The war on arbitration: Jamie Leigh Jones, Tracy Barker, & “Halliburton” V

by Ted Frank on February 14, 2008

A commenter complains about our most recent post, and I respond:

Deprive consumers of a right to mandatory arbitration? Aren’t you being misleading here? There’s nothing stopping corporations offering both arbitration and a court of law to their customers.

This is disingenuous. Mandatory arbitration provides savings because the parties know in advance that the other party won’t abuse the legal system to raise costs. If the parties do not have the choice of pre-committing to arbitration in advance, then the savings aren’t available, because one party, after the fact, can abuse the civil justice system to raise costs. The problem isn’t that people with legitimate claims might not choose arbitration given the opportunity; the problem is that people with illegitimate claims who hope to extort money through forcing the other side through unnecessary legal expenses, won’t choose arbitration. If I can’t promise my credit card company not to bring illegitimate litigation that will raise their expenses, they have to charge me a higher price to account for the risk of me bringing illegitimate civil litigation. My promise to not abuse the legal system is worth money to the other party, be it my employer or my credit card company or my doctor; they are willing to pay me (in higher wages or lower costs) for an enforceable promise to that effect. If consumers are not allowed to make such an enforceable promise, consumers are worse off.

The extortion effect of litigation is not in question. Lefty labor lawyer Thomas Geoghegan wrote about it in his most recent book, as I discuss in my my law review article analyzing his book.

What is the issue is forcing people into arbitrations, especially arbitrations with larger corporations, such as KBR. People should be allowed to choose. Or don’t you agree that people have the right to choose?

Of course people should have the right to choose. The litigation lobby is trying to deprive people of the choice of precommitting to arbitration.

You’re also misleading in your statement about Barker bringing suit against the person who raped her. In this specific instance, the issue has to do with her right to bring a civil suit in a court of law against KBR.

I’m not misleading at all. KBR didn’t rape Barker; a civilian (allegedly) did, and the original DMI and Alternet posts falsely stated that Barker had to arbitrate that civil suit against the rapist. Barker can still sue the civilian in civil court if she so desires, and such a suit is currently pending. And Barker still has whatever legal remedies she has against KBR in arbitration, which takes away no rights whatsoever.

As for privacy of the proceedings, if this case had happened in a court of law, I could easily find all the documentation associated with it, without having to ask anyone’s permission. I notice that you didn’t ask KBR to publish their documents associated with this arbitration. Why not ask KBR for their copies of what little documentation there is?

I asked both parties. But KBR isn’t the one claiming the arbitration is secret. Jones and her attorney, Todd Kelly, are. The arbitration is as secret as Todd Kelly wants it to be, and no more secret. Again, I will post every brief and every deposition and transcript Kelly wants. He apparently doesn’t want me to post any of them—no doubt because Jones’s claims have shifted over time and if she made her briefs public, it would discredt her other claims.

As for whether the women would still be in litigation in the court system, perhaps, perhaps not.

Absolutely, unless the defendant settled—but any such settlement would almost certainly have a precondition of the same secrecy you purport to complain about. Title VII litigation in civil court doesn’t get resolved in favor of the plaintiff in under three years.

Justice takes time.

It doesn’t have to. Arbitration provides justice, and is both faster and cheaper.

As for the women “winning” these arbitration proceedings, you seem to think that winning is equivalent to getting a cash award. These women also wanted to be heard, to have their day in court. To hold KBR responsible, and ensure that what happened to them didn’t happen to other women.

Courts have no advantage over arbitrations in that fashion. Tracy Barker is in arbitration, yet her story is being told, and she will have her day in the court she agreed to have it in. The justice system is to resolve disputes, not for taxpayer-subsidized storytelling.

If arbitration is so fair, and so unbiased, and so cheap, why would we need to have mandatory arbitration clauses?

Again, the issue is the precondition of arbitration. If people do not have the choice of pre-committing to arbitration, then, without being so bound, they can engage in frivolous litigation and raise costs to everyone.

If courts are so fair to defendants who are being sued frivolously, why not allow mandatory arbitration and let people agree to waive the arbitration clause? It works both ways.

Doesn’t strike me that “mandatory arbitration” is something consumers want.

