Please Post Your Story Here

•October 1, 2008 • 20 Comments

I decided to write this blog as a service to all those who have already been negatively affected by an arbitration experience or soon could be.  Despite the veneer of “fairness and impartiality” that is propagated by arbitration advocates, the current system offers little protection for consumers, small businesses and employees with far less bargaining power than those with whom they’re contracting.     

I recently went through an excruciating arbitration horror story of my own.  I was forced to sue a recent former employer for breach of contract and fraud with the arbitration company, JAMS, My opponent perjured himself throughout deposition and right in front of the arbitrator. Then he even admitted to defaming me during a vigorous cross-examination. It all looked very promising – so promising in fact, that he made two huge settlement offers, which I now regret having declined. Just before the conclusion of the proceeding I was informed by someone in the industry that my former employer was spreading lies about me, presumably in an effort at blacklisting. We brought it to the arbitrator’s attention, but he decided to ignore it.

Despite what was a huge preponderance of evidence in my favor, the arbitrator, unbelievably, decided against me.  He also ruled that I should pay my former employer’s legal fees, in addition to my own. The total bill was almost a million dollars and was completely devastating.

It wasn’t until after the proceeding when I attempted to appeal the arbitrator’s decision that I learned of the built-in iniquities of the binding arbitration system here in the United States.  The system usurps ordinary consumers’ basic civil right to trial by a jury of their peers and grossly favors big business. Don’t believe me? Read some of the stories posted in this blog. Worst of all, there is almost no possibility at all for appealing a lazy or downright wrong ruling by an arbitrator.

Originally, our government enacted the Federal Arbitration Act in 1925 in order to alleviate pressure on an overworked legal system.  The intent was to allow large corporations to settle their disputes privately, outside of the public courts.  However, the Act still exists almost wholly unaltered since that time, and today is being used as a means of settling disputes between big corporations and ordinary citizens – a disparity that was never intended. 

Think it doesn’t affect you?  Think again – almost everyone in this country who has a cell phone or a credit card is subject to a binding arbitration agreement.  Even hospitals and doctors have them buried in the fine print of their admissions documents!  This allows these parties to eschew the civil litigation system that you already pay for and to which you are fully entitled.  Instead of a jury of your peers, your case will be decided by a person who works for a big corporation which is being paid by the corporation you are litigating against.  To make matters worse, most arbitrators work in their off-time as defense attorneys for the same sort of companies you are suing.  Imagine suing a hospital for accidentally using elevator lubricant to clean surgical instruments used during your operation – and the “impartial” person assigned to decide your case is an attorney who makes a living defending doctors’ and hospitals’ malpractice claims.  It happened to a man named Bennie Holland

Perhaps the worst part of arbitration is that there is NO PUBLIC RECORD OF PROCEEDINGS.  This is shockingly irresponsible as it allows corporations and the people that run them to violate your rights with impunity and without any fear that discoverable records of their transgressions exist.  In my case, this meant I had no way of knowing that my prospective employer was a people-mill that had been in almost constant legal battles with former employees when I signed my contract – a contract which included a binding arbitration agreement. 

I ask that you please use this blog as a venue to broadcast your own personal arbitration horror story.  I’m making a documentary about the injustice of the Alternative Dispute Resolution (ADR) system and the current initiatives to reform it and I need to hear YOUR story.  It’s incumbent upon us all to use our voices to close this loophole that is allowing ordinary Americans’ right to a fair trial be usurped by large corporations and their lobbyists.  

Please also contact your Senators and Congressmen and tell them to support the Arbitration Fairness Act of 2009 which is currently working its way through Congress.

Video on Kaiser Permanente Horror Story

•July 30, 2010 • 1 Comment

Please watch this video which was sent to me by J. Stein.

Senate Moves to Ban Mandatory Arbitration with Defense Contractors

•October 14, 2009 • 1 Comment

Congratulations to freshman Senator Al Franken (D-MN) and the Senate Judiciary Committee for taking some concrete steps toward leveling the playing field for employees and individual consumers in disputes with influential companies and corporations. The Senate approved a measure banning the use of Mandatory Binding Arbitration clauses in employment contracts by defense companies that contract with the federal government. The amendment in question even garnered the support of a few Republican senators, passing 68-30.

This is another step in the right direction for all of us and I, for one, am grateful!

Unfairness of MBA Discussed on Capital Hill

•October 9, 2009 • 2 Comments

A Senate Hearing held on 7 October 2009 came down on the right side of two very important issues for American employees – Age Discrimination and Mandatory Binding Arbitration. Specifically, Sen Patrick Leahy (D-VT), Senator Al Franken (D-MN) and the rest of the Senate Judiciary Committee held a hearing on two Supreme Court decisions made in the past two years.

Regarding age discrimination, Senator Leahy, who chairs the committee, took issue with the Supreme Court’s decision this past June which switches the burden of proof in age discrimination cases from employers to employees.

“The Supreme Court’s recent decisions make it more difficult for victims of employment discrimination to seek relief in court, and more difficult for those victims who get their day in court to vindicate their rights,” Leahy said. “These decisions will encourage corporations to mistreat American workers in a still-recovering economy.”

Senators Leahy and Franken then focused their rath over the Supreme Court’s decision to uphold the Federal Arbitration Act in Circuit City, Inc. v. Adams.

