Bb's RealTech

I'll be honest… I've tuned out most of what you've written on this subject over however many months. It just isn't an issue near to my heart.

But wow… that dude is like some kind of Orwellian Robotic Asshole, spewing an endless stream of doublespeak shit. His ability to warp any argument into a logical Mobius strip is simultaneously impressive, infuriating, and depressing. There's a sick, petty little part of me that desperately wants to engage him, just to see if I can crack him open and get a look at the clockwork that's whirring away in there.

Fortunately, I've grown wise (and/or lazy) enough to ignore such urges and just close the tab.

This is the last time I have anything to do with him. I've seen a lot of assholes in weblogging, but this guy… I came close to deleting his links, because the reason he writes what he does is to poison pill search results. My giving him links just adds weight to his site in Google.

Ultimately, though, I don't think anyone is stupid enough to buy into his crap. Engage with him? Isn't worth your time, Roger.

I wish, though, there was some way I could connect with people on the topic of arbitration. I've tried to get folks interested in this topic, and have had no success. I am obviously not doing a good job.

What is it with the GOP (and slavish followers like FOX) and their ability to take reasonably decent words like Fairness and completely corrupt their meanings in the most Orwellian way. Arbitration Fairness Act: nothing fair about it, PATRIOT Act: nothing patriotic about it, Fair and Balanced journalism: nothing fair or balanced about it. It speaks to the disconnect that the American people have with the world around them. No one outside of the US is fooled by this stuff but 30% or more of your country eat it up (although fortunately that number is declining as some wake up).

In the end I think this is why Obama is so popular - he's managed to strike an emotional chord that before now only the GOP was able to do, and in doing so he awakened a sleeping giant - the the political consciousness, such as it is, of the youth of America. If for no other reason than that I hope he is the next president. It is vitally important to your country that this wave of progressive energy is maintained and nurtured. I fear that if Clinton gets the nod that energy will dissipate like steam on a cold winter's day.

Shelley, why not link to him through a redirect or no-follow attribute ;)? Personally, while I have to confess to not having an immediate appetite for this topic, your explorations are really enlightening.

Why not write a book, "Arbitration Hacks"?

The Sprint odyssey was enlightening as to how you could fight back.

Bud

Actually, the Arbitration Fairness act is to bring fairness back to the concept of arbitration, Doug.

Bud, it doesn't matter what I do. Ths is a man who would lie, happily, and without any compunction, in order to meet the agenda of his corporate bosses. I don't think I've ever been confronted with such deliberate lies, and manipulation of this environment as I've seen with that web site. But then, since people don't see that any of this impacts on them personally, what does it matter?

Completely off-topic, but somewhat humorous, in response to Doug Alder's complaint about FOX News co-opting the meaning of "fair": a FOX News screen shot.

Oh good lord was that ever a muck up, Doug!

Good one Doug - thanks

Shelley - thanks for straightening that out for me

Signing an arbitration agreement doesn't cost one a single constitutional right any more than signing a prenuptial agreement or an enlistment agreement does.

It's telling that the supporters of eliminating consumer choice in arbitration agreements like Shelley are incapable of addressing opponents' arguments honestly. No one is forcing Shelley to agree to an arbitration clause, but she wishes to forbid consumers who prefer the lower prices and higher wages such arbitration agreements provide from exercising their choice.

Ted, prenuptial agreements are individualized contracts between two individuals. I would not equate them with blanket arbitration agreements added by companies into post-purchase license agreements. By enlistment agreement, are you talking military?

More importantly, why do you continue to bring up unrelated and irrelevant concepts in order to defend your viewpoint? We will stick with the current state of arbitration in this country, and the impact of the Arbitration Fairness Act of 2007.

The only impact this act will have is that it will disallow the inclusion of clauses in consumer, employment, and franchise contracts. The relevant passage:

No predispute arbitration agreement shall be valid or enforceable if it requires arbitration of–

(1) an employment, consumer, or franchise dispute; or

(2) a dispute arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.

Key term is "transactions between parties of unequal bargaining power".

Quite simply, it forbids companies like MBNA and ATT, hospitals, and employers like Halliburton/KBR from adding pre-dispute binding mandatory arbitration clauses into contracts.