Consumers who agree to mandatory arbitration received the benefits of mandatory arbitration, and if they fight to litigate after receiving those benefits (either through higher wages or lower costs), they do so because they want to back out of their commitments and raise costs to the defendant to pursue an illegitimate claim. If contracts are not enforced, everyone loses. I’m a consumer and I want mandatory arbitration. Why not give me a choice and let me have it? If consumers don’t want mandatory arbitration, it will go the way of New Coke and Crystal Pepsi as employers and vendors offer contracts without mandatory arbitration. The reason the litigation lobby is fighting arbitration so hard is because the vast majority of consumers, when faced between lower costs or the opportunity to bring meritless litigation, will choose the lower costs every time. Only by depriving consumers of that choice can trial lawyers continue to practice legalized extortion.

For more on arbitration, see the Overlawyered arbitration section.

{ 2 trackbacks }

Public Citizen and Arbitration: the case of Alex Karakhanov
06.05.08 at 6:16 am
The absent defendant: arbitration vs. court
06.10.08 at 3:13 pm


1 Shelley 02.14.08 at 10:08 am

You write, “Mandatory arbitration provides savings because the parties know in advance that the other party won’t abuse the legal system to raise costs. If the parties do not have the choice of pre-committing to arbitration in advance, then the savings aren’t available, because one party, after the fact, can abuse the civil justice system to raise costs.”

And you call what I write disingenuous?

What you’re saying, then, is that consumers who sue–individually or through class action– corporations such as KBR and want to take such suits to a court of law are “abusing” the court systems.

TF: No. I didn’t say that. Why not address what I did say?

Those people, such as Jones and Barker don’t really have legitimate concerns, and want to take these cases to the court systems because they want to abuse the courts.

Are you accusing Jamie Leigh Jones of wanting to abuse the court system?

TF: Yes. She brought an arbitration, and then, after going through over a year of discovery and motion practice, brought a second litigation in an inappropriate venue.

Is she wanting to take her case to court because she’s one of those who “hope to extort money through forcing the other side through unnecessary legal expenses”?

(BTW, in regards to Joness and Barker’s stories, I would say your use of the word “abuse” is unfortunate.)

You’re also implying that the court system isn’t capable of protecting itself.

TF: I’m not implying it. I’m stating it. Litigants can abuse the court system to impose costs on opposing parties, making it cheaper to settle cases than make a meritorious defense. This is well-documented on both the left and the right. Alas, the litigation lobby has opposed tort reforms that would give judges the power and obligation to defend the court system from such abuses.

That judges aren’t capable of determining if a lawsuit is frivolous. That juries aren’t capable of determining who is guilty or innocent. That class actions never bring out positive change in industries such as asbestos, pharmaceutical companies, or auto makers. All that safety equipment in cars–that’s all a fluke?

TF: Safety equipment in cars is in spite of the tort system, rather than because of it, as the Overlawyered auto section demonstrates.

According to your logic, then, since the court systems are so easily abused, and only arbitrators are capable of determining true justice, the rapists in the Jones and Barker cases should be brought in front of an arbitrator. Following your rhetoric, there is no likelihood of a fair and equitable trial in our easily abused, obviously incapable legal system. After all, if the civil court system is so easily manipulated, why is the criminal system any better? I mean, why stop at at the civil courts if you’re so bent on reform?

TF: Again, why not address what I actually say instead of making up strawmen arguments? Barker and KBR have a contractual relationship; in exchange for valuable consideration, Barker agreed to arbitrate claims. Your other examples do not. Criminal cases cannot be unilaterally brought by a private party; a neutral arbiter has to decide whether a criminal claim has sufficient merit to bring a case; civil cases do not have that protection for defendants.

As for choices in regards to pre-committing to an arbitration, show me the opt-out section for a KBR employment contract.

TF: No one forced anyone to work for KBR. The choice comes when Jones decides to accept the package of wages and benefits and terms and conditions to work there rather than somewhere else.

You know the one that gives the employees the right to opt-out of being bound by mandatory arbitration? Or perhaps the one giving them the right to opt-in? After all, to be fair, _both_ parties should be equally willing to be bound by the mandatory arbitration agreement, don’t you think? Which means that both parties should be given the option to not be bound by the agreement.

