How Forced Arbitration Can Ruin your PI Claim
Posted on behalf of Rizk Law on Apr 28, 2017 in Personal Injury
It wasn’t very long ago that General Mills — manufacturer of dozens of familiar food brands such as Cheerios, Betty Crocker and Pillsbury — raised hell when it changed the legal terms on its website requiring all disputes related to the purchase or use of any of its products to go through mandatory arbitration for resolutions. Consumers were outraged that engaging with the company online– whether by using their website, joining their online community, subscribing to email newsletters, or even downloading a coupon– could make them lose their right to sue General Mills for any future wrongdoing.
After copious pressure, General Mills caved. They reversed their position, but still hundreds of large corporations are subjecting consumers to forced arbitration in their terms and conditions. Clauses are even present in employment contracts.
What is Forced Arbitration?
Arbitration is an alternative method of resolving legal disputes in which two or more parties present their sides of a complaint to a “neutral third party” or “neutral panel” outside of a courtroom. There is no judge or jury; it is this “neutral” party who then decides, after hearing both sides, what the proper course of action should be. There is also no way to appeal the decision reached.
Many cases of arbitration involve parties that all mutually agreed to the arbitration. It is increasingly common for personal injury complaints to be resolved this way; it is just one of several avenues you can take to resolve your case, provided you are given the option.
Forced arbitration clauses are present in the fine print of contracts for everything from car loans and student loans to leases, credit cards, checking accounts, insurance contracts, and even nursing home agreements. If you have ever purchased on Amazon, Groupon, paid a Netflix subscription or obtained cell phone service through any of the big providers, you have signed an arbitration clause and may not even know it.
Effects on Consumers
Proponents of arbitration always try to spin it as a low-cost, informal alternative to lawsuits. They purposely mislead consumers by emphasizing there is no requirement for their representation by an attorney. Surely, a company like General Mills could afford to and would bring their own attorneys to arbitration had they kept that policy.
What are you to do if your child gets sick from eating tainted cereal from a company that does require consumers to agree to forced arbitration? Or a loved one has suffered a wrongful death from nursing home neglect or abuse? The vast majority of consumers do not understand what forced arbitration is and do not realize they are signing away constitutional rights when they agree to terms.
What Happens at Arbitration?
If you ever have a dispute with a company that forced you into arbitration, you are at an immediate disadvantage. The business against which you have a complaint gets to choose the arbitrator, and often pays him handsomely. In many cases, the arbitrator represents the same company over and over again, which automatically unravels the concept of “neutral third party.” Some arbitrators can make $10,000 in just one day. These arbitrators are not required to have a legal background, although many are attorneys and even sitting judges.
During arbitration, arbitrators are not required to consider the law or established precedent when making their final decisions. The final decision is private so that other consumers who choose to move forward with arbitration won’t know what the outcome was for a similar case. These decisions cannot be appealed, no matter how unfair they are or how much harm they may cause.
In addition to banning you from seeing the inside of a courtroom, arbitration clauses often prevent people from pursuing class-action lawsuits to address similar disputes by a group of harmed individuals.
Many Supreme Court decisions have supported mandatory arbitration over the years. It is a rigged system against the consumer that the New York Times refers to as a “Privatization of The Justice System” in this in-depth piece.
A “Low Cost” Alternative
Arbitration is only a low-cost alternative to resolving disputes for the corporations. A consumer may be expected to pay some of the arbitrator’s charges — in the range of $200 to $300 per hour — in addition to their own attorney’s expenses and any travel costs they may have (the company and arbitrator also decide on the location of the hearing). In some more extreme cases, these hearings have cost defeated plaintiffs six figures.
If you are lucky enough, you may be able to resolve the claim in small claims court, where anything you can win is capped at $25,000 depending on the state you are in.
For a thorough review of your personal injury case, talk with attorney Richard Rizk of RizkLaw. If you believe you may be subject to forced arbitration, you need an attorney to protect your interests. Call (503) 245-5677 or contact us for a free consultation.