“Now, after the Circuit City decision, employers are able to unilaterally strip employees of their civil rights by including arbitration clauses in every employment contract they draft,” Leahy said.

Attending the hearing was Jamie Leigh Jones who was drugged, raped and tortured by her coworkers during her time as a contract worker in Iraq. Because of an MBA clause in her employment contract, Jones was forced to take her case in front of an arbitrator instead of a jury of her peers. Senator Franken took up her cause and grilled Mark deBernardo, a partner in a law firm in Virginia who argued the merits of mandatory arbitration. Please click here for video of the hearing.

“She has not had her day in court, sir,” Franken said. “This is the result of your binding, mandatory arbitration, Mr. de Bernardo.”

Forced Arbitration: Unfair and Everywhere

•September 18, 2009 • Leave a Comment

The folks at Public Citizen have published a new report entitled, “Forced Arbitration: Unfair and Everywhere” which is enormously informative. Please click here to read it.

House Subcommittee Heard Testimony on Unfair Binding Arbitration Clauses

•September 17, 2009 • 1 Comment

House Subcommittee Heard Testimony on Unfair Binding Arbitration Clauses

September 16th, 2009 • Filed Under: News • No Comments

Lawmakers and consumers testified on Tuesday before a House subcommittee, calling for new, tough laws restricting the ability of companies to force customers into mandatory binding arbitration when disputes arise. The law could help protect consumer access to the courts in cases against nursing homes, banks, cable companies and other corporations.

Congress is currently considering two different pieces of legislation that would restrict forced arbitration clauses contained in many agreements consumers must sign to do business with companies in many industries critical to Americans’ day-to-day life.

Representative Henry C. Johnson of Georgia has introduced the Arbitration Fairness Act, which would prevent all pre-dispute arbitration clauses that could be considered “forced” due to economic and social needs of the individual, and Rep. Linda Sanchez of California has introduced the Fairness in Nursing Home Arbitration Act of 2009, which would nullify all such clauses contained in admission agreements that prevent residents or family members from filing a nursing home negligence lawsuit or other claim in open court.

A report released on Monday by Public Citizen found that 75% of eight major industries require customers to sign pre-dispute arbitration agreements, including banks, cable/internet providers, home builders, and car dealerships. These agreements require customers to sign away their ability to go to court if they have been wronged, and most companies refuse to give customers information about their arbitration requirements until they are ready to agree to sign a contract.

Defenders of the practice object to calling the agreements mandatory, since consumers are not forced to sign the contract, and other clauses in contracts that people may not be familiar with are not considered to be mandatory. Stephen J. Ware, a professor of law at the University of Kansas, testified against passage of the bills, saying that pre-dispute arbitration prevents load on the court system, and that there are pre-existing laws which allow courts to nullify arbitration agreements which are unfairly utilized.

Critics of the practice say that when such agreements become ubiquitous in key industries, especially ones where people have little choice but to participate, then such agreements become de facto mandatory requirements.

“Checking a parent or other relative into a nursing home or other long-term care facility is a perfect example of a time when one party really has no real power or choice in the matter,” Sanchez said in her testimony before the House Subcommittee on Commercial and Administrative Law. “For desperate families who are unable to provide adequate care at home, the need for an immediate placement for their loved ones makes the ‘take-it-or-leave-it’ choice no choice at all.”

Question about the costs of the arbitration process

•September 14, 2009 • Leave a Comment

One of our readers sent me an email about his particular case. Our correspondence was as follows:

I just read your story about JAMS arbitration and it has confirmed a lot of what I thought. I am considering bringing a contract that I signed with another party to JAMS arbitration per the clause that they put in there but I have no idea what the costs will be. Before the ruling and legal costs that you were found responsible for, what were your costs in proceeding with the arbitration process? Thanks, and I hope all is well,

Los Angeles, CA
Dear SW:

To be honest, I don’t remember what the JAMS fees were, but I believe they were comparable to their competition. In fact, the arbitration fees were paid for by my opponent. What I found completely lacking was the integrity of my particular arbitrator. If you peruse around my blog, you’ll find some other ppl have had similar experiences to mine. I, for one, will never ever use JAMS again, if I can help it.

I hope that helps.

Best of luck to you,
Ehren Bragg

Unfortunately I don’t have a choice based on the contract which specifies JAMS. I called them and they said $400 to initiate, then $1500 retainer for the retainer fee for the arbitrator, and then $500-1000/hr for his/her time, which is pretty crazy considering the dispute is over $500.

Los Angeles, CA
That’s why this whole thing is so screwed up. We already pay for the court system and then we have to pay again – many times it’s approaching or even exceeding the amount we’re seeking redress of – with this arbitration system.

Best of luck to you,
Ehren Bragg

Bank of America no longer requires arbitration to settle disputes

•August 21, 2009 • 2 Comments

Bank of America has changed its policy that required binding arbitration between its credit card holders and banking customers and the bank. Bank of America made the decision in reaction to customer complaints that arbitration favors banks rather than the individual customer.

According to Bank of America spokeswoman Shirley Norton, the new rule change is effective for new disputes beginning Aug. 20. She also said that the company believed that arbitration is fair, but it was clear that some customers felt that it wasn’t.

The new law will allow for lawsuits against the bank but the company hopes that by listening to customer complaints and making changes, they will be able to settle more disputes with customers directly.

The practice to require binding arbitration is a common banking practice to protect against potentially more costly lawsuits.


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