As for your ludicrous statements that these arbitration clauses drive down prices and raise wages, we've not seen this in today's economy. People pay higher prices for cellphone coverage and these clauses have been around some time. Bank of America was one of the first to add these clauses to credit card agreements, and the bank just started raising interest rates on their prime customers to 22% or more. In fact, the financial gain we've seen in the last decade since these have become more widespread is how much corporate officers make, and profits. No cost savings are ever passed along, and there's been been any statement by ANY industry that such and such clauses have saved us so much money, and here you go, people.

You've not proven your statements, or provided anything factual, at all. In fact, I find it most likely that you and your think tank buddies made this up to confuse people trying to understand this topic.

Personally, I think it would be a fascinating exercise into exploring in more detail the funding behind your organization, and then seeing how each of the industries involved have 'passed on the savings' to their employees and customers. Perhaps you'd be kind enough to point me to your organization's financial reports?

Shelley, as you know, I'd rather reform concentrated on the actual 'unfairness' of many arbitration agreements between parties of unequal bargaining power, ie. the lack of choice of venue, no mutual selection of the arbitrator(s), and so on, but a blanket ban of this sort is still a huge improvement from a civil-rights perspective (after all, isn't that what 'inalienable rights' is all about?).

Ted, when entire industries collude to include one-sided arbitration clauses, hides the collusion *and* the clauses such that there is little or no opportunity for anyone to make an informed consumer choice, your argument carries little weight. Show me where there is an actual A/B choice with and without the arbitration clause (you know, like option packages on a car), and then we can talk about the 'savings to the consumer'.

Michael: current laws already bar what you are complaining about without the need to pass a new law eliminating consumer choice. If entire industries are colluding to offer arbitration clauses, that is a violation of Section 1 of the Sherman Act, and is subject to criminal penalties and treble damages. Do you have actual evidence of such collusion, or are you being loose in your use of the word "collude" in the same sense that automakers are "colluding" to offer cars that all have four wheels, which means that consumers don't have the choice of a five-wheeled car?

Shelley focuses on section (2), and ignores section (1), which violates the constitutional right of freedom of contract. Note the word "or," which Shelley doesn't. Shelley instead engages in ad hominem attacks on me, ignoring the substance fo my arguments. (My organization's financial records are public, and quite irrelevant, as I held the same opinions about the importance of the constitutional right of freedom of contract long before I took my current job. Look it up yourself.)

For all of the facts about arbitration that Shelley does not want you to see, see the Overlawyered arbitration section.

Constitutional freedom of contract? WTF?

Michael, you're quite right. I allowed myself to be pulled into a fishing exhibition.

I did want to leave a more detailed comment in response to a couple of points raised here.

First of all, the credit card companies have been sued in New York for collusion when it comes to adding arbitration clauses into credit card agreements. In the late 1990s, the companies got together with a commercial arbitration company, National Arbitration Forum, for a series of meetings. Not long after, identically worded arbitration clauses began to appear in each of the company's credit card agreements. The credit card companies were accused of just the collusion that Ted rejects.

A lawsuit was filed in New York in 2006 and dismissed in 2007 (PDF). The reason? The consumers can't challenge the arbitration clauses until they are actually invoked. In other words, the claimants would have to actually have suffered an injury based on the clauses before being able to file a complaint about the clauses.

This ruling makes it virtually impossible to file a class action, anti-trust suit against the credit card companies because to do so now would mean finding people who have suffered an injury because the arbitration clause was invoked (we have no way of finding such people since arbitrations are not a matter of public record). Then those bringing suit would have to manage to convince the court that the injuries suffered from all these different providers and based on many different actions sharing only one commonality between them, the BMA clause, should be treated as one action, and be used to penalize the banks for including the agreement, not for the individual actions that led to the arbitration agreement being invoked, and the list of difficulties continues. Let's say this would be virtually impossible.

We already know what happens when we challenge arbitration agreements with the current sitting Supreme Court. While Scalia is in the court, average Americans are not going to be getting much of a fair shake from the Supreme Court.

