Tuesday, November 03, 2015

Attorney Says Judicial Arbitration Injures Victims and Consumers -- See New York Times Article

by Charlies Carreon

This article is in reference to the following New York Times article.

This front page New York Times article about how arbitration provisions in many non-negotiable contracts slam the courthouse doors against the claims of severely injured people. As a young, ambitious proto-trial attorney just out UCLA back in 1986, arbitration provisions were not too often a concern in most of the contracts I dealt with. Today, it is one of the first issues I address when I deal with a dispute that involves a written contract. When I am reviewing a case for an injured/damaged client, if find an arbitration clause, it usually means game-over, because there is not going to be much available for the attorney if the case has to go to arbitration. Definitely don't plan on getting it in the arbitrator's award if it is a case involving workplace discrimination, physician malpractice, securities fraud, or negligent physical injury.
Because arbitrators are often conservative retired judges whose judicial habits have disposed them kindly to corporate defendants, and ungenerously toward those injured by corporate misconduct. They are quick to forgive executives for "mistakes," and slow to see transparent fraud, blatant prejudice, and obvious negligence. The National Arbitration Forum was put out of the business of arbitrating credit card debt cases because it turned out the whole damn NAF was run by Mann Bracken, one of the three largest collection law firms in the nation!
Although knocked out of doing credit card arbitrations, the NAF still arbitrates domain name disputes, with a 92% win rate for the corporate trademark holders last year, up from 88%. See the NAF news page for that admission. The total kiss of death for most cases is the fact that it costs a butt-load to arbitrate. 

I have a wealthy client for whom I write contracts. We have worked together for about seven years, and I have written a couple of dozen contracts for his businesses. We used to put arbitration clauses in them, but after our last arbitration, we do not use them at all anymore. The cost to process the case was outrageous, even though our arbitrator charged the minimum $500/hour through a well-known LA arbitration company. And then, after I had passed the case on to local counsel to handle the arbitration in LA, due to a bizarre decision by the arbitrator, my client was found liable for attorney's fees. Although I did step back in and enviegle a way out of this debacle, avoiding the humiliation of having my client pay the attorney's fees for the fellow we had pursued at substantial expense under the authority of the arbitration clause in our own contract. Never again, said the client. So even for a millionaire, a judge for free down at the courthouse is a mighty desirable thing, once you've been through the arbitration nightmare. The New York Times is breaking this story to a public that desperately needs to hear it. Read and vote for candidates who support the elimination of arbitration clauses, because once it gets to court, judges are more than happy to send cases to arbitration, for two simple reasons: (a) it gets work off their docket, and (b) when they retire, they know they will get paid $600/hour doing arbitration's, and that's going to be sweet. My favorite sad story about arbitration clauses was one where a persistent debt collector was repeatedly calling this man to collect a credit card debt. The man had a heart attack, and his family was trying to call 911, but the debt collector kept calling, interfering with their efforts to get an ambulance. The arrival of the paramedics was in fact delayed so long, the man died. The family sued for wrongful death, and a federal judge ordered the family to arbitrate that claim, based on, yep, the arbitration clause in their credit card agreement.