Yes, that Bank of America is actually allowing credit card, loan, and banking customers to file lawsuits. They aren't doing it due to a sudden change of heart, of course. National Arbitration Forum, which handled their disputes, is leaving the credit card business entirely after being punched in the face sued by the Minnesota Attorney General. Consumers are not terribly fond of arbitration.

Consumer advocates have faulted the arbitration process, saying it is biased in favor of companies and that consumers often do not realize they are waiving their right to sue when they accept services. Supporters of arbitration say the process can be faster and less costly than going to court.

"While the bank thinks arbitration is a very fair way to go, customers do not," Bank of America spokeswoman Shirley Norton said. "It is in everyone's best interest to change it. We're hoping we'll be able to resolve more disputes directly with our customers."

Norton said the bank will review consumer cases already in arbitration on a case-by-case basis.

That's one more big company down...maybe now even more will follow their lead.

Bank of America ends arbitration of card disputes [Reuters] (Thanks, Phil!)

PREVIOUSLY:
Arbitration May Be Dead, But Courts Offer Imperfect Alternative
Credit Card Arbitration Cabal Implodes
Another Arbitration Firm Pulls Out Of Credit Card Arbitration
Minnesota Attorney General Punches National Arbitration Forum In The Face

(Photos: PJLewis and mrkathika)

Meanwhile, the Arbitration Fairness Act continues to chug along in Congress, gathering cosponsors and hopefully getting some attention later this summer. If you want to find out more about mandatory binding arbitration, stay updated, or find out how you can help get the Arbitration Fairness Act passed, check out fairarbitrationnow.org.

Rape Case Highlights Arbitration Debate [NPR]
(Photo: nailmaker)

When I was seven, I saved the lives of my two younger cousins who were playing on the railroad tracks. They did not notice the train coming, but I did and frantically ran to them. I was able to toss them both to safety, but I fell and my pants got caught on the rail. I have been living with one leg ever since.

Thirty surgeries and two decades later, I was doing fine as a medically trained professional, drawing blood for lab tests at the University of Southern California Hospital. I did my job just as easily on crutches as with a properly fitting prosthetic leg, and had supervisors who understood that I needed to switch between the two because artificial legs don't always fit the way they should. Padding wears down and that extra pressure causes painful blistering that can take weeks to heal, months if the blisters get infected. It also takes weeks to get my leg back when it needs to be refitted.

When staffing needs at USC changed and I had to transfer to the Tenet facility at Garfield Medical Center, my working environment turned ugly. In this day and age, when the law says employers have to accommodate the disabled, the last thing I expected to hear from my new supervisor was, "Go home and put on your leg," but it was something she told me over and over. I did what she asked for as long as I could because I did not want to lose my job, but wearing the leg on top of the blisters gave me a bad infection. Artificial limbs wear out and, at this time, I also had to get a new leg, which meant a lengthy medical review process and insurance delays to replace my basic prosthetic device which costs $34,000. Because my supervisor refused to let me do my job on crutches, I was unable to work for six months. When I returned to Garfield, my job was gone.

The only work they had for me was as a daily hire on the graveyard shift, where a new supervisor let other workers make disparaging remarks to me. When I complained to her, she said I should not take it seriously, that they were just "playing around." I could not let my situation continue, so I told the human resources department I was filing a grievance. My job performance reviews were the only thing that changed after that. They went from always good to always bad.

I thought I had an "open-and-shut case" of discrimination, so I found a lawyer and he filed a lawsuit against Tenet and Garfield. Four days later, I was fired for something I never did, mislabel specimens.

Evidence and facts matter in a court of law, but I didn't have access to one. Tenet employment contracts include a binding mandatory arbitration clause which prevented me from having my case heard before a real judge in a legitimate court. Instead, my case was reviewed by an arbitrator Tenet hired, guaranteeing I would lose and they would be protected.

I was never going to get a fair hearing, but just to make doubly sure of that, Tenet offered the arbitrator two more case to handle while she was in the process of evaluating my case. I lost, of course, but because of this treachery and the strong evidence we had, my lawyer tried to get a regular court to throw out the arbitration decision. That was a failure too.

You can ask your members of Congress to support the Arbitration Fairness Act here, you can also check out the Fair Arbitration Now website and sign a petition to ban forced arbitration.