The only other recourse to preventing pre-dispute mandatory arbitration agreements is to change the law. I should say, refine the law because the Federal Arbitration Act was never intended to be used by companies against individuals. It was only the Supreme Court interpretations, almost always counter to state interpretations, that distorted the FAA until it has become a cheap, backdoor form of tort reform practiced by companies wanting to eliminate class action lawsuits, or bypass the court system altogether.

Ted has accused me of being a tool, a pawn of the trial lawyers because of my unreserved support for the Arbitration Fairness Act of 2007. Actually, I cannot understand how any American, once they hear the facts, would not be for this act.

People in the past died for our Constitutional rights, and the inclusion of pre-dispute mandatory binding arbitration clauses is counter to one of those rights: the Seventh Amendment, which allows for jury trials in civil cases. Yet I find people being indifferent. Why? Because the inclusion of such agreements hasn't directly impacted them. Yet.

When did we stop defending our Constitutional Rights because we don't see any direct benefit for us in whatever right is being threatened? Should we then return to the Jim Crow south, because we're not black? How about eliminating women's right to vote right now, and let's just give Obama the Democratic nomination now. After all, we know Clinton, being a woman, hasn't a chance of winning.

Michael, you mentioned about the unfairness of the arbitration process. True, most clauses actually name an arbitration company and don't give the consumer/employee an option for another company. Ted would say that it doesn't matter. He would say that both parties have the option to reject an arbitrator if they perceive a bias in the arbitrator.

However, companies that bring a lot of suits have records of how arbitrators have ruled in their own cases, and will reject anyone who has ever ruled against them. You and I, with our single, sole arbitration, have no way of knowing how the arbitrator has ruled in the past. We're not allowed to review their past cases, to discover if they rule 97 or 100% in favor of the company. All we're given in a sketchy one or two page resume.

Then consider an organization like Bank of America, as one party to a complaint and you and me as the other. The bank is involved in probably hundreds, thousands of arbitrations with a single arbitration company (the aforementioned NAF). The bank and its team of in-house lawyers know all the tricks, the nuances, the wordings. People like you and me? If we're served an arbitration notice in the mail, most of us don't even know that it's a legal document. Most people haven't even heard of arbitration.

Many lawyers won't work an arbitration case because they know most such actions are stacked against the consumer/employee and they have no chance of winning. There is no recourse to law, no real mandated procedures to follow, the process is very arbitrary.

Compare that with the court systems. The person will receive a notice of a claim filed against them typically served by a Sheriff. No difficulty there knowing that there's a legal action in the process. In addition, there are organizations that help people too poor to afford a lawyer, and most courts do give a great deal of leniency to the individual defending themselves, pro se. In our own area, the Federal court has set aside a room for people to help themselves, and the state has initiated actions to also aid the pro se individual.

More importantly, there are rigid rules that courts must follow, detailed in documents, which control how the case is run. Any rulings are a matter of public record. Any decisions must be backed by appropriate case law, and with reasoning attached. More importantly, the judge is paid regardless of who wins or loses.

When the arbitrator rules, in most cases the agreement or the arbitrator puts a confidentiality requirement on the ruling, so we don't see any papers filed, or an explanation of the ruling. We don't even see the ruling.

If the party disagrees with the ruling, they can take it to court to try and get the arbitration over turned. However, this is virtually impossible, because you would have to prove a fairly strong case of malfeasance on the part of the arbitrator.

Let's look at it the other way, and the cases where individuals want to sue the company. We'll we've already seen the problems with these. There have been three separate class actions against cellphone providers because of illegal and unexplained charged in bills, unfair early termination fees, and so on. Most cellphone arbitration agreements don't allow for class action status. Most arbitration companies won't support class actions in arbitrations. Yet class action is about the only effective tool to use against companies such as ATT, Sprint, Verizon, and T-Mobile.

I don't even want to get into the recent cases with women being raped, and suing KBR because the company put them into positions where they would be harmed and harassed by their co-workers. Not only were they denied justice by the Department of Justice because of the bastard laws we've passed giving contractors freedom from the law, they're also denied their Seventh Amendment rights because KBR includes these arbitration clauses and invokes them. Doesn't matter whether the women win or lose in these arbitrations: the facts don't come out because of the seal of confidentiality typically included in these clauses. In fact, without even seeing KBR's arbitration clause, I can about guarantee that it has a confidentiality provision.

