What Is Mandatory Binding Arbitration?

Chances are, you own a product or subscribe to a service you agreed to “binding arbitration” once you purchased it. But what is it?

Mandatory binding arbitration is certainly kinky, but not in a sexy way. For one, in the event of a disagreement with a company, you void your right to sue. Instead, a 3rd party, usually an arbitration company, hears both sides of the argument and renders a decision. For the most part, the ruling is final and can’t be appealed. Consumers lose many protections standard in a court of law.

Companies like binding arbitration because it’s more cost effective than dealing with a bunch of lawsuits.

We, on the other hand, see a conflict of interest. Arbitration companies get the bulk of their business from large corporations, so there’s a definite possibility for bias in order to protect their revenue stream.

In some cases, consumers have no choice. Try getting a cellphone without agreeing to binding arbitration. For more on how the procedure works, check out this article at Bankrate. — BEN POPKEN

(Photo: kevin_cease)

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  1. Beerad says:

    Longtime lurker, first-time commenter here. In fact, I AM a lawyer, although of course I am not YOUR lawyer, so this comment is worth the paper it’s not printed on. Also, I’m a corporate attorney at a big firm, so YMMV.

    Arbitration “companies” typically DON’T hear the cases themselves – I’ve never even heard of such a thing. Usually a clause will refer to an arbitration organization (like the American Arbitration Association), which may help with appointment of a neutral arbitrator. Arbitrators are selected from a huge pool of eligible candidates who are usually attorneys and typically screened for conflicts (so if you’re arbitrating with EvilCorp X, a candidate who worked at EvilCorp X for 50 years is automatically ruled out).

    The arbitrators themselves aren’t inherently biased – Joe Lawyer isn’t any more likely to hate consumers than anyone else, and they get paid either way. The arbitration organizations have a vested interest in having access to fair, qualified arbitrators – their reputations (and thus future business) depend on it. Even without a stacked deck in favor of the corporation, arbitration is just so much cheaper for a corporation than a lawsuit would be.

    It’s generally cheaper and easier for the customer too. The case won’t drag on for months (or years) in court, and the rules and procedures are simplified so often you don’t even need a lawyer to meaningfully participate in an arbitration.

    Yeah, some things are important enough to demand you retain all your legal rights to sue. Your $40 per month cell phone bill probably isn’t one of them.

  2. Falconfire says:

    courts like it too since it keeps cases they feel are “petty” out of the system. Very often the judge will just force you to go to arbitration anyway even if you did take someone to court since they dont want to deal with a dispute.

  3. mac-phisto says:

    many of these arbitration clauses also dictate who gets to pick the arbitrator (& here’s a clue – it’s usually not the consumer).

    IANAL & i’ve never had to play the card afterwards, but i always sign contracts with a little U.P. (under protest) or W.P. (without prejudice) next to my name. this is supposed to protect your rights (including the right to sue in a court of law) under section 1-308 of the uniform commercial code, which governs all commercial transactions.

  4. castlecraver says:

    Thanks for posting this… I’ve always wondered how these clauses work out and how legally enforceable they actually are. Something tells me most judges would relish tossing a big F-you to corporations who make it a point to revoke their customers’ rights to due process, but if its as common as it sounds from the article (and thus obviously falls outside the boundaries of unconscionability) , I guess you’re not left with much hope of that happening.

  5. Hedgy2136 says:

    When I purchased my home 12 years ago, the builder did a crappy job of installing my septic system. I wanted to sue him, but he bankrupted his company shortly after I closed on the house. I ended up going through my Home Buyers Warranty which had Mandatory Binding Arbitration. It was not too painful for me. The process took a long time (about 6 months), but I ended up with a $10,000.00 settlement. In some cases it can be benificial.

  6. dbeahn says:

    It’s my understanding that you can’t “agree” to forfeit your rights. If you sign a contract that requires “binding arbitration”, you can still go to small claims court, or file a class action or whatever. The judge may force you to go to arbitration, but if you aren’t happy with the results, then the case goes back to court.

    In other words, it’s in the arbitration company’s best interest to make sure you’re happy and don’t go to court after the arbitration.

    It does help to know that you can still go to court, since the one time I had to go through arbitration they tried to tell me that “when we’re done here, you’re done, there’s no where else you can go with this”. I calmly produced the as of yet unfiled small claims case and explained that if that were the case, I was done there and would see (company in question) in court. A fast back peddle later, the negotiations actually began in good faith, and the bullying stopped.