Previously: The Arbitration Fairness Act Is In The House
Mandatory Binding Arbitration: The Worst Choose Your Own Adventure Ever
What Is Mandatory Binding Arbitration?
(Photo: mindonfire)

My husband and I are struggling with a housing crisis – and it's very different from the mortgage crisis you've been hearing so much about. Ours was caused by sneaky language in the contract we signed with the home builders. Thanks to a clause requiring "binding arbitration agreement," we are stuck with a poorly constructed house that we might not be able to get rid of.

John is an Apache helicopter pilot serving in Iraq and, between his year-long tours of duty, his unit transferred to Georgia. When we bought our new home in Savannah in 2006, we thought of it as a place representing security, stability and safety for our family – everything a home should be. The associate assured us the defects we noticed when touring the house were "normal" and would be repaired by the builder in a timely manner.

Among the blizzard of documents we had to sign during our closing was a warranty that contained the arbitration clause. We had no idea it meant we agreed to a contract that shielded the builders from legal action no matter how negligent or shoddy their workmanship was. And believe me, it was.

Apparently, all kinds of businesses routinely stick these arbitration clauses into contracts for credit cards, cell phones, nursing homes and employment, to name a few. Like millions of other Americans, we effectively waived our legal right to take the company to court. Instead, our arguments would be handled by an arbitrator – a private company hired by the home builder.

Of the 182 defects we found and reported to the arbitrator, only 39 were approved for repair. Contractor estimates said it will take about $20,000 just to repair those defects, not including the other defects and code violations, doors that don't fit their doorways and mold problems caused by improperly installed showers and doors. Instead of fixing the defects, the home builder has offered us a measly $2,600.

Given the huge difference between the estimated repair cost and the home builder's offer, we appealed the arbitrator's decision. Just submitting the appeal set us back another $1,000.

If we disagree with the arbitrator's final decision, we won't be able to appeal or take the builder or the arbitrator to court – even if the decision seems illegal. Once you've agreed to binding arbitration, the only way to address problems is through that process regardless of facts and evidence. And since arbitrators are hired by the company responsible for the circumstances in dispute, they have a financial incentive to make rulings that satisfy the company that retains them.

Meanwhile, the paperwork and fees keep adding up. Instead of taking care of our home repairs, we have to keep feeding the arbitration beast while we hope and pray that the next decision will be a fair one. We doubt it will. And as the clock ticks, defects like the faulty installed showers and back door are causing more and more damage from water and mold.

John comes home from Iraq in October, and his unit will transfer to Fort Drum, New York, in January 2010. We will have to sell the house, defects and all. We would need to disclose the lingering $20,000 repair estimates, code violations and mold issues. With a mess like this, who in their right mind would knowingly buy this house?

Like so many of our country's economic problems, ours shows the amazing gap between what is legal and what is right. It's just not right for us to be saddled with the expense of fixing this defective home. Nor is it right that we had to sign away our right to sue and become trapped in this frustrating process of binding arbitration.

Unfortunately, the only way out of binding arbitration now is for Congress to change the law to let buyers choose whether they want to settle disputes with an arbitrator or in a court of law.

Michelle also told us that while she was complaining to the construction company, one of their employees told her, "We build in middle class neighborhoods because middle class people can't afford to fight us." People are fighting, though: victims of mandatory binding arbitration and consumer advocates are hitting the Hill today to tell Congress to support the Arbitration Fairness Act. You can ask your members of Congress to support the Arbitration Fairness Act here, you can also check out the Fair Arbitration Now website and sign a petition to ban forced arbitration.

On Wednesday, consumer groups and arbitration victims will head to Congress to demand passage of the Arbitration Fairness Act, which would ban mandatory binding arbitration clauses in consumer, employment, and franchise contracts. We'll be sharing the stories of some arbitration victims here throughout the week. Today's story is by Deborah Williams, a small business owner who was forced into arbitration and ended up paying over $4,000 just to feed, house, and transport the other side's witnesses and lawyers.

Being trapped by the fine print of a contract transformed my dream of opening a coffee bar with my husband into a nightmare.

We had wanted to open a small neighborhood coffee shop, where everyone recognized each other and we would get to know the people and spirit of our community. We wanted a "Cheers" on caffeine.

