Please Post Your Story Here
I’ve recently gone through an excruciating arbitration proceeding with a former employer. Despite what was a huge preponderance of evidence in my favor, the arbitrator, unbelievably, decided against me. 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.
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 decided to write this blog as a service to all those who have already been negatively affected by an arbitration experience or soon will 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 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.
If you’d like to email me, please feel free to do so at ebragg@the-beach.net.
I personally attribute settling a construction defect case to getting OUT of arbitration. The arbitration clause was in a home warranty policy that the builder bought and that we received after closing. We found out in time that FHA and VA buyers do not have to arbitrate with home warranty co’s, (Title 24, of the Code of Fed. Regulations, Sec. 203.204(g) states court has to be an option too.) Based on early “offers,” if we’d had to arbitrate we could’ve gotten nothing, or maybe up to about half our damages. Instead, because we were able to hold onto our right to use the courts, we were able to settle for pretty much all of our damages and didn’t have to go to trial. The leverage that consumers have when they CAN sue is important, even if they don’t go to trial or even file a lawsuit.
Now, as a consumer advocate for the last several years, I see so many consumers getting shafted by arbitration clauses with no way out. If whole industries are going to use these clauses so widely that consumers have no realistic choice to refuse them and shop elsewhere, then the law needs to be fixed so the clauses aren’t enforceable. Consumers can’t rely on the courts to get them out of arbitration. Some courts enforce it, some are less likely to, but it costs a lot fo time and money to fight the arbitration clause, and then they have the original case left to handle even if they get out of arbitration. It uses up their resources to fight the real battle.
Also, arbitration run privately by industries is fraught with reports of bias, disregard for the law, expense, and of course the secrecy that hides these complaints in private records. Other consumers are not aware of these complaints and can’t avoid bad companies even though they’re doing their “homework” first.
I support the Arbitration Fairness Act.
Home Sour Home
News: What happens when a Republican homemaker goes up against an elusive construction company, a faceless bureaucracy, and the whole housing-industrial complex?
By Randall Patterson
July/August 2005 Issue
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CONVERSION EXPERIENCES generally begin with a quest, and for Bob and Jordan Fogal, it began with a quest for comfort. Bob, who works in marketing, wanted a shorter commute to his office. Matters of the home, as usual, were left to his wife, and Jordan had spent months looking for a house—and had rejected many—when at last she found the one: a regal, stucco box in a gated community near downtown Houston. “You could see what a quality piece of work the house was,” Jordan remembers. She liked the 20-foot ceilings, the granite counters in the kitchen, the stainless-steel appliances—all part of the “Tremont Attention to Detail Difference,” according to the builders’ handout. She assumed that since the house was so nicely appointed, it was also soundly built. Seduced by beauty, certain of value, the Fogals bought the home in April 2002 for $368,564, investing nearly everything they had.
The first disappointment came on the day they moved in. Bob Fogal, weary from unpacking, trudged upstairs to relax in his new whirlpool bath. When he got out, he pulled the plug and “all 100 gallons of that water came down through the dining room ceiling, into the light fixtures, down the columns, onto my dining room table and Oriental rugs,” Jordan recalls. “And I just started screaming.”
The Fogals tried to tell themselves it was just an oversight—one unconnected drain—but then more oversights appeared: a portion of yard that turned into a swamp; a section of house that visibly sagged; heating that wasn’t warm enough; a cooling system not cold enough. And always, and most seriously, water coming in from somewhere. Sitting at breakfast, thanks to a window above them that had been installed upside down, the couple sometimes felt the falling rain.
It was all too much for Bob to think about. He continued going to work while Jordan stayed home, appreciating the “Attention to Detail Difference.” Eventually, Bob too would join Jordan before the Houston City Council to lament the mold and the rotting and how, according to the meeting’s minutes, “the builder knew of the problems and failed to disclose it.” Jordan had looked forward to a leisurely life taking care of her new house and writing memoirs, but when the builders would not fix the structure, and when no authority would compel them to do it, Jordan experienced, for the first time, an in-justice she could not endure. On a street corner near her house, the 59-year-old Republican began picketing for all she was worth.
“I mean, it’s a rat’s nest,” she says of the house, of Texas law, of the System,”and here I am, one grandmother with no money and no help.”
IT WAS A MISMATCH from the start—one mad-as-hell housewife against the entire construction-industrial complex. Home-building is a chief indicator of the economy’s health, and politicians are rarely inclined to slow it down with regulation or oversight. Reinforcing that impulse is an extremely well-funded, organized builder lobby whose focus, according to Janet Ahmad of the watchdog group HomeOwners for Better Building (HOBB), has never been “on how to build a house correctly, but on how to limit regulations and liability.”
As a result, contractors throughout the country have been able to feed the U.S. housing boom with little fear of being held accountable for the quality of their work. The faster a house is constructed, the greater the profit, and thus many homes are now built as though on an assembly line, often in as little as 90 days. Contractors “build them spacious and grandiose and give them the appearance of quality,” says Ahmad, whose group tracks both federal and state regulations. Behind the facade, though, are often shoddy workmanship and cheap materials, such as “wood” trim that is actually recycled paper.