  7. Mike_ says:

    @mac-phisto: Interesting.

    If anyone with more background in this area would care to comment, I’d like to hear more about whether and when one should prefix his signature with “Without Prejudice UCC 1-207″ when signing a contract. Google + IANAL seems to indicate these words are a powerful tool.

  8. Mr. Gunn says:

    All of the credit monitoring services provided by the bureaus themselves include a binding arbitration clause. This effectively takes away your one weapon to make them change inaccurate information in your report. I’ve not checked, but perhaps a third-party provider might be a way around this, or perhaps you could cancel your service, then sue.

  9. “many of these arbitration clauses also dictate who gets to pick the arbitrator (& here’s a clue – it’s usually not the consumer).”

    That’s really what decides if it’s a good arbitration or a bad arbitration. As Beerad notes, if you’re dealing with the American Arbitration Association, you’re virtually always getting top-notch, fair arbitration. (There are other excellent organizations as well.)

    Some of these contracts, however, require you to agree to the company’s INTERNAL arbitration. (Particularly health insurance, it seems, although perhaps that’s just because it’s part of my husband’s practice so I have selection bias there.) That is virtually guaranteed to screw you, although I’ve heard of a few companies where consumers were delighted with the company’s internal process (but they seemed to serve more as high-quality customer service dispute resolution than true “arbitration”). However, I’ve not really heard of anyone held to the terms of a contract demanding internal arbitration if they sue over it. That’s pretty unconscionable, particularly in a health care contract, where you typically don’t have a choice and you have to sign what they give you.

    There is a serious legal question as to whether “boilerplate” agreements presented to consumers constitute contracts at all. You have no opportunity to “dicker terms,” which is generally required for a contract (if someone dictates terms to you and you sign because you have no other option, that’s getting awfully close to duress). Typically in these cases you have no choice but to sign the contract, either because you have no choice in provider (you’re in the ER gushing blood, or your company chooses one health care option for you), or because every bank/cell phone company/whatever in the region has the same boilerplate clause and you can’t acquire the service without it.

    SOME JURISDICTIONS will not hold consumers to such contracts and will designate them unconscionable. I would not, however, bet the ranch on this. Or at least not without the advice of an excellent lawyer qualified in your jurisdiction.

    For high-quality entertainment, I like to take my own forms with me when I know they’re going to make me sign something. Just watching them running back and forth and frantically calling people higher and higher up the chain of command because, oh my God, the customer has a CONTRACT! is worth the effort of preparing them.

    (Which kinda goes to show you how truly uncontractual these alleged contracts are. They’re absolutely not interested in having me consider the terms and provide any of my own. It’s not a contract. It’s a form, and the people having you sign it has no idea what it means either.)

  10. Flynn says:

    I wrote Consumerist about this a few weeks back when I was troubled to see a manditory arbitration clause in an IRA agreement. My company is starting retirement funds, and we’re getting set up.

    Now, it’s one thing to keep the courts from being “clogged up” with those “pesky” class action suits against cell phone and credit card companies. It’s another, however, when your possible future is being handled this way. I mean, could anyone imagine an Enron-style collapse of a major 401k organization? How much fun would THAT be with everyone locked into manditory arbitration?

  11. lore says:

    When I purchased my house, the purchase agreement had a binding mandatory arbitration clause WHICH WAS OPTIONAL.

    In my case, I signed away my rights (mistakenly) but fortunately nothing happened that required arbitration.

    Before you buy your house (or anything) be sure that you do NOT sign any arbitration clauses that are marked as OPTIONAL! The salesperson will NOT tell you that it is optional…

  12. royal72 says:

    nice pg-13 bondage pic consumerist, with a no-so-subtle hint at an illicit leafy substance… party at ben’s house everyone!

  13. phildeaux says:

    News Flash — the arbitration clause has nothing to do with a company’s desire to arbitrate rather than go through the courts. It has everything to do with prohibiting classs actions.

    Due to the peculiar history of arbitration and how it was developed out of the labor/collective bargaining agreements (see Steelworker’s Trilogy), there is a presumption favoring the enforceability of arbitration clauses. This presumption is largely unique to arbitration clauses, due to their favored status arising out of labor law. This is because courts saw it fit to force companies and their unions who agreed to these clauses in negotiated collective bargaining agreements to use the dispute resolution procedured agreed upon.