In 2004, the vice president of Michigan-based Coffee Beanery told us that, in the right location, our café with their franchise could yield $125,000 a year, so we talked it over and decided to sign a 15-year agreement. What the vice president conveniently neglected to tell us, however, is that nearly 40 shops in the Coffee Beanery franchise had failed within three years of opening, leaving their owners bankrupt.

My husband and I soon found ourselves following a similar path. We were receiving bills amounting to far more than we signed up for – and the quality of some of the franchise products we had to use was abysmal. The real costs were so much greater than expected that we had to take out an additional $50,000 loan just to open the store. It didn't take long to realize we were in deep trouble. We struggled to keep up with our expenses but quickly began to fall short.

Then we heard from two other Coffee Beanery franchise owners whose shops were not just failing to thrive, but losing money fast. We had to face the fact that we'd been duped. We tried to get out of our contract but were dragged through the company's mandatory arbitration process. When signing the contract to open our store, we also had to sign away our right to take the franchise to court. You might think arbitration resembles mediation, but you would be wrong. It is biased from the start because the company typically selects the arbitrator it wants.

In our case, the company's lawyer had already worked with this arbitrator and won, making it extremely unlikely that we would do any better than the previous franchise owners. The arbitrator also used the same accounting firm as Coffee Beanery, a conflict of interest that further reduced our chances of having an impartial hearing. As if that wasn't bad enough, an investigation conducted by Maryland's State Attorney General's Office concluded that Coffee Beanery committed fraud in selling us our franchise, a key finding the arbitrator elected to ignore. We should have known that justice would never be served.

Coffee Beanery made us travel from our Maryland home to Michigan for the arbitration. We were forced to fly there four times in the 11 days of hearings, driving up our already hefty arbitration costs. In the proceedings, the company attributed our store's downfall to our own mismanagement, not its faulty sales concept.

The arbitrator unsurprisingly sided with Coffee Beanery, ordering us to pay $187,452 in legal fees and arbitration costs – including almost $17,000 for the arbitrator's services and $500 to cover the cost of Coffee Beanery lawyers' lunches.

We lost everything; we have nothing left. Our home is being foreclosed. We are living out of boxes until the bank sells our house. This past winter, our pipes froze because we could not afford to pay for heat, leaving us without water for three days. Our simple coffee shop dream wrecked our whole life

What's worse, though, is that ours is not an isolated case. Many others have been subjected to the unfairness of binding mandatory arbitration.

Had we been allowed to go to civil court, we would have had a fighting chance for justice. Mandatory arbitration is deceitful and skewed to favor the big companies, not the small entrepreneurs trying to make a living. This isn't just a problem for business owners like us; people unknowingly sign binding arbitration contracts all the time – when they buy a cell phone or house, apply for a credit card, go into a nursing home or take a job.

Besides writing your members of Congress, you can also check out the Fair Arbitration Now website and sign a petition to ban forced arbitration.

(Photo: freaksanon)

Rep. Hank Johnson, the original sponsor of the bill, was joined by 36 other House members and will likely get more support in the coming months.

Arbitration is a form of alternative dispute resolution where, instead of going to court, parties agree to make their case to an arbitrator, using fewer rules and a simpler procedure than typically found in litigation. The arbitrator's decision is usually binding on the parties.

Binding mandatory arbitration is the same as the above, except consumers are required to use arbitration (and forbidden from going to court) as part of doing business with the company. Most consumer contracts for credit cards, cars, homes, utilities, insurance, and even employment have clauses requiring binding arbitration, and preventing a consumer from suing if the company hurts him or her. The arbitrators are usually biased towards the company, which picks which arbitrator to use-and often pays the arbitrator's fees (unlike courts, which are funded by taxpayers).

Why do we support the Arbitration Fairness Act? In short, because mandatory binding arbitration is patently unfair to consumers. It is a joke of justice; a fake tribunal where injured consumers will almost always lose to corporations at the hands of a biased arbitrator.

For more information, check out our posts on arbitration, or our recent choose your own adventure through the arbitration process.

(Photos: spi516, navets, and superbomba)

Although there aren't any revelations in the article, it's still nice to see a story critical of arbitration run in a business publication. The volume of the article—BusinessWeek interviews numerous former arbitrators who became disillusioned with the process—makes a pretty compelling case that arbitration is broken, although it doesn't mention any solutions, like passing the Arbitration Fairness Act.