No governmental body tallies how many of these new homes prove seriously defective, but Consumer Reports, in a broad investigation of construction defects in 2004, estimated that some 150,000 homeowners a year find “they have more consumer protections for a fickle $20 toaster” than for the biggest investment of their lives.
And nowhere, homeowners’ groups say, do negligent builders get a better deal than in the Fogals’ home state. “If you want to be a successful fly-by-night contractor,” says HOBB’s Ahmad, “you come to Texas. They’re pillars of the community here, on the who’s who list. They don’t even have to sneak away in the night. They operate in the full light of day.”
In one of the country’s most business-friendly states, construction is one of the most influential businesses. The largest individual contributor to Texas politicians is Bob Perry—a builder who gained national fame during last year’s presidential campaign when he funded the Swift Boat Veterans for Truth. The organization dispensing the most political money in the state, Texans for Lawsuit Reform, is also headed by a builder, and builders have been the main beneficiaries of a decade’s worth of Texas tort reform laws—laws that, for homeowners, amount to little more than a maze of obstacles designed to obstruct the filing of lawsuits.
Most builders in Texas (and elsewhere) require homebuyers to agree to settle disputes out of court, in binding arbitration. Should a consumer, by some miracle, make it past that clause, the legislature recently passed a law that abolishes standards that a home display “workmanlike construction,” confines damage awards to the cost of repairs, and establishes a commission—dominated by builders—consumers must go to before filing a claim either in court or in arbitration. This law was in large part written by the chairman of a Texas Association of Builders task force, John Krugh, whom the governor later named to sit on that very commission.
A Texas homebuyer’s only real hope for recovery, then, is to raise hell. Builders know that most people don’t have the stomach for that, says Ahmad, the consumer advocate. But with Jordan Fogal, she adds, “I think they bit off more than they can chew. That one woman has created an army’s worth of ruckus.”
BACK IN ALABAMA, where Jordan had lived until 1994 and raised her three children, she was “den mother, room mother, cookie baker—the whole nine yards.” Once, she circulated a petition to get her dirt road paved, but otherwise she had lived for 59 years without public protest of any kind.
Now, in the two-bedroom apartment the Fogals fled to when mold started showing up in their leaky house, she complains that she hardly has time to do her hair, let alone get to the tanning bed. The kitchen table is an unruly heap of evidence as Jordan, maniacally smoking, tells her sprawling story. Along the way, she mentions Grandmother, who taught her there were no gray areas—”it was right, or it was wrong”—and also Granddaddy, who believed that “if it was bad, you shot it.” And, over and over again, she repeats her own maxim: “I don’t like people messing with my home.”
Her home is one of 44 jammed onto two acres just off Houston’s Waugh Drive and surrounded by a wall. The wall, the gates, the closed garage doors give the place an isolated feeling, which the builder marketed as security. But it was never perfectly clear which company built Hyde Park Crescent.
The builders operated under many names, and it seems the Fogals’ house was built by two companies, Tremont Homes and Stature Construction, both of which were directed by one Jorge Casimiro and his business partner, Thomas Thibodeau. With some $28 million in revenue, Stature was listed by Hispanic Business magazine in 2001 as one of the country’s largest Hispanic-owned companies. Casimiro himself has been chairman of the Houston Hispanic Chamber of Commerce’s political action committee and the recipient of several business honors, which company publicity touts as proof of “his integrity and commitment to providing outstanding service.”
For more info and my testomony to congress on the effects of arbitration on the consumer please google my name. We began this nightmare April 2002. We are still being held hostage in the cooourt of appeals in Texas and have been for over a year. We have a ruling of fraud against our builder from the last time they forced us into arbitration. Arbitration “awards” are mearly pieces of paper. We have been told by our builders lawyers we will never see a dime. We did not even get “awarded” enough to pay the arbitration costs, much less get our damages or down payment back. You can show my email.
Cindy brings up an excellent point. One of the main problems with the arbitration system in the U.S. is that it is completely private. Therefore, unlike a public proceeding where the record becomes available and readily accesible to anyone, arbitration records are the equivalent of a “sealed record” in a public forum. Only in rare circumstances are public records sealed by judges and, if they do so, there has to be a solid reason for it.
Effectively, this means that businesses and people who regularly practice in an unscrupulous way can continue doing so unabated and with little fear of publicity as long as they can continue to direct any legal proceedings into mediation and arbitration.
In my own particular case I took a job with a company that went through employees like water. But since all of the employee grievances were subject to binding arbitration, the records were invisible and inaccessible when I did a background check on the company. Before I took the job I had, in fact, asked the owner of the company if he had been involved in civil proceedings with any former employees and he told me he had not. I later found out that at the time I posed my question to him, he was just finishing up an arbitration proceeding with one of those former employees.
To make matters worse, during the course of my own binding arbitration proceeding with the company there was no way for my attorneys to access these previous arbitration records. We knew about them through the grapevine, but there was no way to enter them into evidence unless the owner admitted to them – which he did not.
This is a major loophole in the legal system that needs to be closed!
Here’s an interesting story related to this topic:
http://seattletimes.nwsource.com/html/localnews/2002849011_yourcourts07m0.html
For more information on attempts (advocacy and litigation with SEC)to cure problems with securities arbitration conducted before securities industry forums, please see http://www.LGEsquire.com/LG_Links.html .