    Fast foward to the present. The collective bargaining aspect is gone, as these clauses are found in form contracts that the consumer cannot negotiate. But the presumption favoring arbitration still exists.

    So Verizon, AT&T, T-Mobile, Comcast, and so on have figured out, through their clever lawyers such as our own Beerad, that they make class actions extinct by slipping bans on class actions and arbitrations in their arbitration clauses. Where it would be difficult to contract around a consumer’s right to participate in a class action brought in court, that difficulty is eased when you contract around the consumer’s right to participate in a class action because they agreed to arbitrate.

  14. Skeptic says:

    so there’s a definite possibility for bias in order to protect their revenue stream.

    Nothing “possible” about it. At least one study showed that repeat arbitrators (i.e. the corporations) consistently receive more favorable outcomes from compulsory arbitration.

    In spite of what Beerad may suggest, arbitration is imposed on consumers to take away their rights. Arbitration was supposed to allow two parties to voluntarily choose to arbitrate rather than go to court. The way corporations force in on consumers is an insult to that idea.

    In arbitration the decisions are generally un appealable and the arbitrator doesn’t actually have to base their decision on the law.

    Compulsory arbitration is an oxymoron and loose loose for consumers.

  15. eldergias says:

    People need to remember there is no need to cower under the steel-toed boot of corporate America. As one posted said, citing section 1-308 of the uniform commercial code to protect your right is a good idea (had to look it up, but damn is that a smart move). Second, no matter what anyone tells you about not being able to sue around arbitration or not being able to appeal they are wrong, period. The 7th Amendment to the Constitution clearly states, in black and white, that all citizens with civil cases with a dollar value higher than $20 have the right to a trial by jury. You may choose not to have a trial by jury, but no one short of the Supreme Court can deny your right to trial by jury as it would be unconstitutional. Signing a contract cannot waive this right. It is like signing a contract that sells yourself into slavery. Sign it in blood in front of a priest and your mother but it still will never be legally sound since the 13th Amendment protects your right of emancipation.

    These companies use scare tactics to get what they want from people. Just because they tell you something does not mean they are telling the truth. The courts may make you go through arbitration first, since you did agree to arbitration in your contract, but it would be a constitutional violation for them to say you can never have a trial by jury against the accused because of the agreement.

    When singing contracts do use the UCC reference, also read over everything before you sign it. Sometimes you can opt out of certain clauses, and if you can’t don’t forget that it is legally sound to alter contracts before singing them, however the counter-party is supposed to inspect the altered contract after your signing and can choose to reject the agreement, however I doubt most sales people would give it second thought. Put an “X” through an arbitration section if you don’t agree with it, or add a word here or there to clarify things, then sign it. They can reject the contract, but sales people are lazy and apt to miss your alterations. Just make certain you get a copy of the very same contract you altered and signed as proof of your changes.

  16. phildeaux says:

    It would be interesting for Consumerist to get information from consumers who have actually tried to enforce their arbitration contract. Do the companies actually appear to defend themselves or do they just get default judgments.

    My gut sense is that if you have a 40 or 400 dispute with say Verizon or At&T, and you are getting nowhere with the CSR, if you submit a demand for arbitration of the issue and follow through, that the company will notspend the time and $ that it takes to appear and defend the case. It would be cheaper for them to eat the judgment than hire a $300 an hour lawyer to read the file.

  17. eldergias says:

    @phildeaux: One would like to think that, but these companies keep law firms on retainer most of the time, so another lawsuit won’t cost them anything.

  18. Chris says:

    There’s a lot of misinformation in this thread, for some reason. To address a little bit (while not providing legal advice):

    – I’m not aware of any benefit from signing a contract with some sort of “not really” symbol or letters. I’m not saying there’s never been a judge that let a contracting party out of a term for doing that, but I’d be surprised.

    – At least in California, where I practice (not your lawyer, etc.), courts have interpreted and arbitration clauses to make the playing field fairly equal for consumers. Frankly, I advise most of my business clients that arbitration awards aren’t usually a good idea in a business-to-business contract. That calculus might change, though, if I was drafting a consumer contract. The cost savings aren’t that great anymore, and the lack of appellate review sucks. The anti-class-action provision IS a big one.