Banks Vs. Consumers (Guess Who Wins) [BusinessWeek]
(Photo: Getty)

Our favorite polling question takes aim at people who support mandatory binding arbitration, but don't quite know what they're supporting:

A majority of those who were initially supportive or unsure of binding arbitration disapprove of arbitration when important information is given about common provisions in consumer contracts. With added information, Americans overwhelmingly disapprove of binding arbitration.

Big shift among binding arbitration supporters. Those who said they approve of, or were not sure about binding arbitration were presented the three following facts:

1. The arbitrator who decides the outcome of the dispute will be selected by the company
2. The consumer may never take legal action against the company over the dispute
3. Binding arbitration applies even in cases where the consumer has been seriously injured by the product or service

When presented with this information, two in three (66%) disapprove of binding arbitration and only one in five (21%) approve. Among those who initially said they were unsure, disapproval is very high (64% disapprove, 6% approve). Disapproval is high even among those who initially approved of arbitration (67% disapprove, 28% approve).

After learning the specifics of contract provisions, Americans overwhelmingly are against binding arbitration. When initial and final disapproval ratings are combined, binding arbitration loses by more than eight to one (81% initial/final disapproval, 10% final approval).

Congress may be unable to do anything about our unpopular President, but 64% of us want them to get off their asses and pass the Arbitration Fairness Act. When they return tomorrow, rested from their holiday break, give 'em a call and tell them to channel our collective hatred of mandatory binding arbitration into action.

New Poll: Americans Say "No Thanks" To Binding Arbitration [Consumer Law & Policy Blog]
Write Your Senator
Write Your Representative
PREVIOUSLY: How To Write To Congress

(Photo: Getty)

The new data applies to workplace arbitration, which is generally the same bucket of fail as consumer arbitration.

LeRoy examines a "snowballing futility for employees" who are forced into arbitration. If they manage to win, despite the built-in institutional bias, the employer can take it to state court and get the award overturned, forcing the employee to start over from scratch. On the other hand, if they lose, the courts are highly unlikely to disturb the decision.

From the study:

Remarkably, state appellate courts confirmed only 56.4 percent of employee wins in arbitration. But when the same courts ruled on employer victories, they confirmed 86.7 percent of awards.

The "Snowballing Futility" of Arbitration for Employees [Consumer Law & Policy Blog]
Write Your Senator Write Your Representative PREVIOUSLY: How To Write To Congress (Photo: Getty)

The 8-1 decision came in a lawsuit by Alex E. Ferrer, a former Florida Circuit Court judge who decides minor civil disputes as a form of TV entertainment.

Ferrer refused to pay a management fee to Arnold Preston after the two men had signed a contract that called for arbitration of any disputes.

Ferrer says Preston is not a licensed talent agent as California law requires.

Preston sought the money by starting a proceeding with the American Arbitration Association in Los Angeles. Ferrer filed a complaint with the California Labor Commissioner, seeking to invalidate the contract for the fees. Ferrer went to court when the labor commissioner said she lacked the power to block the arbitration.

At issue was the reach of the Federal Arbitration Act.

"When parties agree to arbitrate all questions arising under a contract, the FAA supersedes state laws," wrote Justice Ruth Bader Ginsburg.

An October hearing on companion legislation in the House Judiciary Committee quickly devolved into a sob story, with three consumers sharing in horrifying detail how arbitration left them financially ruined. Today's hearing will be comparatively sedate, featuring one panel of academics and lawyers.

Join us at 9:30 as the professionals slice and dice the wonderful and evil qualities of the most anti-consumer practice allowed by law—for now.
(Photo: xsparrowx)
9:32: Video Link - Constitution Subcommittee hearing to examine S. 1782, to amend Chapter 1 of Title 9 of the United States Code with respect to arbitration. Coverage begins momentarily. Oh Congress, you could de-sass anything.
9:34: Here we go. Senator Feingold (D-WI) is chairing the hearing, already decrying our lost right to jury trials.

9:35: Arbitration is especially evil because contracts are often non-negotiable.

9:36: Arbitration's extra-judicial nature precludes discovery and restricts judicial review. It's the 'gitmo of contracts.

9:37: Voluntary alternate dispute resolution is great, but consumers must be given the right to choose arbitration or a jury trial.

9:37: The bill is meant to apply to disputes between investors and securities brokers, which is important to some people.