We are talking about choice. Both parties should have the right of choice, shouldn’t they? Or are you talking only about the corporate right of choice? The only choice I know of with arbitration clauses in employment contracts is not to take the jobs. That doesn’t strike me as a true choice. Does that strike you as a true choice?

TF: KBR employees have that option. They don’t have to work for KBR if they would rather have lower wages with an employer that does not have a mandatory arbitration agreement. It’s just one of the terms and conditions of employment, like free parking, a free gym, and how many weeks of vacation are offered.

Speaking of arbitrations, what was the wording of the rulings in the cases for Mary Beth Kineston and Pamela Jones? Can you provide me a copy of all depositions taken? How about the original claims? I’ve also not been able to find a copy of KBR’s arbitration clause. I’m assuming you have that on hand, and can provide a copy, in comments or a post.

Since KBR is a contractor working for the United States, I would think that this information should be accessible to all citizens of the country, don’t you think?

Seriously, where’s the arbitration equivalent of the PACER system?

TF: You can’t get depositions or transcripts in civil cases on PACER, either, unless one side or the other chooses to put them on file. Your argument is a non sequitur. But if Kineston’s lawyers want to provide the rulings, I’ll be happy to post them.

Congress certainly has the right to subpoena Todd Kelly’s arbitration files to show what happened in the Jamie Leigh Jones arbitration. I suspect there is a very good reason the litigation lobby supporters who have been trumpeting the Jones case have not.

PS, you wrote:

“The justice system is to resolve disputes, not for taxpayer-subsidized storytelling.”

That was an unfortunate statement to make in light of what Ms. Barker had to say, don’t you think? After all, I would think that this form of “storytelling” is all Americans should hear, and especially those women contemplating working for KBR in Iraq.

But then, it is just a couple of women, telling their stories of sexual harassment and rape, and justice denied by the Department of Justice because of protections given contractors in Iraq. Nothing really that we in the US need to hear, is there?

TF: You’re the one who said that courts are for storytelling. Not me. Barker has successfully gotten her story out even though she has agreed to arbitrate her claims. Courts are neither necessary nor sufficient to tell a story, and it is poor public policy to destroy the right of contract over an imaginary belief that courts are the best way to tell a story.

And, again, you are dishonestly conflating the Department of Justice’s failure to prosecute with the arbitration clause. The arbitration clause did not cause the DOJ to fail to prosecute. A civil case in a state or federal courthouse will not cause the DOJ to prosecute. It’s an entirely separate issue.

2 SPQR 02.14.08 at 12:15 pm

Shelley, indeed why do you continue to falsely claim that the mandatory arbitration issue has anything to do with the criminal prosecution issue?

3 Scote 02.14.08 at 1:42 pm

I think it is pretty uncool to use your mod power add your comments directly to the commenter’s posts, as if you were correcting a students paper.

Binding arbitration should be voluntary, after a dispute has arisen. If it is so great, the parties will both choose it–and cost savings will be realized by the efficiency. If you say their are no cost savings for post dispute choice of an arbitrator then you are admitting that Arbitration is flawed.

4 Ted 02.14.08 at 1:50 pm

Scote’s comment fails to address the explanation in my post why arbitration must be binding to provide benefit to consumers. Shelley has yet to address that issue as well.

Again: why not give consumers the choice of mandatory arbitration? If it doesn’t provide cost savings, there is no advantage to businesses in insisting on it, and businesses who do not insist on mandatory arbitration can advertise that difference for competitive advantage.

Again: if consumers don’t want mandatory arbitration, why is legislation necessary to achieve that result? Open up your own business, advertise the lack of mandatory arbitration, and all these imaginary consumers who want to pay higher prices for the power to bring meritless litigation will come flocking to your door.

5 Shelley 02.14.08 at 2:18 pm

SPQR, I didn’t. I was following the original writing.

Ted, in comment replies are an attempt to break up the thread of communication contained within my original writing. I won’t comment here again, because I find such to be rude, as well as a cheap trick.

I did address the issues. Arbitration does not need to be mandatory pre-conflict. If it is, it should be agreed on by both parties. Otherwise, it is not choice, and say so is a lie.