    – Most arbitrators are fair, just, and very congizant that their reputation is their livlihood. I’ve seen at least one study that shows a slight “repeat player” bias, but I think that was in the domain name dispute resolution context. The plaintiff’s bar is more organized than the defense bar, so an arbitrator who consistently ruled in an (unjust) anti-consumer fashion would soon find himself out of work.

    – Finally, eldergias is talking pure, unadulterated nonesense – like the kooks who say that income tax is unconstitutional, or that West Virginia wasn’t properly created as a state. A binding arbitration agreement, if enforced, precludes any independent action in state or federal court, on the same grounds. Saying that you can just “re-try” your claim in small claims court, etc., is just not true. I’d love to see a case that says all arbitration agreements are unenforcable, or that an arbitrator’s decison is just advisory.

    The Federal Arbitration Act specifically approves of arbitration as a dispute-resolution method, as do numerous state laws. I don’t know what went on with dbeahn’s situation, but you can’t (successfully) file a small claims case after losing at arbitration (on the same claim, of course).

  19. Chris says:

    Another misunderstanding of the legal process by eldergias. A “retainer” is simply an advance payment for services. Very, very, very rarely (I’ve never heard of it) does a company pay a law firm some sort of flat fee to handle any and all lawsuits. Extra lawsuits mean extra money for the clients, whether they’re individuals or big companies.

  20. HippieLawChick says:

    Thanks Chris! If you could get out of mandatory binding arbitration by filing a lawsuit later, the clause would be meaningless, right?

    I also wonder if these agreements are a way for these big corporations to keep their bad acts “hush hush.” Are these cases published where the media could publicize them? I don’t think they are!

  21. eldergias says:

    @Chris: You really think I am talking pure unadulterated nonesense? Reread the 7th Amendment:

    “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.”

    What do you think that means when you read it? What I am taking note of is “In Suits at common law, where the value in controversy shall exceed twenty dollars,the right of trial by jury shall be preserved”, the part after that is direction for validity of the facts of the case, and is not pertinent to this conversation. “In Suits at common law, where the value in controversy shall exceed twenty dollars,the right of trial by jury shall be preserved” means if you have a lawsuit with a dispute of $20 or more you have the right to a trial with a jury. I don’t know any other way you could take that, and it doesn’t seem like crazy talk to me, seems pretty darn straight forward.

    No matter what you do, you cannot give up a constitutional right, it just is not possible. The only way those rights can change are with Amendments to the Constitution or with the interpretation of the Constitution by the Supreme Court. What is it that I am saying that seems like nonsense to you?

  22. Beerad says:

    Yes, yes, it’s all my fault – I’m working day and night to screw everyone, and I read Consumerist to study the enemy. (eye roll, sigh).

    I’m no UCC expert, but I’m pretty sure it only applies to “sales of goods” and won’t get you anywhere under a service contract. Also, the whole “without prejudice” section 1-308 thing seems to crop up largely in hardcore libertarian / government conspiracy theorist circles, so I wouldn’t rely on it too much (although, depending on personal viewpoint, some might consider that a plus). Also, one party changing a contract and not subsequently obtaining the other party’s signature approving the changes probably isn’t going to result in those changes being honored.

    I’m not suggesting that arbitration doesn’t waive some of your rights – obviously it does. But it’s not like companies set out to say “Gee, what rights can we rid our customers of today?” Companies want money. Litigation is very expensive. Anything that reduces litigation (like arbitration clauses) saves lots of money. It’s not more complicated than that.

    Yes, it’s not “voluntary” in the sense that if you want to purchase the goods or services, you have to sign the standard agreement. But guess what – you don’t need to have a cell phone! Feel free to take your business elsewhere, or try and write your own contract with Verizon (have fun!), or found your own “no-arbitration-clauses” company and make a million bucks. But please don’t complain about the corporations “forcing” you to use their product.

    The presumption in favor of arbitration clauses is due to the expediency and simplicity of the process, as opposed to a full litigation. The impact of such clauses on class actions is not entirely settled under the law, and I doubt anyone would agree that class action lawsuits are “extinct”.

    Regarding companies and attorneys: for these arbitrations (meaning small, consumer/standard contract issues), corporations use staff attorneys who are paid way less than $300 an hour (probably a lot closer to $30). They aren’t bringing in top NY law firms as outside counsel to deal with these claims, I promise you.