9:38: And now to Senator Brownback (R-KS).

9:40: Brownback thinks the proposed law is "over-broad" because it applies to any dispute where the two parties have unequal power.

9:40: He is worried that removing arbitration would lead to a flood of lawsuits that would clog the judiciary. Then us poor consumers would have no meaningful chance of recovering anything.

9:41: More reasonable, he wants a distinction between fine print arbitration, where arbitration is snuck into an agreement, and agreed arbitration, where two equal parties agree to send disputes to an arbitrator.

9:42: Employees are 20% more likely to recover from arbitration than litigation.

9:42: California studies show that consumers won 65% of cases against businesses.

9:43: These statistics conflict directly with what we heard during the last hearing. Consumers have a 1.6% chance of winning most arbitrated cases.

9:44: Eh, weak point. The trial bar suggests that a series of small cases should be bundled together into a class action. Brownback offers "My toaster doesn't work" as an example. If most toasters of a certain brand don't work, a class action would be justified. The problem is that class actions also fail most consumers. Who wants a $5 coupon towards a new toaster when the lawyers handling the case get $5 million for their work? But that is a whole separate bill. We do not want to drag our broken toaster into arbitration.

9:46: Feingold is clarifying that the bill applies only, exclusively to mandatory arbitration. Other arbitration is more palatable.

9:47: The witnesses have been sworn in.

9:47: Oh good, we do have an aggrieved consumer: Fonza Luke of Birmingham, Alabama. She works two jobs in health care, and serves on the board of her church. She has four children and six grandkids.

9:48: She is going to talk about how mandatory binding arbitration applies to employees.

9:49: She spent 30 years as a licensed nurse and always earned the highest honors and accolades. Always took the hospital up on new training opportunities.

9:49: In November 1996, she was told she would lose her job if she didn't sign a mandatory binding arbitration agreement.

9:50: She didn't think it was right, and after speaking to her husband and pastor, she refused to sign.

9:50: The hospital tried twice more to get Fonza to sign, and when she still refused, she was fired for insubordination.

9:51: "The only things I did that were insubordinate were things that younger, white employees did all the time." "I believe [the hospital] fired me because of my race and my age."

9:52: The EEOC (Equal Employment Opportunity Commission) agreed and fined the hospital.

9:52: She sued in federal court, but was told that she had to go to arbitration, even though she had refused to sign the agreement.

9:52: She was told that she implicitly agreed to the proposed agreement because she continued to work for the hospital.

9:53: Her appeal was rejected, and she was sent to arbitration.

9:53: The arbitrator was paid by the hospital and rejected Fonza's claims of discrimination. "I don't even think he looked at my claims."

9:54: Now Peter B. Rutledge of the Catholic School of Law.

9:55: He's talking about "the data."

9:55: "'The data' are conflicting with calls to abolish arbitration." Dude, just say that the numbers tell us to shut up.

9:56: Costs would rise, consumers would lose access to justice. Irony would run through the streets without abandon.

9:56: "Eliminating arbitration would not make individuals as a whole better off." We are bothered by the phrase 'individuals as a whole.'

9:57: Most arbitration studies refer to employment arbitration, not the standard consumer arbitration that we hate.

9:58: His argument boils down to this: litigation is expensive and time consuming, so why not arbitrate?

9:58: Litigation is expensive, but that is a factor that each consumer must weigh. Sure, arbitration could work in certain circumstances, but arbitration can only be fair when consumers choose it over litigation. That choice is what this bill seeks to restore.

10:00: Onto Richard M. Alderman of the University of Houston Law Center.

10:01: Yuck! Congress eliminated mandatory arbitration for used car dealers, but hasn't given us the same freedom.

10:01: The car dealers complained that stronger dealers would impose arbitration on weaker franchises, so Congress stepped in and provided relief. Thanks for forgetting the rest of us, Congress.

10:02: Bingo: Business has opted out of the civil justice system in favor an alternate form of justice that they control.

10:03: Our courts do more than hand down decisions. They interpret statutes and form common law. By escaping the courts, we kill democracy. Do you want to kill democracy? Didn't think so.

10:04: Arbitrators are not bound by precedent. No common law, no uniformity. Different consumers in identical situations can receive different outcomes.