“They don’t have to work for KBR if they would rather have lower wages with an employer that does not have a mandatory arbitration agreement. It’s just one of the terms and conditions of employment, like free parking, a free gym, and how many weeks of vacation are offered.”

What an absolutely ridiculous argument. Do you realize that you do more fo the Arbitration Fairness act of 2007 than I do? One only has to read what you write to see how important this act is. Thanks for your continued support for the act.

6 Ted 02.14.08 at 2:34 pm

Shelley writes: Arbitration does not need to be mandatory pre-conflict. If it is, it should be agreed on by both parties.

A mandatory arbitration clause is a consensual agreement by both parties to arbitrate any disputes they have. The anti-choice legislation Shelley supports would deprive consumers of this option.

Shelley still hasn’t answered why legislation is necessary if mandatory arbitration doesn’t save expenses and consumers don’t prefer it. Her inability to answer that question (or to honestly address SPQR’s statement) is the real reason she’s fleeing Overlawyered.

If mandatory arbitration is so terrible, how come almost every trial lawyer insists on including it in their fee agreement with clients? Why aren’t you complaining about John O’Quinn forcing his breast implant litigation clients into arbitration?

7 Cindy 02.14.08 at 2:36 pm

If pre-dispute mandatory arbitration was good for both sides, why would ONE side–corporations primarily–keep making it MANDATORY on consumers? I have seen arbitration firms’ promotional materials where they “court” business to use them, with subtly worded promises to decide in the corporation’s favor, saving THEM money. It does not save the consumer money if the process is biased against them so that they usually lose or only are awarded pennies on the dollar of actual damages. If this process was working, that is if it was FAIR for BOTH sides, we would not be having this discussion. Consumers are learning how unfair it is and how hard it is to avoid it, and they don’t want it.

8 Ted 02.14.08 at 2:50 pm

Cindy also fails to address the reasoning behind mandatory arbitration. Isn’t it interesting that not a single person claiming to oppose mandatory arbitration is willing to address the main argument in favor of it?

Again: it’s false that consumers don’t want mandatory arbitration. If they didn’t prefer mandatory arbitration, there wouldn’t be a need for the litigation lobby to insist on legislation. Mandatory arbitration would go the way of New Coke and Crystal Pepsi if consumers didn’t prefer it. I want the ability to commit myself to arbitrate, because it reduces costs and increases my wages. Why does Cindy want to take that choice away from me? I’m not forcing her to agree to a mandatory arbitration clause; if Cindy is so foolish that she’d rather pay more money not to have such a clause, or to start a business that doesn’t have arbitration clauses, she’s perfectly free to do so. Why does she want to force me to be unable to agree to a mandatory arbitration clause?

Consumers and employees do better in arbitration than in litigation. The only litigants who are worse off are the litigants with illegitimate claims who are using the expense of the civil justice system as leverage to force an unmerited settlement.

9 jkoerner 02.14.08 at 4:32 pm

Corporations draft the contracts, consumers do not. Corporations can include these clauses if they wish and consumers can avoid their products or offers of employment if the clause is a deal breaker. From my own personal observations, the vast majority of consumers/employees just don’t care either way about arbitration. The main time anyone cares seems to be when a lawyer tells a potential plaintiff that there is no jackpot at the end of arbitration.

As for not getting just payment for wrongs, the courts are not much better. If a harmed consumer uses a lawyer, then 1/3 comes off the top and that consumer recovers pennies on the dollar. I guess arbitration reduces the top amount posible, but it also forestalls appeals and takes a lot less time. If it takes 3 years for trials and then 7-10 more for appeals, the plaintiff is not paid for a very long time. Arbitration seems like a much better option to me.

10 Joel Smith 02.14.08 at 4:44 pm

“If pre-dispute mandatory arbitration was good for both sides, why would ONE side–corporations primarily–keep making it MANDATORY on consumers?”

Cindy, as a consumer, do you honestly face a risk that a corporation (or a trial lawyer) would use the legal system to extort millions from you? Of course not. For one, most consumers don’t tend to have millions, and for another, consumer laws and class actions don’t tend to work that way.