Not only do the women not get their day in court, we don't hear the truth. We don't hear what a contractor paid in American tax dollars is doing to its employees.

A tool of the trial lawyers because I support the Arbitration Fairness Act? Not likely.

"However, companies that bring a lot of suits have records of how arbitrators have ruled in their own cases, and will reject anyone who has ever ruled against them. You and I, with our single, sole arbitration, have no way of knowing how the arbitrator has ruled in the past. We're not allowed to review their past cases, to discover if they rule 97 or 100% in favor of the company. All we're given in a sketchy one or two page resume."

Oh, I think if there was an actual competitive market in arbitrators (which there currently is not except for arbitration among equals) this lack would soon be remedied with one or more rating services from consumer-reports type organizations. Arbitrators that hid their record wouldn't stand much of a chance at getting selected. See, that's where I think Ted is full of shit. Where is the free market in arbitration services?

A good example is the UDRP, which allows for both individual arbitrators and three-member panels (if either party specifies this). There is a clear statistical correlation showing that single arbitrators selected by the arbitration providers are overwhelmingly more likely to rule in favor of the complainant (typically the trademark owner). This is both motivation for, and result of, forum shopping.

In my opinion, if the parties cannot come to an agreement on an arbitrator, then the dispute should default to the court system. Arbitration is useful only if it is by mutual agreement. Yes, this does allow either party to select only arbitrators that the other party would find unacceptable and force the case to court. Oh well.

And as I said, I'm perfectly fine with banning the use of arbitrators in civil-rights cases.

People like you and me? If we're served an arbitration notice in the mail, most of us don't even know that it's a legal document. Most people haven't even heard of arbitration.

IF arbitration were better regulated (which is what my suggestions are basically advocating), then this argument of public ignorance wouldn't hold much weight (ignorance of the law, yadda yadda). As it stands, you are of course completely correct.

Essentially, I think that the arbitration system could be reformed into a system that is fair even if it does not allow for appeal (which is where the savings come in). If the ardent advocates for arbitration were also pushing for reform of the abuses it is currently being used for, they might have a leg to stand on. As it is, their position of 'arbitration is fine as it is' is completely unsupportable.

Arbitration has been part of the court system for some time. It's not unusual for a judge to suggest that the parties take a case to local arbitration. We have in our local court system arbitration in place for handling many of the juvenile cases, so that they can avoid the court systems, and give the kids a better chance of a clean start.
In these cases, though, the arbitration is monitored and part of the court system–not a commercial, for-profit enterprise.

The latter is the true death of arbitration, in my opinion. Once profit enters into any justice system, the system is effectively co-opted by the rich and powerful.

The problems with arbitration now is that corporations want to turn it into some form or tort reform, but without having to engage the legislature, or really the judicial branch of government. They like the idea of commercial justice–fits their concept of what's right and proper in the world.

There is a place for arbitration, but arbitration the way it was meant to be, not this pay-as-you-go justice system.

"Once profit enters into any justice system, the system is effectively co-opted by the rich and powerful."

Hmm. That's an exaggeration (though not a gross one). For one thing, unless you are advocating for complete public financing of attorneys, there will always be some advantage that money can buy in an adversarial justice system, at least in terms of skilled advocacy, and even if you are then there is always the 'revolving door' for aftermarket compensation or straightforward bribes.

Second, the main advantage that we are talking about here is essentially gained through forum-shopping (though in an extreme form), which doesn't even require a direct profit motive to work to distort justice (example: East Texas is the preferred forum for Patent Trolls).

So, I have to disagree with you: eliminating profit from arbitration is neither entirely necessary nor entirely sufficient to fix it.

Instead, I think that eliminating the primary mechanisms by which wealth distorts the system is the way to go, primarily though the mandating of actual fair arbitration practices: mutual selection of arbitration, mutual selection of the arbitration panel, requirements for public record-keeping and disclosure of the panelists track records, etc.