10:05: Arbitrators can not contribute to, or modify, common law. We have frozen the law and prevented any adaptation to new or novel situations.

10:05: Should a powerful party should deny weaker parties access to the courts and our common law?

10:06: Onto Richard Naimark of the American Arbitration Association. Wonder what he might possibly say.

10:07: "The AAA does not represent an industry." Arbitrators are independent lawyers, not employees of the AAA.

10:07: He agrees that the issue is access to justice.

10:08: Back to this old point: arbitration is cheaper than litigation.

10:08: Arbitration is cheaper "IF due process protections are built into the process."

10:09: 'Due process protections' and access to courts and consumer choice are not the same thing.

10:10: Due process means that costs must be reasonable, everybody should have access to legal counsel, the arbitration must be in a mutually agreeable location (we heard at the last hearing that this is not followed.)

10:10: Those provisions are necessary for people to take arbitration seriously, but they do not justify denying consumers access to the court system. Nothing does.

10:11: Onto Tanya Solov, the Director of the Securities Department with the Illinois Secretary of State. We're going to hear about investors.

10:12: This is all the Supreme Court's fault. They're the ones who ruled that investors could be roped into mandatory binding arbitration.

10:13: Don't think investment disputes affect you? Half of all Americans invest, and most investment agreements include clauses requiring mandatory binding arbitration.

10:13: A win in arbitration results in meager recovery, sometimes less than the cost of arbitration.

10:14: "Arbitration may be desirable if both parties knowingly and willing agree to arbitrate at the time of the dispute." 'However, even if arbitration is cheaper and faster, especially when investors lose their life savings, a fair hearing with a public review is more important than a cost-effective solution.'

10:15: She supports the act.

10:17: Onto Mark A. de Bernardo or Public Justice. He has testified more than 40 times before Congress. Impressive.

10:18: He supports arbitration over litigation. Again, litigation is not always the solution, but consumers must be given the choice.

10:20: He is rattling off statistics that prove how arbitration is better than sliced bread, all without addressing the issue of consumer choice.

10:22: "I do believe this bill would be a death blow to arbitration in America." We agree.

10:23: "Arbitration is a job saver, litigation is a job destroyer."

10:24: Onto F. Paul Bland, Jr. We will make no joke about his last name. None.

10:25: He wants to respond to some of the comments thrown around today. "Outlandish comments" have been made.

10:25: He's pissed and wants people to look at the big picture, not little studies and "the data."

10:26: The studies are rigged. One study selected one case out of every one thousand to show that consumers won.

10:27: Here is how the studies define a consumer win: Consumer loses their house, goes into arbitration. If the consumer recovers $1, that's a win.

10:27: What is the one place in the country where the data isn't handpicked? California. All data must be posted.

10:28: Bland is so angry. He's practically yelling at the other witnesses.

10:28: Employee win rates and damage awards are much worse in California.

10:28: Blackballed: Every arbitrator that gave a large award to a consumer suing an HMO never heard another case involving HMOs again.

10:30: AAA talks about due process, but prior to 2001, they had never enforced due process claims. Only when they were sued in federal court did they begin to selectively enforce due process.

10:30: AAA doesn't provide neutral arbitrators. They hand over a list of seven arbitrators who all specialize in defending the industry.

10:31: That's what happened to Fonza.

10:33: Question time.

10:33: Feingold is praising Fonza for refusing to sign the arbitration agreement, but wants to know why she refused.

10:33: Fonza was told that she would be waiving her rights because she felt that she could be fired too easily as she was approaching retirement.

10:34: The hospital offered nothing in exchange for signing the agreement.

10:34: The arbitrator that heard her case refused to allow any evidence that the EEOC spent months collecting. Courts would have allowed Fonza to present her evidence.

10:35: Holy shit! The woman who was raped in Iraq and accused Halliburton of covering up her case is trying to sue the company in federal court. She is now being told that she must submit to mandatory binding arbitration.

10:36: Going back to the revolution, colonists complained that King George selected judges and who were dependent on him for their salary. Their decisions were decried as horrifically unfair. Sound familiar?

10:39: "To try to make arbitration more like a court won't work. The question is should consumers be forced into arbitration."

10:42: Brownback was the Kansas expert on "fence law." What is fence law, and why is Brownback talking about Kansas fence law?

10:42: Oh, this is when a cow breaks through a fence and does unspeakable things to the neighbor's property.