Consumers don’t face the legal risk that mandatory arbitration clauses are designed to eliminate. That’s why it’s mostly companies that use them. But because consumers can refuse contracts with such clauses, the cost-savings must be competitively shifted to consumers in order to entice them to contract.

11 Jason Barney 02.14.08 at 6:02 pm

Simply because “corporations” may opt for consumers to use only binding arbitration is not necessarily contrary to consumers’ interests. Consider this: you buy a new car from a dealer for $25K. Both the dealer and you must have believed you were better off or the transaction would not have taken place—that the dealer thought the car was worth less than the sale price; and you, more.

But some of the above commenters suggest that simply because corporations offer arbitration as their preferred method of conflict resolution it must be to their benefit. Of course it is, but also may be in yours, too, since the two are not mutually exclusive as the car sale analogy demonstrates.

And, if you believe corporations are screwing over people by contractually offering only arbitration as a means of dispute resolution, isn’t the opposite true—that trial lawyers by resisting arbitrations are seeking forums in which to screw over corporations by their trial shenanigans and demagoguery in front of sometimes uneducated and disinterested jurors?

I would propose a kind of “Schumer Box” to contractually agree to mandatory arbitration in a contract: Prominently displayed in such-and-such a font so that the agreement was clear and that those consumers can choose in the marketplace of ideas which method of conflict resolution to use. And, such arbitrations would be done by recognized and qualified arbitrators, of course not some shill working exclusively for the entity that drafted the contract.

The county where I live has mandatory pre-suit arbitration for civil cases where the amount in dispute is $50K or less. This isn’t contractually mandated; it’s simply the law. And, guess what? Plaintiffs regularly obtain awards that are generally higher than jury verdicts. The non-prevailing party can trial de novo and take it to a jury trial, but if they don’t improve their position (obtain a lesser judgment) they then owe the attorney fees of the plaintiff for the time from the arbitration award to trial.

This may just be an idiosyncrasy of my venue, and elsewhere juries probably are more inclined to give other people’s money away than they are here. But, my point is that arbitration works. It doesn’t always get it right but neither does a jury trial.

12 Cindy 02.14.08 at 6:46 pm

Half truths like “consumers want arbitration” will not persuade me. It’d be more accurate to say “Consumers who do not understand how important it is to keep their right to use the courts may THINK arbitration is preferable because that’s what they’re told, but those who’ve been through it often find it to be biased and expensive.”

And, Do consumers “face a risk of being sued?” Yes, they do. There have been many lawsuits by corporations, against customers for complaining. These lawsuits are often frivolous and designed to just shut the customer up. The courts have thankfully preserved free speech in most cases. Admittedly some consumers do not understand what is free speech and what isn’t, or they wrongfully use the co’s trademark etc, but overall the person exercising free speech can, and sometimes is, sued by the corporation. I know of one homeowner in TX right now being sued by her builder for millions. No, they don’t have millions, but that didn’t stop their builder. This was no isolated incident either. And of course the homeowner is fighting mandatory arbitration, too.

Arbitration can’t “go the way of New Coke” when the industries that insist on using it keep using it, and increasingly so. You can’t get a cell phone, credit card, house, car, ticket to many events, medical care, or nusing home admission, etc, etc, etc, without most if not all of that industry insisting on an arbitration clause. These days you cannot do without many things on this list like phone, credit card, medical, job, computer, software, etc. The clause can be hidden in material you only see after purchase, e.g. computer/software, home warranty. Those clauses are being enforced. People have very little if any way out. That’s not a “choice,” so it can’t be phased out by lack of consumer demand.

13 Ted 02.14.08 at 7:13 pm

“Consumers prefer arbitration” isn’t a half-truth, it’s a whole truth. If they didn’t, then the first company that offered lower prices and mandatory arbitration clauses would have been slaughtered in the marketplace, and it wouldn’t be the case that everyone else, seeking to compete, also started offering mandatory arbitration clauses. It’s like cup-holders in cars. You can’t get a car without a cup-holder any more, because consumers prefer cup-holders.

