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

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.”

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.”

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,

SW
Los Angeles, CA
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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
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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.

SW
Los Angeles, CA
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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

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.

Rape Case Highlights Arbitration Debate

by Wade Goodwyn

All Things Considered, June 9, 2009 · Jamie Leigh Jones was a 20-year-old Halliburton employee in 2005 when she was sent to work in Iraq. She’d been there just four days when she joined a small group of Halliburton firefighters outside her barracks at the end of the day. One of them gave her a drink. She took two sips, and Jones says that was the last thing she remembered.

“I woke up inside the barracks,” she says. “It was actually inside my barrack room, and that’s when I noticed I had been severely beaten and was actually naked.”

Jones had been raped, repeatedly. By how many men, she’s not sure. But she says one man was still naked and asleep in the room when she came to.

“Apparently, he knew he was beyond the reach of any jurisdiction, so he was still brazen enough to be there,” she says.

Jones was escorted by security to the company clinic for a rape examination. When the rape kit examination was done, the evidence was turned over to Halliburton security.

The young woman’s breasts were so badly mauled that she is permanently disfigured. It has been four years since the attack, and despite the physical and circumstantial evidence, the Department of Justice has declined to investigate.

Seeking Justice Through a Suit

Justice Department officials refused to explain or comment in any way to NPR about the case. Jones has decided that if she can’t have her day in criminal court, she’ll sue Halliburton and its former subsidiary, KBR, in civil court.

“I want corporate accountability,” she says. “I was so brutalized that I’m going to have to remember this the rest of my life. And Halliburton was so uncompassionate that they even let the men work there, still, after I went home.”

Heather Browne, director of communications at KBR, says that while the company can’t speak to the facts since the case is ongoing, it denies any liability in the attack. And she argues that any dispute with Jones, even one involving charges of rape, must go to arbitration.

So Jones is now going to court seeking the right to sue. She has become one of the nation’s leading arbitration reform advocates.

An Arbitration Culture

If Jones’ case is remarkable, the fact that arbitration is involved is not. In the past 20 years it has become a dominant feature in the legal relationship between American corporations, their employees and their customers.

If you use credit cards, have a cell phone contract, bought a house from a builder or put your mother or father in a nursing home, you have very likely signed away your right to be heard in court if there’s a problem. It’s called pre-dispute mandatory binding arbitration.

Public Citizen’s David Arkush, one of the country’s leading researchers on arbitration, says many consumers have no clue as to the rights they’re signing away.

“In the fine print of those contracts is a provision that says that they can never sue the company if they have a dispute,” Arkush says.” Instead they have to go a private, secret tribunal chosen by the company.”

A Losing Record For Consumers

Arbitration is a closed, private process, often with little or no written record. But one state, California, changed its law to require that arbitration results be publicly recorded. Public Citizen staff reviewed 34,000 California cases, and Arkush says the results speak volumes.

“Overall, consumers lost 94 percent of the time,” he says.

The arbitration industry disputes that number. But it does not disagree that corporations win more of the time. The disagreement is about whether this is evidence of bias or a reflection that corporations bring stronger cases.

Mike Kelly, spokesman for the National Arbitration Forum — one of the country’s largest arbitration firms — says it’s the latter.

“You’re not going to bring a case that you’re going to lose,” he says. “Frankly, you’re not going to bring a case that you think you have a chance to lose.”

Kelly says the results would still be lopsided if these same cases went to court instead of arbitration. And Kelly says his arbitrators, which the NAF calls neutrals, are men and women without bias.

“What you’re really doing is taking a shot at all those individual neutrals who are handling these cases,” he says.

Rulings And Consequences

Elizabeth Bartholet was one of the NAF’s arbitrators for a time. She’s a law professor at Harvard and for two decades has moonlighted as a part-time arbitrator. The first 19 cases she arbitrated for the National Arbitration Forum were all credit card cases. She ruled each time for the credit card company.

Then, on the 20th case, she ruled for the consumer. After reviewing the evidence, Bartholet awarded the cardholder $48,000. And with that, her career as an NAF arbitrator was effectively over. She says she was stricken from her remaining cases.

“I called the NAF and spoke to the case manager, and she agreed the reason I was being removed was because I had ruled in this one case against the credit card company,” Bartholet says.

The NAF says nothing improper was done, that companies and consumers alike are allowed to strike an arbitrator from a case. Bartholet counters that arbitrators know full well that if they rule against corporations too often, their income will dry up.

“NAF arbitrators are given a form where every line is filled out in terms of the amount it is suggested that you rule,” she says. “And so all you need to do is fill in to the right [of that line] the exact same number. And then at the bottom, you total it up and they give the attorneys’ fees number. And there’s no indication that you should even write a one-sentence opinion.”

Bartholet says nowadays, she will arbitrate only when both parties are roughly equal in power and enter into arbitration voluntarily.

Push For Reform

The Arbitration Fairness Act now before Congress would ban clauses that make arbitration mandatory for the resolution of disputes — restoring to consumers and employees the choice of taking their case to court.

Lisa Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform, says that making arbitration voluntary will lead to its extinction.

She also says it will clog the courts with needless litigation. “It really is human nature,” she says. “When people have an argument, they really want to fight it out. And the best place to fight it out is in court.”

- 59% of likely voters oppose the inclusion of mandatory binding arbitration clauses in consumer and employment contracts.

- 6 out of ten Americans support the Fair Arbitration Act.

- Over 2/3 of the sample didn’t realize that they were subject to mandatory arbitration clauses that were buried in the fine print of contracts they had signed with credit card companies, cell phone service providers and others.

- More than 70% of respondents were completely unaware that MBA’s could keep them from suing employers and consumer product companies in a court of law.

The results of the poll were announced yesterday by the Fair Arbitration Now coalition at a Capital Hill news conference that was held to commemorate Arbitration Fairness Day.

Unfortunately, the fight isn’t over and there is still time to get the attention of lawmakers and the media. Please contact your members of Congress by telephone or email and let them know you are part of the majority of Americans who support arbitration reform. Click here to find their contact information.

For more information, please visit: www.fairarbitrationnow.org.

I’ll be reporting on the effect of our efforts in the days and weeks ahead. Thank you all for your continued support.

Best,
Ehren Bragg