Sign a Contract and Lose Your Right to Seek Justice in Court

Consumer beware.  American corporations have created a private system to settle disputes that denies consumers their day in court.

When you sign a contract to buy a cell phone, rent a car, join a bank, put your loved one in a nursing home, sign an employment contract, make an investment, or are admitted to the hospital buried in the fine print may be a forced-arbitration clause.  In the event of a dispute with the company, under forced-arbitration a consumer or an employee cannot take their case to court.  Also, consumers cannot band together to form a class action to bring about a change in business practices.  Instead, consumers are funneled into a rigged system decided by an arbitration company chosen by the company.

How You Are Hurt By The Fine Print:

  • One-sided Requirements – Consumers waive their rights to sue but corporations do not.
  • High Costs – Consumers often must pay steep filing fees to initiate a case as well as pay their share of the arbitrator’s hourly charges.  In addition, forced-arbitration clauses often allow the corporation to choose the arbitrator, as well as the location, regardless of how inconvenient or costly travel will be for the consumer.
  • Biased Decision-Makers – There is a disincentive for an arbitrator to rule in favor of a consumer if he hopes to be hired by the business again.  The arbitrator is not required to have any legal training or even follow the law when reaching a decision.
  • Weak Civil Justice Safeguards – The individual’s ability to argue his or her side of the case is often restricted, including access to necessary evidence.  The arbitrator’s decision is almost impossible to appeal.
  • Secret Backroom Proceedings – While proceedings and records of the courts are open to the public, most forced-arbitration clauses require that proceedings be kept confidential, even if the case raises important public health and safety issues.

Last week, The New York Times published an investigative series exposing the corporate bullying tactic of forced-arbitration.  The stories are based on thousands of court records, interviews with lawyers, judges, arbitrators, and the people who have been affected by forced arbitration, in 35 states.

Most people interviewed by the Times did not know they had signed away their rights to sue.  The family of a 94-year-old woman at a nursing home who died from a festering head wound found that they could not sue the nursing home. Parents of an infant who was born with serious deformities could not sue the obstetrician for negligence.  Students who received a worthless degree could not file a class action suit against the for-profit university.

The first story “Arbitration Everywhere, Stacking the Decks of Justice” describes the pernicious practice of forced arbitration, a get-out-of-jail free card for corporate wrongdoing.

The second story, “In Arbitration, a Privatization of the Justice System” tells stories of consumers who lost their right to go to court when a school, a car dealership, and even a nursing home had done them wrong.

The third and final story “In Religious Arbitration, Scripture is the Rule of Law” focuses on how religious tribunals, once used to settle family disputes and spiritual debates, are now being used to sort out secular problems like claims of financial fraud and wrongful death.

The article’s investigative reporter, Jessica Silver-Greenberg, elaborated on the series during an interview on Fresh Air.  You can hear her interview at http://www.npr.org/2015/11/12/455749456/have-we-lost-a-constitutional-right-in-the-fine-print

Unless we speak up, Congress is unlikely to come to the aid of consumers and empolyees.  Contact your Congressmen and demand they act to protect your right to have your day in court.  Don’t wait until you need your rights to find out you don’t have them.