Nothing prevents you (or, more likely, the billionaire trial lawyers behind this anti-consumer anti-arbitration legislation) from starting a credit card company that advertises the benefits of not having arbitration clauses. There is a reason no one does that. Dozens of credit card companies out there, and not one thinks it advantageous not to have an arbitration clause? That’s not a sign that consumers are hurt, that’s a sign that consumers prefer arbitration clauses because they benefit from them in lower costs. Time after time, corporations have learned that they cannot force consumers to take something they do not want.

Consumers get what they want in a competitive free market. The anti-arbitration legislation seeks to make the market less free, thus making it less likely that consumers will get what they want.

If you’re really concerned about frivolous corporate lawsuits against customers, join Overlawyered’s tort reformers and fight for loser pays laws. It’s the litigation lobby that opposes such reforms that would stop such lawsuits dead in their tracks by making it profitable for contingent-fee lawyers to defend them.

14 smurfy 02.14.08 at 7:44 pm

“Corporations draft the contracts, consumers do not” As a negotiator for my barganing unit, I am in the rare position of being a consumer – or in this case employee – who does participate in drafting my contract.

We are currently negotiating to upgrade from non-binding arbitration to binding arbitration. Because we recognize the value of this, we will be giving up wage increases and medical benefits to gain the contractual language we want. Believe it or not, Cindy and Shelly, there are consumers out there willingly bargaining FOR arbritation clauses.

One of the strengths of arbitration clauses for the employee is that the cost to bring a dispute is low enough that the employee can bring a grievance for relatively minor, and much more common contractual disputes. The type of employment actions that bring big bucks such as wrongfull termination and actionable workplace discrimination are rare events. I am much more concerned that my more mundane contract disputes see their day before a nuetral thrid party.

But then, our goal is to get the employer to abide by the terms of our contact, not to extort punative damages.

15 billb 02.14.08 at 8:53 pm

The problem is bargaining power. As noted above, corporations do in fact draft contracts where the individual terms are essentially non-negotiable, and binding arbitration is one of these terms. Yes, of course, a consumer can opt out of binding arbitration clauses in a contract with a corporation, but only by opting out of the entire transaction and refusing to sign the contract. A corporation can afford the loss of revenue from one consumer, but, especially when there are no competing offers w/o these clauses (see, e.g., credit cards), the consumer has only the choice to forgo the product.

It seems to me that there ought to be a business opportunity for large corporations with a large number of small customers: offer the same product with and without binding arbitration clauses in the contract, with a price premium for the latter. This would allow the company to buy an insurance policy (or otherwise hedge their risk with investments) against lawsuits with the rates being directly related to the number of consumers who pay for their right to sue. Why this doesn’t exist in the marketplace isn’t exactly clear (though I can think of some plausible reasons).

The fact that all the large corporate entities in a particular market tend to have these clauses in their consumer contracts (cell phones, credit cards, the list goes on…) really shouldn’t come as a surprise. The market forces them to do so–quite effectively! If a competitor lowers prices by introducing mandatory binding arbitration, then the others in the market must either find another way to lower prices or add the same sort of clauses to their contracts.

This is not a big enough issue for most consumers because we do not think about such things most of the time. We sign contracts without reading them, without the advice of counsel, and/or without the necessary legal knowledge to know what’s enforceable and what isn’t. Given that most people will never have the need or desire to sue anyone, it’s easy to see why we silently sign away our right to do so for cheaper products.

Saying that consumers “want” mandatory binding arbitration clauses probably isn’t disingenuous, but it is certainly more than a little glib. Consumers want lower prices, and creative contracting gives producers a way to come at them. That most consumers are probably better off with less lawsuits generally is a strong point in favor of these clauses, but that it does so at the expense of rights that are enshrined in our most holy of political documents must also be expected to rankle some folks. This is especially true considering the take-it-or-leave-it “choice” that consumers have.

I’m a free market sort of guy, so I’m not recommending government action against these clauses. But we shouldn’t be surprised that the folks that are opposed to them are pushing for regulation, it is, after all, the political arena where vocal minorities can effect the changes they cannot acquire in the marketplace (where larger or more vocal efforts are probably required). All that being said, I’m not convinced that some regulations protecting both sides in arbitrations aren’t necessary (conflicts of interest? appearances of (im)propriety? transparency? standards of evidence? etc.), though perhaps they already exist.

