User:GregG/Attacks on arbitration

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Work in progress. Collecting links and quotes for future article on this subject.

  • [1]: "If you don't want to give up your right to personally sue them in a court of law and be forced into a kangaroo court overseen by a judge whose fees are paid for by the company you're suing, Cablevision will let you."
  • [2]
  • [3]
  • [4] -- misleading statement that "Arbiters are typically retired judges who fetch an hourly rate of $300 or more, a fee that's generally split between the two parties"
  • [5] -- "[Suing in small claims court] also doesn't require parties in the proceeding to keep their mouths shut after a decision is rendered, as arbitration does." -- which is false with respect to the AT&T Mobility agreement
  • [6] -- Consumerist again, citing the trial lawyer advocacy group Public Citizen and their report on post-Concepcion arbitration law
  • [7]
  • [8] -- "Arbitration, however, requires consumers to surrender their right to sue, and many consumer advocates say the process as used in financial products is biased toward banks." without further comment or elaboration.
  • [9] -- "an arbitration procedure in which there is not a judge or jury—but rather, a private arbitrator often chosen by the corporation being sued."
  • [10] -- another article which intones that the company chooses the arbitrator, also misstates that parties are generally required to keep results confidential
  • [11] -- "Generally speaking, businesses prefer arbitration because settlements are limited and because professional arbitrators, whose fees are typically paid by the company in a dispute, tend to favor businesses. It's a classic example of not biting the hand that feeds", also quotes without comment Public Citizen's dubious 94% figure
  • [12] -- "Of course, because Valve will be hiring the arbitrator in question, one can expect that the person dealing with disputes will not be completely impartial either"
  • [13]
  • [14] -- from Fox Business, which is flat out wrong about discovery in arbitration
  • [15] with respect to being able to recover from an AG action
  • [16] -- problems with arbitrator neutrality, ability to order injunctive relief, secrecy, etc. that are not reflected in the two agreements highlighted
  • [17] -- basically all the standard Public Citizen talking points, misconstrues Rent-a-Center West
  • [18] -- "Typically, the consumer has no say in who the provider or arbitrator is", also exaggerates the effect of loser-pays clauses in arbitration
  • [19]
  • [20]
  • [21]
  • [22]
  • [23] -- let us enumerate the blatant lies:
    • "Consumers are also forced to pay steep filing fees just to initiate a case—seldom less than $750 – and pay their share of the arbitrator’s hourly charges, which are routinely $400 or more per hour."
    • "arbitration clauses often allow the corporation to choose the location, regardless of how inconvenient or costly travel will be for the consumer"
    • " most arbitration clauses require that proceedings be kept confidential"
  • [24] -- a pretty egregious article
  • [25] -- blatant lies such as "The catch is that the bank gets to pick the arbitrator, and the arbitrators naturally know they’ll never work in this town again if they ever rule against the banks", also cites Public Citizen's dubious 94% figure and mentions the NAF without disclosing that it has ceased new consumer arbitrations
  • [26] -- blatant lies, such as "Arbitration panels are overwhelmingly funded by big business. Thus, to assure they keep getting the work, arbitrators almost always rule in favor of the business. They understand that decisions against the business will result in their firms not being used again."
  • [27]
  • [28] -- a very uninformed letter to the editor
  • [29] -- falsely claims that filing and copying fees in arbitration for a $1,000 claim would be prohibitive
  • [30] -- falsely reports as fact that Sprint's July 2013 terms forbid representation by an attorney in arbitration, in contradiction to what Sprint says the actual effect of the provision is.
  • [31] -- derogatory statement: "Both [suing in small claims court and proceeding with arbitration] can be long, stressful and potentially expensive processes."
  • [32]
  • [33]
  • [34] -- "And the arbitrations that consumers must resort to if they have complaints? The corporations often select the arbitrators, limit investigation of the facts, and keep the whole process secret. Worse still, the average consumer or small merchant who dares to challenge Big Business is almost certain to give up if the cost of arbitration exceeds any possible recovery -- which is another way of saying that our laws against corporate abuse, such as the antitrust statutes, will simply go unenforced."
  • [35]
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  • [37]
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  • [39]
  • [40]
  • [41] -- "Corporations pick and pay for arbitrators, which lets them stack the deck by selecting those who are friendly to their interests, [consumer advocates] charge."
  • [42] -- "you'll be limited to arbitration, handled often by a one-person judge and jury who is often selected by the business with whom you have a dispute. And you might have no choice", also cites a Public Citizen lawyer who said that arbitration suppresses small claims when in fact most arbitration clauses allow parties to proceed in small claims court instead
  • [43]
  • [44]
  • [45]
  • [46] -- false statement reported as fact: "Many of those mandatory-arbitration clauses actually stipulate that the business gets to choose the arbitrator."