  23. Beerad says:

    @Beerad: I’m no UCC expert, but I’m pretty sure it only applies to “sales of goods” and won’t get you anywhere under a service contract.”

    Bah, looks like only UCC Article 2 covers “sales of goods”. Hey, I said I wasn’t an expert!

  24. eldergias says:

    @Beerad: It’s true that one party changing a contract and not obtaining the other party’s signature approving the changes would be invalid in normal contract conditions, however the conditions set forth by the “contracts” from most companies out there now are anything but normal. They are not contracts that are signed, countersigned, and notarized. They are forms that the customer makes an “X” on. If I signed my name as “I do not agree to any of the terms of this contract” in cursive, I am sure that there would be a bunch of sales people that would not give it a second look and would give me whatever service I was trying to get. Luckily for consumers, one of the big things we still have in our defense is the “that isn’t my signature” move. When its true its true, and the courts will side with us.

    Since there are no countersignatures or notarizations on cell phone contracts or the such, one could argue that changes to the contract would not require any further countersignature since one was not required in the first place. Your right, if you don’t like a contract you don’t have to get a cell phone, but the same is true for the provider, if you don’t like my revisions you don’t have to provide me with service. If they never look over the contract for my changes it is as much my problem as me not looking over their contract for their hidden terms and conditions is their problem. If they provide me with service, perhaps my changes will never come up, you know if they act honorably, but if they don’t I would have something to point to in my defense when they point to their contracts in their defense.

    Sure, companies aren’t out there JUST to limit people’s rights, but I guarantee you that if they could legally erase people’s rights at will they would. Companies would spring up offering slavery and murder for hire. Sure, that is an extreme circumstance, but if companies could they would precisely because they want money and thats all that many people care about.

  25. eldergias says:

    @Chris: I may be wrong about retainers, but I was under the impression that many large companies had “retainer agreements” with their law firms such that the firm basically receives a “salary” from the company each year and in return handles any and all legal matters for the company with no addition payment needed for extra time or lawsuits because all legal work is covered in the agreement. If there are no lawsuits in a year then the law firm makes out like bandits, if they are flooded with work they can’t charge the company any more, but they can rewrite the retainer agreement for the next year.

    Now I admit, my knowledge of corporate retainers is limited, so I could be wrong, but that does not negate the validity of my other arguments, nor has it caused me to insult you by claiming your a nut. I disagree with what your saying, but I prefer to refute you with arguments and debate rather than writing you off as a lunatic.

  26. Chris says:

    eldergias,

    You’re arguing for a purely literal interpretation of the Bill of Rights, which simply doesn’t exist. The only people I’ve ever seen advocate that position are – and I’m sorry – people from the foil hat, ultra-libertarian fringe.

    You said: “No matter what you do, you cannot give up a constitutional right, it just is not possible.”

    It is possible. And true. For nearly 220 years, courts have been interpreting the Bill of Rights – you can’t just read the thing for yourself and be 100% sure what it means.

    Are CIA agents allowed to talk about government secrets? No, despite the First Amendment – they gave up that right by contract.

    Am I allowed to carry a gun into my workplace? No, despite the Second Amendment – I give up that right by implied contract.

    Etc, etc, etc.

    I’m not talking out of my ass on this – to make sure, I did the research before my initial post.

    Here’s language from one of a hundred cases directly on point. This court explains the situation quite well:

    “A plaintiff suing for money damages under the Federal Fair Debt Collection Practices Act is entitled to a trial by jury under the Seventh Amendment to the United States Constitution. However, a contracting party may waive this right by agreeing to have any disputes arising from a contract settled in arbitration, rather than through litigation. See Allied-Bruce Terminix Co., Inc. v. Dobson, 513 U.S. 265, 280-282, 130 L. Ed. 2d 753, 115 S. Ct. 834 (1995). In order to encourage the inclusion of arbitration clauses in contracts and to encourage their enforcement by courts, Congress enacted the Federal Arbitration Act (“FAA”) in 1925. By doing so, Congress created a distinction between the analysis of jury trial waivers standing alone and those jury trial waivers included, either by logical implication or explicitly, in arbitration agreements. In order for a party to show that a jury trial waiver contained in an arbitration agreement violates his Seventh Amendment rights, a party must prove that the arbitration clause itself is unconscionable. See Stinson v. America’s Home Place, 108 F. Supp. 2d 1278, 1286 (M.D. Ala. 2000) (quoting Goodwin v. Ford Motor Credit Co., 970 F. Supp. 1007, 1015 (M.D. Ala. 1997)).”

