neighborhood Economic Development Advocacy Project

Public Citizen

Service Employees International Union

U.S. Public Interest Research Group

 

State Organizations

 

Alabama

Long Term Care Ombudsman Program of Jefferson County

Central Alabama Aging Consortium

 

Arkansas

Arkansas Advocates for Nursing Home Residents

 

California

California Advocates for Nursing Home Reform

Foundation Aiding The Elderly

Long Term Care Services of Ventura County

Ombudsman Services of San Mateo County

Riverside County Long Term Care Ombudsman Program

 

Delaware

Delaware Long-Term Care Ombudsman Program 

Citizens for Long Term Care

 

District of Columbia

Office of the D.C. Long-Term Care Ombudsman Program

 

Florida

ACTION: Advocates Committed to Improving Our NursingHomes

FANHI: Family Advocates for NursingHome and HomeCare Improvement

 

Georgia

Georgia Office of the State Long-Term Care Ombudsman

 

Idaho

Idaho Long Term Care Ombudsman program

 

Illinois

Illinois Citizens for Better Care

Illinois Office of the Long Term Care Ombudsman

 

Indiana

Indiana Long Term Care Ombudsman Program

Long Term Care Ombudsman, Area 12

United Senior Action of Indiana

 

Kansas

Kansas Advocates for Better Care

 

Kentucky

Barren River Area Development District Area Agency on Aging

Kentuckians for Nursing Home Reform

Kentucky – Barren River District Long Term Care Ombudsman

Kentucky Protection & Advocacy

KIPDA District Long-Term Care Ombudsman Program

Nursing Home Ombudsman Agency of the Bluegrass

 

Louisiana

Advocacy Center

Louisiana Long Term Care Ombudsman Program

 

Maryland

Manor Care Chevy Chase Family Council

Montgomery County MD Long Term Care Ombudsman Program

Voices for Quality

 

Massachusetts

Massachusetts Advocates for Nursing Home Reform

Wynn Gerhard, Managing Attorney, Elder Law Unit, Greater Boston Legal Services, on behalf of our clients

Ombudsman Program, Consumer Advocates for Better Care of

Montachusett Home Care Corp.

SeniorCare, Inc./Long Term Care Ombudsman Program

 

Michigan

Citizens for Better Care

Michigan Campaign for Quality Care

 

Minnesota

ElderCare Rights Alliance

Families Against Nursing Home Abuse, Albert Lea

Mid Minnesota Legal Assistance

Office of Ombudsman for Long-Term Care

 

Missouri

Missouri Long-Term Care Ombudsman Program

St. Louis Long Term Care Ombudsman Program

 

New Hampshire

New Hampshire Office of the Long-Term Care Ombudsman

 

New Jersey

Bergen Regional Medical Center Long Term Care Family Council, Paramus NJ

 

New Mexico

New Mexico Long Term Care Ombudsman Program

 

New York

The Coalition of Institutionalized Aged and Disabled

FRIA, The Voice and Resource for Eldercare with Dignity

Long Term Care Community Coalition

New York State Ombudsman Alliance

 

North Carolina

Friends of Residents in Long Term Care

North Carolina Long Term Care Ombudsman Program

 

Ohio

Dayton Long Term Care Ombudsman Program

Ohio Office of the State Long-Term Care Ombudsman

 

Oklahoma

A Perfect Cause

Oklahoma Long Term Care Ombudsman Program

 

Pennsylvania

CARIE

Pennsylvania Long-Term Care Ombudsman Program

 

Rhode Island

Rhode Island Long Term Care Ombudsman Program

 

South Dakota

South Dakota Advocates for Nursing Home Reform

 

Tennessee

Tennessee State Long-Term Care Ombudsman

 

Texas

NHVC, Inc.

Texas Advocates for Nursing Home Residents

 

Vermont

Regional Long Term Care Ombudsman, Vermont Legal Aid, Rutland

 

Virginia

TLC 4 Long Term Care Residents

 

Washington

Alzheimer’s Association, Western and Central WA Chapter

Resident Councils of Washington

Washington State Long Term Care Ombudsman

 

Wisconsin

Coalition of Wisconsin Aging Groups

Wisconsin Long-Term Care Ombudsman Program

 

Wyoming

Wyoming Long-Term Care Ombudsman Program

 

 

 

MBNA Talks to Dead People

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Columnist Don McNay has an article up at the Huffington Post about how a debt collector working for MBNA (a subsidiary of Bank of America) allegedly talked to his mother, two and a half months after she died. He was informed by one firm that MBNA had obtained an arbitration award against her, and later by a second firm that MBNA might obtain an arbitration award. First debt-collection séances, and now "Schrödinger’s justice?"

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