10:43: He is still talking about fence law, the civil alternative to pulling guns.

10:45: He is asking the AAA how more due process could be added, possibly by legislation.

10:46: The AAA would require legislation to protect the little guy by enshrining their due process requirements into law. Still doesn't get us to consumer choice, though there might be new opportunities to sue for violations of those protections. If the AAA hands over a list of biased arbitrators, consumers could potentially sue for failing to follow the due process requirement of a neutral arbitrator.

10:47: Rutledge is concerned that all arbitration—consumer, employment, securities—is lumped together. "The data" don't support that. "The data" are angry.

10:48: Brownback also wants more data.

10:48: Rutledge is defending himself from Bland's claims of "outlandish comments." Don't mess with "the data."

10:49: He believes the best, most accurate data have been cited in his testimony. Powerful words. Maybe he wants "the data" to speak for themselves.

10:50: A batch of schoolchildren have walked into the hearing room.

10:50: They do not look amused. These kids today, with their rock music and sneakers... they have no respect for "the data."

10:52: The Illinois Secretary of State rep also wants to know how these studies classify a win.

10:53: Even without that data, she thinks there is more than enough support to pass the bill.

10:53: Feingold wants to hear more about how we lose something as a nation when we chose arbitration over common law.

10:54: Our system depends on private parties litigating in public to keep market players in check. When you make proceedings secret, the marketplace loses vital information.

10:55: We have a right to know if someone is suing Mattel for making deadly toys. "This is your life. This is your house, this is your health, this is your automobile. If this is secret, you do not have a way to protect yourself."

10:56: Feingold is picking up on our choice argument: Do you think that it means that no reasonable person would choose arbitration?

10:56: Right, if nobody chooses arbitration, that strongly damns the institution.

10:57: Consumers rarely choose arbitration. Of 20,000 cases, 4 were brought by consumers. This is not a valuable alternative that helps consumers. "There are not consumers out there crying because they might lose the chance to arbitrate."

10:58: Brownback wielding self-deprecation: "The fence law expert is back."

11:01: He wants to know if there's a way to bring arbitration into the tradition of common law.

11:02: No.

11:02: Alderman does not believe there is any way to create public law outside of the courts.

11:03: We don't want arbitrators interpreting statutes. Federal judges are nominated by the President and confirmed by the Senate. Businesses pick arbitrators who save them money. They should not be allowed to interpret Congress' work.

11:04: The Texas Better Business Bureau required its members to use BBB arbitrators regardless of what their contracts stated. BBB arbitration was considered fair, but when one of the arbitrators ruled against the biggest homebuilders in the state, the businesses chose to withdraw from the BBB rather than face another unsuccessful arbitration. It is a money-saving business decision, not an open and fair system of justice.

11:08: Feingold contrasting mandatory binding arbitration and a Congressional hearing: "This is exactly what a hearing should be, a fair hearing of the issue."

11:10: The hearing is adjourned.

No predispute arbitration agreement shall be valid or enforceable if it requires arbitration of...a consumer dispute.

(Photo: Bombardier)

American arbitration came into being in the Federal Arbitration Act of 1925. It was created to provide a speedy alternative to courts for for businesses "of generally similar sophistication and bargaining power" to resolve their disputes. A series of supreme court decision s extended the meaning to parties lacking lots of money and lawyers, like consumers and employees, in what is termed mandatory binding arbitration. Getting a credit card, bank account, car, medical care, or in some cases, a job, is conditional upon your agreement to forgo your constitutional right to take disputes to court.

What started as a way for peers to come to a sort of expedited gentleman's agreement has evolved into a extra-judicial system for corporations to enforce their will and protect themselves from censor. The Christian Science Monitor found that the top 10 arbitration firms decide in favor of companies 98.4% of the time. This seems hardly representative of a system between parties "of generally similar sophistication and bargaining power."

In a previous post, we urged you to email your elected representatives. But in talking with a former congressional aide, we learned that at the end of the week, the total number of form letters is tallied and the number given to the chief of staff. Definitely do one or the other, but if you want to have more impact, and have it read by the staffer covering the issue, mail in a personal letter.

Lookup the mailing address for your
Senator
Representative

$200 termination fees are just the beginning. Protected from the reach of law, of public review, of appeal, who knows what else these companies will get up to?