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Article:
Know Your Rights: The Case Against Arbitration
Agreements
Jacksonville Attorney - Lawyer,
providing experienced Consumer Protection, Family Law, Estate Law,
Employment Law, Business Law, and Bankruptcy Law legal
representation in Jacksonville, Hilliard, Duval County,
Nassau County and the surrounding Northeast Florida areas.
By Steven
M. Fahlgren, Esq., (904) 845-2255
It was not
too long ago that when consumers were cheated by a
corporation, they could file a lawsuit seeking a remedy.
If the remedy was relatively insignificant compared to
the time and money that would be necessary to obtain it,
consumers could join together with other consumers and
file a class action lawsuit. A class action lawsuit is a
lawsuit where relatively few plaintiffs' file a lawsuit
on behalf of many class members. Although class action
lawsuits have been criticized from time to time,
unethical corporations knew that there could be
consequences for engaging in illegal behavior. These
checks on corporate behavior seem to have diminished
with the pervasive use of arbitration agreements.
In theory,
arbitration agreements are designed to save resources by
streamlining the court process because discovery is
limited and the rules of evidence are relaxed. The
result reached in arbitration is supposed to equate with
the result reached after a jury trial, although the
arbitration procedure is thought to be less costly.
Unfortunately, there is a vast difference between
arbitration in theory and in practice. In practice,
consumers are often forced to pay the costs of
arbitration in addition to their attorney's fees and
other costs. In the court system, no party has to pay
the judge to rule on the merits. In arbitrations, the
consumer must often pay administrative fees and
arbitrators' fees which can be run into the thousands of
dollars. Often times, arbitration provisions require
that the arbitration be held in a distant jurisdiction.
Others require that the arbitration be held before a
tribunal which is paid by the corporation to arbitrate
disputes. There may be an inherent prejudice in favor of
the corporation which pays the arbitrator a fee to
preside over a matter. Some arbitration agreements
attempt to shift the risk of the litigation to the
consumer even though doing so is contrary to the intent
of the legislature when it passed the consumer law in
question.
In the age
of arbitration agreements, consumers often cannot file
class actions to vindicate their rights because many
arbitration agreements prohibit joinder of other claims
together with the consumer's claims. In addition, the
rules of various arbitrators prevent joinder of claims.
Therefore, consumers cannot join forces and simply do
not have the money to vindicate their own rights without
joining together with others. Many consumers faced with
the choice between paying thousands of dollars in fees
they cannot afford in order to vindicate their rights
before an unfair tribunal choose to forgo taking any
action. It can be compared to buying a lottery ticket
for thousands of dollars in the hopes that the consumer
can recover the purchase price of the lottery ticket,
plus a few hundred dollars.
As a
result of this dynamic, some corporations have not been
deterred from engaging in deceptive and unfair practices
when it comes to consumers. This has a terrible effect
on the marketplace as the unethical corporations of the
world swallow others who simply cannot compete because
they refuse to engage in unethical behavior. I do not
mean to imply that the use of an arbitration agreement
means that the corporation has something to hide. But I
have seen that those corporations with something to hide
almost always use arbitration agreements.
These
problems have brought calls for corporate
accountability. Some legislation has been passed,
additional regulations are being considered, and some
criminal charges have been brought. However, the
arbitration age means that there are fewer private
attorney generals ensuring that unethical business
practices are confronted as they occur rather than years
after the fact. As a result, good companies have closed
their doors or have been swallowed up before something
was done to stop deceptive business practices by
unethical companies.
I propose
two solutions to remedy the problem. First, consumers
should not sign arbitration agreements. This is not as
simple as one might think because some companies have
enforced arbitration provisions stuffed in with phone
bills and credit card bills. I question whether our
founding fathers viewed the Seventh Amendment right to a
jury trial in such a narrow manner.
Second, an
amendment should be made to the Federal Arbitration Act
outlawing the use of arbitration agreements in consumer
transactions, i.e., transactions involving a consumer
purchasing goods or services for personal, household, or
family purposes. Until this is done, consumers should
strike through arbitration agreements and consider going
elsewhere if businesses insist that the agreement must
be signed in order for the consumer to obtain goods and
services.
If
something does not change soon, corporations will be
able to nail shut the doors on the jury room when it
comes to consumer matters. Why should consumer matters
be any different from criminal matters and personal
injury matters?
I know
that some will be skeptical when reading this article
and claim that arbitration is necessary to avoid
unscrupulous lawyers taking frivolous claims. Those with
an understanding of the legal system know that this is
not the case. Even before arbitration agreements, very
few attorneys took consumer cases because they knew they
would never receive a dime unless they win and collected
a judgment. Moreover, courts have inherent authority to
sanction parties who engage in frivolous litigation.
There is also a Florida Statute that was recently
strengthened which provides that a party and its
attorney may be sanctioned for filing frivolous claims.
Finally, there are rules by which one party can make a
reasonable offer to settle a matter and if the other
party does not settle on those terms, the other party is
responsible for the attorney's fees of both parties if
it does not prevail.
So, the
next time you are faced with a decision as to whether or
not to sign an arbitration provision, consider not doing
so. By refusing to sign, you may be voting to keep the
doors open to the jury room so that unethical
corporations may be held accountable when they lie,
cheat, or steal. Without such accountability, consumers
and reputable businesses will both suffer.
Disclaimer: The above Article
is intended to give you, the consumer, insight into various legal topics. This
information is not intended as legal advice, but rather helpful topical
information.
 If
you require professional legal services regarding
Consumer Protection, Family Law, Estate Law,
Employment Law, Business Law, and Bankruptcy Law issues, be proactive in
protecting your legal
rights by seeking the legal advice of
an experienced Jacksonville criminal defense attorney
& lawyer. Contact
The Law Offices of
Steven M. Fahlgren, P.A.,
by calling
904.845.2255.
Jacksonville Attorney - Lawyer,
providing experienced Consumer Protection, Family Law, Estate Law,
Employment Law, Business Law, and Bankruptcy Law legal
representation in Jacksonville, Hilliard, Duval County,
Nassau County and the surrounding Northeast Florida areas.
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