  • [47] -- "Suing a business in small-claims court is usually a last resort. Increasingly, companies are including arbitration clauses in their contracts, which may require that a dispute be taken to a third party for private review rather than to court—including small-claims court."--mostly false
  • [48] -- see #1, makes the unsubstantiated (and probably false) assertion that in arbitration, the "'resolution' is often a pittance compared to what a plaintiff would get in a lawsuit" (scare quotes in original), also falsely asserts bias in arbitration, as well as that consumers cannot pursue a case in arbitration pro se.
  • [49] -- multiple falsehoods and misrepresentations of arbitration:
    • "If you live in Florida and have a dispute with Paypal, you will have to travel to California – at your own expense – to have your dispute heard." This has not been the case with respect to Paypal since 2003.
    • "The corporation also gets to choose the arbitrator. The consumer rarely has any choice of who will hear the dispute, but even when a choice is offered, it is from a list chosen by the corporation."
    • "corporations often reserve the right to cancel an arbitration hearing and take the matter to court"
    • more throwing around a long-debunked NAF statistic
    • quotes Steven Law out of context to suggest hypocrisy with respect to enforcement of arbitration contracts, when Law was referring to proposed government-mandated arbitration between employers and unions
  • [50]
  • [51]
    • describes organizations like the AAA as "[p]roponents of forced arbitration"
    • suggests that consumers would not be able to pursue a claim pro se since the business would likely be represented by a lawyer
    • falsely claims (with respect to AAA arbitrations) that arbitrators do not have to follow the law and do not have to have legal training
  • [52], with our favorite mastermind behind the mainstream media attacks on arbitration, F. Paul Bland!
    • falsely suggests that arbitration agreements deprive consumers of rights under FDCPA and FCRA
    • Bland: "The arbitration system is essentially a corporate tribunal set up by companies"
    • Bland: "Arbitrators don't have to give any reasons (for their decisions)". This misrepresents the rules of AAA (explained decision available on request at no charge) and JAMS (explained decision required).
    • Perry is quoted as suggesting that businesses would retaliate if adverse decisions were issued "once or twice". A look through AAA and JAMS consumer disclosures indicate this is certainly not the case. Logically, such a threat doesn't make sense either, as the consumer caseload of AAA and JAMS arbitrators is a very small portion of the whole (which includes employment disputes, commercial disputes, and labor disputes).
    • Trots out win rate statistics; suggests that 99.9% win rate for debt collection claims in arbitration was too high, when, in fact, studies show that debt collection claims in court were won at about the same rate.
  • [53]
  • [54] -- "Arbitration favors repeat players. The repeat players are the businesses that put arbitration clauses in their contracts. An arbitrator who finds in favor of employees or consumers risks being black-balled."
  • [55] -- "Consumer advocacy groups such as the National Association of Consumer Advocates and Public Citizen say the forced arbitration clauses give companies immunity if they sell or provide substandard products or services, commit fraud, violate consumer protection laws or fail to do what they promised." -- although the article attributes the viewpoint to NACA and Public Citizen, it's clear that the author also subscribes to that viewpoint, especially since no contrary perspective is provided.
  • [56]
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  • [69]
  • [70] -- Consumerist, again, states that an arbitration clause is "a clause in many consumer contracts that forces you to give up your right to sue in small claims court and have all disputes resolved by a professional arbitration firm that gets paid directly by the companies," when, in fact, the clause discussed preserves the right to proceed in small claims court.
  • [71] -- poll featuring a loaded question: "Those who said they approve of, or were not sure about binding arbitration were presented the three following facts: [] The arbitrator who decides the outcome of the dispute will be selected by the company[;] The consumer may never take legal action against the company over the dispute[;] Binding arbitration applies even in cases where the consumer has been seriously injured by the product or service"
  • [72]
  • [73]
  • [74]
  • [75]
    • "When we buy a phone or download a song, we have probably unwittingly waived our right to use the civil justice system to hold the seller accountable." The author provides no empirical support for this proposition or the usage of the word "probably".
    • a boilerplate contract is "composed of eight pages of impenetrable language in a font measured in micrometers" -- making a false insinuation
    • "As a result, the courts have enforced arbitration agreement after arbitration agreement, no matter how drastic or unfair and corporations have become increasingly emboldened." False, see Chavarria v. Ralphs Grocery Co., 733 F.3d 916 (9th Cir. 2013)
    • "The New York Times reported recently that General Mills had added language to its website to alert customers that by using its website to request a coupon or even by 'liking' something on its Facebook page, they are agreeing to resolve any disputes using 'informal negotiation via e-mail' or arbitration. After being contacted by a reporter, the Times reported, the company added language that suggested that simply buying a General Mills product would bind a consumer to those terms." The paragraph fails to mention that General Mills never considered purchasing a General Mills product or liking its Facebook page to constitute assent.