    Taylor v. Green Tree Fin. Servicing Corp. (In re Taylor), 260 B.R. 548, (Bankr. M.D. Fla. 2000).

    Yes, some arb clauses can be thrown out as violative of the Seventh Amendment. But most are fine.

  27. mac-phisto says:

    @Beerad: ucc 1-308 actually only applies to “agreements”, but a contract relates to an agreement as it is the legal obligation under which an agreement is reached. 1-308 specifically excludes accords & satisfactions from the “reservation of rights”, but not a contract, as excluding a contract would thereby also exclude any agreement reached by contract.

    i understand your “quack” argument (supreme court has repeatedly argued that a tax defense cannot be mounted on the idea that income tax is unconstitutional), but the u.c.c. governs virtually every business transaction in the united states. it is the foundation on which these contracts are built. i do not see how one could successfully enforce a contract by negating its relevance.

    1-308 does not nullify a contract entirely. what it does is whittle it down to the rights granted to each party under the uniform commercial code. it “reserves your rights” under this code. an arbitration clause negates certain rights, such as the right to a court of law (remedies: 1-305) & therefore would not be enforceable. the parts of the contract that are enforceable under the u.c.c. would remain in effect (severability: 1-105).

    again, IANAL, but i will continue to use this myself until i see sufficient evidence to show that it’s b.s. trust me, i’ve been looking. for some reason case law is a rather enjoyable read for me.

    i will say that i put U.P. on a form that a former employer required me to sign which granted them the right to garnish my pay if they determined i was negligent in protecting the company against losses. i felt the particular provision defining negligence was rather broad & i also objected to the idea that an at-will employee had to sign a binding contract (that did not imply contract of employment…i hate lawyers). my DM called me & told me i had 24 hours to sign the form “correctly” or i would be taken off the schedule. needless to say, i don’t work there anymore. so, imho, that puts some credence behind it.

  28. phildeaux says:

    @Beerad: While not extinct, if the clause is well constructed, it can make it very difficult to have a nationwide class action. Even if a class plaintiff is successful in fighting it, that result is usually only after years of litigation and appeals.

    As to the 300 an hour lawyer, I think it would be interesting to see whether Defendants even show up for these smaller arbitration claims. Do you have any sense on this?

  29. eldergias says:

    @Chris: Well Chris, I guess it is a case of half-full half-empty. There are two ways you can look at the law: by the letter of the law or by the interpretation of the law. Since I could put 10 lawyers in a room and get ten different answers for what the “spirit” of a law is, there is only one strict reading of the law that is available to all people, so the only real way to make headway is to go strictly by what is written. In actual practice, sure you have to go by interpretation so that you try to maximize your position, but we’re not in a court room, we’re discussing the law presented to us as it is, not what we believe it to mean. I don’t think that only crazy fringe people should be the ones that look to the letter of the law, but if that has been your experience that is pretty unfortunate.

    Firstly, you are right. I over simplified my stance, I should have clarified more. Yes we have freedom of speech, but we can’t yell fire in a crowded theater for fun. Our rights are limited such that we cannot use them to harm ourselves or others. However, this is not my choice or doing, it is nothing I gave up, but rather was the court’s reading of the bill of rights. But it is only to the extent of clearly discernible harm derived from the right. But if you really believe that people can sign away a right as such, what is it that differentiates the right to trial by jury from the right to life? Why can’t I sign a contract where if I default on a payment to you that you get to kill me when I can sign a contract that will let you enforce binding arbitration? Both outcomes violate my constitutional rights, but why is alright to violate one but not the other?

    You have enlightened me to the Federal Arbitration Act which I had not been aware of, but none-the-less is seems unconstitutional. You know just as well as everyone else, that Congress has passed unconstitutional bills in the past, and that just because a bill is passed does not mean that it is Constitutional. Perhaps the Supreme Court has upheld the right to arbitration in the past (but I haven’t heard of any such cases yet), but that would odd since it seems fairly clear that that was not the intent of the 7th Amendment.

