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Big Biz Using Arbitration to Stack Deck, Bypass Court System?

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Interview with Joanne Doroshow, Executive Director of The Center for Justice and Democracy


Joanne Doroshow
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My guest today is Joanne Doroshow, founder and executive director of the Center for Justice and Democracy and author of The Case for the Civil Jury: Safeguarding a Pillar of Democracy.

JB: Welcome to OpEdNews, Joanne. We're going to be talking about arbitration, the ability for two parties to settle their differences outside of the court system. The New York Times has jumped into the fray with a three-part series in which their headlines accuse arbitration of both "stacking the deck of justice" and "a privatization of the justice system". Are they getting carried away by their own rhetoric or is there really something for us to be worried about?

JD: We should be very worried. We have all noticed forced arbitration clauses and class action waivers in most every consumer contract we have now -- cell phones contracts, bank and credit card agreements, gym memberships, and countless retail contracts. Employers are starting to force employees to sign them. They are in virtually all nursing home admission forms. It is only a matter of time before this practice starts to spread broadly to any type of transaction -- housing, transportation, health care, and so on. These clauses are usually outlined in tiny print, buried it documents and paragraphs and written in legalese that is incomprehensible to most people. And because entire industries are inserting arbitration terms into contracts -- including class action waivers - there is little choice but to agree to them.

JB: This is definitely a disturbing development. How did it come about?

JD: This is happening because in 2011 and again in 2013, the U.S. Supreme Court decided that corporations can strip people of their constitutional right to jury trial and force them into private, corporate-designed systems to resolve their disputes. What's more, the Court said that companies have the unilateral right to ban class actions by inserting class action waivers into these arbitration clauses. Where a company may have acquired a large financial windfall by violating the rights of large numbers of people, class actions are often the only way for people to gain access to the courts. Without this tool, many cases cannot be brought at all, allowing corporate wrongdoing to completely escape any legal accountability.

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In addition, our judicial system is designed to ensure that "the little guy" has fair access to the courts. It does this by neutralizing imbalances between parties through procedural and substantive rights like the right to know and rebut evidence through discovery, cross-examination and argument, civil rules of procedure, and an impartial judge who is guided by the substantive law.

Arbitration, on the other hand, does none of these things. Arbitrators are often on contract with the businesses against which a claim is brought. Often the company, not the victim, is allowed to choose the arbitrator. This creates inherent bias and self-interest on the part of the arbitrator--the arbitrator is motivated to rule in a way that will attract future company business. At the same time, arbitration companies have a financial incentive to side with corporate repeat players who generate most of the cases they handle. Arbitrators are also not required to have any legal training and they need not follow the law. Court rules of evidence and procedure do not apply. There is limited discovery, making it much more difficult for individuals to have access to important documents that may help their claim. Arbitration proceedings are secretive. Decisions are still enforceable with the full weight of the law even though they may be legally incorrect. This is especially disturbing because these decisions are binding. And sometimes, victims must split the sizeable costs of arbitration with the defense.

JB: Talk about unequal justice! It sounds like a total end run around the court system. This makes me mad. What can be done about it?

JD: Unfortunately, Congress has to fix this. There is a bill in Congress called the Arbitration Fairness Act, which would stop companies from using forced arbitration clauses in employment, consumer, civil rights and antitrust contracts. Sen. Al Franken (D-MN) and U.S. Rep. Hank Johnson, (D-GA), and Sen. Pat Leahy (D-VT), are pushing this bill very hard, but clearly it will be a struggle to get Congress to act. But people should at least let their Senators and Members of Congress know they support this bill. In the meantime, the Consumer Financial Protection Bureau (CFPB) is poised to issue a new rule that would prevent companies from inserting class action bans in their forced arbitration clauses. Anyone interested in supporting the CFPB can sign this petition. There are also a few things state lawmakers can do. The National Consumer Law Center has a model state bill, the Model State Consumer and Employee Justice Enforcement Act.

JB: Ah, Congress. You've laid this out very clearly. Anything you'd like to add before we wrap this up?

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JD: I hope the New York Times series and interviews like this one, help increase awareness about how our right to trial by jury in civil cases is slowly being stripped away. The framers of our Constitutional felt this right was so important that they made it part of the Bill of Rights - the 7th Amendment. The companies that are taking it away are undermining a fundamental aspect of our democracy. Hopefully with awareness, we can all start pushing back.

JB: I sure hope so! Thanks so much for talking with me, Joanne. I learned a lot.

***

The New York Times is publishing a three-part series Beware the Fine Print, including, "Arbitration Everywhere, Stacking the Deck of Justice" and "In Arbitration, a 'Privatization of the Justice System'." The third part is forthcoming.

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Joan Brunwasser is a co-founder of Citizens for Election Reform (CER) which since 2005 existed for the sole purpose of raising the public awareness of the critical need for election reform. Our goal: to restore fair, accurate, transparent, secure elections where votes are cast in private and counted in public. Because the problems with electronic (computerized) voting systems include a lack of (more...)
 

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