Dale Irwin explains unfairness of arbitration clauses in article in Kansas City Star

July 8, 2014 by

Magnifying Glass Over Contract PapersJenn, a waitress at a chain restaurant, left her job because a male coworker kept verbally and physically abusing her, despite her constant complaints to management.

Believing a court and jury would find that unacceptable, she filed suit for sex discrimination. Her employer tried to get her suit thrown out of court, claiming she had signed away her right to a jury trial in order to get her job waiting tables.

Only then did she realize why she had been required to sign an arbitration agreement. It was to shield her employer from a jury.

She thus learned what employees and consumers often learn the hard way these days. They cannot get a job, a loan, a car, a home, a credit card or even a cellphone without unknowingly signing away their Seventh Amendment right to a jury trial.

No matter how horribly employees are treated, no matter how badly consumers are cheated, their choices of what they can do about it are limited. To put all this in perspective, consider another constitutional right we often hear about — the Second Amendment right to bear arms.

Suppose you buy a home, signing a lot of paperwork. Then, as you are carrying in your gun, Barney Fife from the homes association wanders over.

He tells you guns aren’t allowed in La Paz Heights. You point to the Second Amendment.

He points to page 12, paragraph 137, of your contract. There, in confusing legalese, you have signed away your right to have a gun.

You threaten to file suit. He flips to page 13, paragraph 143, where you have also unwittingly agreed not to go to court, only to arbitration, for being deprived of your guns.

What the heck is arbitration, you wonder. Well, as the word implies, it can be rather arbitrary.

You get no jury. Your case is usually decided by a single arbitrator. It takes place behind closed doors. You have virtually no right to appeal the arbitrator’s decision.

And while courts are open to the public and their decisions are readily available, not so with arbitration proceedings. Taxpayers pay judges.

You and the business you are up against pay the arbitrator. Arbitration favors repeat players. The repeat players are the businesses that put arbitration clauses in their contracts. An arbitrator who finds in favor of employees or consumers risks being black-balled.

We once represented a woman who had been thoroughly cheated by a car dealer. We were forced out of court and into arbitration. A regional vice president of the dealer’s hand-picked arbitration company invited me to lunch.

When I asked about his day-to-day duties, he said he called on businesses to persuade them to put his company’s arbitration clauses in their contracts. He told them it was a way to limit their liability.

No wonder businesses prefer arbitration companies to judges and juries. There is legislation in Congress that would prohibit arbitration clauses in consumer and employment contracts, the Arbitration Fairness Act. Please support it.

It would only do for consumers and employees what Congress did for car dealers in 2001 when it outlawed arbitration clauses in their franchise agreements with manufacturers. Back then, car dealers were crying to Congress about the unfairness of forced arbitration.

Now they are having a field day forcing consumers into arbitration. It seems a bit unfair.

Dale Irwin of Kansas City is a consumer protection lawyer with the law firm of Slough ConnealyIrwin & Madden in Kansas City. Reach him at oped@kcstar.com.

Categories: Forced Arbitration

Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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