    Call me what you will, I am fine being called a crackpot because I point to words and tell people to read them for what they mean. I happen to believe that laws and rights we have on the books should be enforced to the letter (not to the wispy dream of what people want them to mean), and the ones that are crazy and inane should be challenged in court and knocked down.

    Just because the general practice is that arbitration is enforced does not mean that it is constitutional. You probably know the history behind Griswold v. Connecticut 381 U.S. 479 (1965) and that the abortion laws were not being enforced properly, but that Griswold and Buxton manufactured their own arrest and fine because they wanted to challenge it on its constitutional merits. They won and showed that current laws could be unconstitutional but the only way to show them as such and have them overturned is to challenge them. Sure, its a sucky method to cause change, but it is all we’ve got.

    Also, it is a cheap card but its out there so I might as well mention it. Lately judges have been overturning prenuptial agreements because the women signing them were temporarily insane due to their desire to get married. Now I happen to thing that is pretty retarded, but if people can say that as their stance for breaking that contract it would seem that you could break any contract by wanting whatever you are agreeing to enough. Stupid defense, but if it can be used once it should be usable again.

  30. eldergias says:

    @Chris: I have to add one more thing. I just think that your response of how I am taking the amendment too literally is funny:

    The Amendment says: if A and B then C.
    I say: Currently we have A and B, that must mean C.
    You say: No your wrong. Yes A and B, but C isn’t right, you are taking the Amendment too literally.

    If you disagree with the amendment itself and think that it should be revised, so be it, challenge it on those grounds. But if we are not talking about what it should but but rather what it really is, then read it for what it says. Don’t look at 2+2 and call it 5.

  31. triple says:

    I just have to comment, this is the first time ive seen a popular blog post a SFW bondage picture.

    That’s all.

  32. mac-phisto says:

    @eldergias: you’re right & you’re wrong. the problem is that the court is presumed to always be right. w/o this presumption, our laws have no legitimacy. often, a court of law must look at the law & then the judgments made with respect to the law (called case law). these can conflict over time. cases are usually presented to the court in a way that makes them relate to prior successful cases. the bench must then decide which case laws are more relative to the specific case. importance is usually given to more recent cases as the court likes to maintain the idea of consistency. so a more recent ruling that supports your position will hold more weight than an Act from 1925.

    what does this mean? well, it means it’s not as simple as if A & B, then C. sometimes it’s A & B, then C. sometimes, in the context of D, B can be substituted by Bd, which results in Cd. or, when E exists, E takes precedence over A, thereby adjusting the equation to E (not A) & B, then Ce.

    our constitutional rights should be preserved literally, but the nature of man & law prohibits this from happening. just as the bible is subject to interpretation, man’s laws are no different.

  33. Beerad says:

    @phildeaux: “I think it would be interesting to see whether Defendants even show up for these smaller arbitration claims. Do you have any sense on this?”

    – Honestly, I have no idea. Probably varies from place to place. I would imagine that a company would certainly want to follow up on disputes worth anything (say, over a hundred bucks), and probably the smaller ones too (which obviously add up over time, and you don’t want to set a bad example by defaulting). Actually, in thinking about it, I doubt they send an attorney at all. The issues are generally the same in all these cases (contract says X; here’s the facts) and there’s probably some in-house staffer who’s familiar enough with the procedure to run through several a day. Pure conjecture on my part, but I’d guess it could be someone a notch or two higher than CSR manager.

    – Re: 1-308, it seems rather spurious that you can sign a contract waiving certain rights, and then add your own little note that means “but really I’m not agreeing to what I just agreed to.” I’m not even touching the Constitution argument with a 10-foot pole.

  34. mac-phisto says:

    @Beerad: that’s not what 1-308 does. the purpose of the u.c.c. was to standardize trade throughout the u.s. previous to this code, 50 states had 50 different ideas on how to conduct trade. this piece of legislation allowed a normalization of those ideas. the purpose of 1-308 is to allow commerce to continue despite contractual disagreements. it’s the legal way of saying “we cannot resolve this now, so we’ll resolve it later”. historically, it was to avoid “hostage contracts” where commodities could be held up by negotiations not in good faith so as to drive the price down as they spoiled.

    unfortunately, until i visit a legal library i cannot report on its effectiveness. all i can find regarding cases online deal with its relation to tax law, which is, it’s not related to tax law.