16 Joel Smith 02.14.08 at 9:07 pm

“Consumers … may THINK arbitration is preferable because that’s what they’re told, but those who’ve been through it often find it to be biased and expensive.”

Cindy, for the sake of argument, let’s just assume that most consumers are in the dark regarding the conseqences of signing contracts with binding arbitration. I’m not sure that this is true, but it’s surely possible.

Is passing a law prohibiting ALL consumers, even the fully informed ones, from choosing binding arbitration the proper remedy?

This is like using a buzz-saw to untie one’s shoes. Why unnecessarily limit the rights of fully informed consumers when more sensible legislation is available, such as disclosure laws, for example, or maybe attorney consultation requirements? I know here in Texas the consumer rights laws operate in a similar fashion, so such isn’t unheard of, and to the extent that a person “knows” he or she won’t want a trial he or she can gain the benefit of eliminating a vendor’s potential hazard.

“And, Do consumers ‘face a risk of being sued?’ Yes, they do.”

Cindy, I didn’t ask whether consumers faced a risk of “being sued.” I specifically asked whether consumers faced a risk tha a corporate-plaintiff would “use the legal system to extort millions.” See above. That’s the risk that is being hedged by arbitration clauses, and why companies, by and large, are the ones primarily using them.

17 Shelley 02.15.08 at 10:00 am

“Is passing a law prohibiting ALL consumers, even the fully informed ones, from choosing binding arbitration the proper remedy?”

That’s not what the Arbitration Fairness Act is doing, Joel. People can still choose to have their conflicts resolved via binding arbitration. The Act doesn’t impact on this.

18 Ted 02.15.08 at 10:55 am

As with every other comment she has made in this thread, Shelley’s got her facts wrong. The Arbitration Fairness Act eliminates the option of consumers choosing in advance to pre-commit to arbitration in exchange for lower prices and higher wages.

Shelley still hasn’t addressed the arguments in favor of mandatory arbitration clauses or explained why the market can’t be trusted to resolve this issue without legislation to eliminate consumer choice.

19 Shelley 02.15.08 at 11:34 am

“As with every other comment she has made in this thread, Shelley’s got her facts wrong. The Arbitration Fairness Act eliminates the option of consumers choosing in advance to pre-commit to arbitration in exchange for lower prices and higher wages.”

No, I am not wrong. Not unless you can specifically show me the text that states that the act eliminates binding arbitration. Joel did not mention anything about pre-dispute. I did not respond on anything about pre-dispute. You modified the context.

I will not address your other statement until you apologize for editing my comment, and remove the edits.

However, feel free to respond in comments in my space Ted, and ask your questions there. I won’t edit your comments.

20 Ted 02.15.08 at 11:55 am

Either Shelley is deliberately dishonest, or she was dishonestly changing the subject by changing the definition of arbitration clause that everyone is using, or she doesn’t know anything about the bill she is supporting. See Section 4 of the bill, which amends 9 U.S.C. § 2 to add:

`(b) No predispute arbitration agreement shall be valid or enforceable if it requires arbitration of–

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

As one can see, this does exactly what Shelley says it doesn’t do, “prohibit[s] ALL consumers, even the fully informed ones, from choosing binding arbitration” in advance.

21 Ted 02.15.08 at 3:38 pm

Cindy and Shelley have attempted to post comments that do not address the critical issue of pre-dispute arbitration agreements and rehashing what they have already posted. Either they are incapable of understanding the issue, or they are deliberately trolling; either way, they are not permitted to hijack the comment thread. If either wishes to post something on-topic addressing the post’s point why arbitration needs to be pre-dispute to provide maximum benefit to customers, I’ll be happy to print it.

22 Joe Bingham 02.15.08 at 8:29 pm

‘Half truths like “consumers want arbitration” will not persuade me. It’d be more accurate to say “Consumers who do not understand how important it is to keep their right to use the courts may THINK arbitration is preferable because that’s what they’re told, but those who’ve been through it often find it to be biased and expensive.”‘

This is key, I think. The argument that antireformers are reluctant to make, but that is the foundation of their points, is that consumers can’t be trusted to choose whether or not to accept binding arbitration clauses.

Comments on this entry are closed.