DEO Linda Lipsen of the American Association for Justice states that, “Forced arbitration is a corporate bullying tactic designed to kick people out of court and eliminate their right to seek justice. It’s a rigged system set up by corporations to favor corporations.”
So what exactly is forced arbitration? What is the effect that it can leave on people?
Arbitration is a process where a private firm is hired to settle a dispute so that the parties can stay out of a court setting. It is a litigation alternative to keep lives private and make the feeling of compromise a little more comfortable. However, arbitration has been twisted into a tool by powerful corporations. More and more corporations are finding out that they are able to force consumers and employees to surrender their right to hold corporations accountable for wrongdoing before the court.
Forced arbitration takes place so that individual consumers are forced to “fight it out” before a private arbitrator chosen by the company that either cheated or discriminated against them. Think this sounds good and fair? Nobody does. The sad fact of the matter is that financial corporations are said to win 93% of the claims they bring on. The sadder fact is that companies you may love such as Netflix, Instagram, Wells Fargo, PNC, and Amazon all use it (AFJ).
A Doctor in Philadelphia, Pennsylvania… And Her Story
Deborah L. Pierce, an emergency room doctor in Philly, brought a sex discrimination claim against a medical group that had dismissed her despite the fact that she had evidence that the practice had a distinct pattern of denying women partnerships. Pierce was highly respected in her practice and believed that she would receive the best possible outcome from court; however, these views changed when she discovered that she was being blocked from court and instead forced into arbitration, thanks to the company. A corporate lawyer by the name of Vasilios J. Kalogredis took the case because he had prior experience with handling arbitrations.
Pierce stayed confidence throughout the process until she came to the hearing and saw Kalogredis having a coffee with the head of the medical group that she was suing. Evidence was withheld during court that could have benefited Pierce greatly. A doctor reversed testimony that Pierce had given and Kalogredis ended up ruling against her in the proceedings. Dr. Pierce lost all faith in the legal system after this, and has to pay the price of $200,000 in legal costs, now seven years later.
The investigation goes even further and brings up more issues than Pierce ever could have expected. Kalogredis said he couldn’t comment on details of the court hearings because they were confidential, but just so happened to believe that everything was handled properly. He was asked to impose sanctions on the defense for breaking the rules of discovery and destroying evidence that could have helped her case. However, Pierce ended up being billed $2,000 extra for the time it took for him to look into matters. Pierce had to take out a second mortgage in the end to cover the legal expenses of her case. She received an unfair and extraordinary bill of $58,000 from Kalogredis. American Health Lawyers Association agreed that it was not their responsibility to verify the abilities of competence of Kalogredis (Silver-Greenberg).
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Forced Arbitration by Sprint
In another case, a man named James Pendergast got the surprise of his life when he found out that he had actually agreed to arbitration. He found out when a class-action suit he filed on behalf of Sprint customers in Miami suddenly got thrown out of court after roaming charges were discovered. Pendergast was contesting a meager $20 but the cost of arbitration ran way over that in itself. Sprint, with 57 million subscribers, faced a small six arbitrations between the years of 2010 and 2014 (Gebeloff).
Americans are truly losing the fundamental right of being able to appear on their day in court. The sad matter is that they probably don’t even know it or ever foresee it happening. Arbitration clauses are being added to contracts that many employees and consumers don’t read. This is why, when things like medical malpractice, sexual harassment, discrimination, and wrongful death occur, these large companies are actively shrugging their shoulders. In 2011, the problems grew after Supreme Court ruled that arbitration clauses could reject class-action lawsuits. This caused many plaintiffs to withdraw from suing when they rightfully deserved compensation or other awards.
Did you know that the federal government does not require these arbitration cases to be reported? This is why little is known about the process to the public eye and proceedings are always kept confidential. This poses the next question: How fair are these arbitration proceedings? The secretive nature puts these things in question and a fresh light. There are too many issues being discovered in tandem with the proceedings, such as the fact that plaintiffs have personally asked courts to intervene in the past only to end up losing. A court in California once claimed that it would never overrun an arbitrators’ decisions even if there was injustice involved – this shows things for exactly what they are (Silver-Greenberg).
Banning of Class-Action Suits
Class action suits exist so that individuals can lump themselves together and bring all of their specific common claims against these big corporations. However, forced arbitration clauses ban these suits, making it impossible for them to occur. Without the ability for multiple people to come together about the same problems, individual claims are found to be way too small to justify costs of litigation. This means that these huge consumer companies can do small amounts of harm to a large number of people without facing the consequences. The arbitration system, unfair in its ways, gives corporations a pass to break the law and make it difficult for consumers to see what they’re getting into. It was found that less than 7% of consumers with forced arbitration clauses in credit card terms of service knew that they could not sue the issuer in a court setting (AFJ).
When Will the Unfairness End?
Some arbitrators, as it seems, will get all-too-friendly with the companies that they are working for. This leaves little hope for those bringing a suit for various circumstances. In one case, an arbitrator went to a basketball game with company lawyers the night before proceedings took place. In another case, a man overseeing an insurance case noticed that, during a break in proceedings, an arbitrator and defense lawyer returned in matching silver sports cars after having lunch together. In both these cases, the plaintiffs lost. Arbitrators will sometimes keep close ties with companies just to get business (Silver-Greenberg). But how will the deceitfulness ever come to an end?
Many people and corporations are taking action toward the Consumer Financial Protection Bureau and attempting to revoke corporations’ license to steal by putting a halt to the abusive practice of forced arbitration. If you believe that you have a case against a corporation due to discrimination or personal injury issues, you may wonder if you read all the fine print. However, you can always turn to an attorney that you trust with the experience you need. Contact Maggiano, DiGirolamo & Lizzi today to learn more.
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- AFJ. Alliance For Justice, 2015. Web. Accessed Nov 2, 2015. http://www.afj.org/our-work/issues/eliminating-forced-arbitration
- Jessica Silver-Greenberg. NY Times, 2015. Web. Accessed Nov 2, 2015. http://www.nytimes.com/2015/11/02/business/dealbook/in-arbitration-a-privatization-of-the-justice-system.html?hp&action=click&pgtype=Homepage&module=first-column-region®ion=top-news&WT.nav=top-news&_r=0
- Robert Gebeloff. NY Times, 2015. Web. Accessed Nov 2, 2015.