    • "Many pre-dispute arbitration agreements replace a jury of one’s peers with a single arbitrator that works for a company chosen by the defendant corporation and is arguably beholden to that corporation for future business." Arbitrators serve as independent contractors for neutral arbitration administrators. Further, in AAA and JAMS, consumer cases are a small fraction of the caseload (the big cases are business-to-business disputes and employment disputes), so it is highly improbable that an arbitrator would deliberately bias himself or herself in favor of a business in a consumer arbitration in the hope of further cases.
    • "Non-party discovery is non-existent, and the injured party has to share the fees of the arbitrator" 9 USC 7 provides for third party testimony at a hearing, and the Second Circuit has upheld preliminary "hearings" for the purpose of receiving testimony from third parties prior to the main hearing on the merits. See Stolt-Nielsen SA v. Celanese AG, 430 F.3d 567 (2nd Cir. 2005). Also, under AAA and JAMS rules, the arbitrator's fees are paid entirely by the business unless the consumer volunteers to pay a portion of the fees.
  • [76]
  • [77]
    • asserted that General Mills's short-lived arbitration policy would have been assented to by liking a Facebook page, which has been repeatedly debunked
    • "punitive damages are not allowed in arbitration — although they are allowed as monetary penalties in state and federal consumer protection laws meant to deter companies from violating them." -- this is blatantly false
  • [78]
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  • [86]
    • "Earlier this year, General Mills added in their fine print that even liking their Facebook page or purchasing a box of Cheerios could remove you of your rights." General Mills specifically said that those actions would not be construed as assent to the terms.
    • "The arbitrators are hired by the corporation" -- no, they are not
    • "often specifically chosen because they rule in favor of the company" -- no, they are not
    • "Consumers and employees have to waive their right to go to court, but the corporation can still sue." -- this usually is not the case
    • "The consumers and employees also have to pay for the arbitrator, filing fees, and more – which can sometimes include airfare and hotels to visit the arbitrator." -- this is mostly false
    • "Corporations in forced arbitration can choose whatever location they want" -- not if they want to keep AAA or JAMS as an administrator
    • "Forced arbitration curtails the ability of the individual to present certain evidence in their case and often to even obtain it in the first place. The records and proceedings are confidential and sealed, which means that public safety or employment concerns that would affect many others don’t have the ability to be aired. Instead, the corporation has the ability to quiet the individual without addressing the issue at hand." -- while it is true that the public cannot generally demand a copy of an arbitration award, most agreements do not prohibit consumers from disclosing the arbitration proceedings or award
  • [87]
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  • [89]
  • [90]
    • "forced arbitration agreements often require consumers and non-union employees to pay arbitration fees that are much higher than the filing fees they would have to pay to file a claim in court."--This is blatantly false.
    • "We know that arbitrators who handle claims under these forced arbitration clauses, who are paid hundreds of dollars by the hour, have a financial incentive to rule in favor of corporations to keep getting work from the companies whose arbitration clauses designate them to decide claims."--also false
  • [91]
  • [92]
  • [93]
  • [94]
    • In the article, F. Paul Bland lambasts a Missouri appeals court's decision to have the arbitrability of a tort dispute in which the plaintiff alleges Rent-A-Center is liable be determined by an arbitrator in accordance with an arbitration clause the plaintiff agreed to with Rent-A-Center.
    • "Now, not to be overly cynical, but the arbitrators get paid in these cases by the hour. So if the arbitrator finds that the case can’t be arbitrated after thinking it over for an hour, the arbitrator only gets paid for an hour. (The typical arbitrator charges several hundred dollars an hour, in many big cities it’s more than $500 an hour.) If the arbitrator finds that the case CAN be arbitrated, though, they can bill LOTS of hours. So the arbitrator has a certain financial incentive to go with Rent-A-Center here." This quotation has many misconceptions (get it, mis-Concepcions? Never mind):
      • Bland's reference to arbitrators' fees is inaccurate. Under the 2014 AAA Consumer Arbitration Rules, the arbitrator is paid $750 for a case decided on the basis of document submissions and $2000 per day (not the $500 per hour claimed by Bland) of telephonic or in-person hearings.
      • In spite of Bland's (unfounded) insinuation of unfairness of having an arbitrator decide arbitrability, the plaintiff never brought those arguments in the court below, even though Rent-A-Center raised the delegation clause as an argument for arbitration.
    • The reader ought to note that the overall enforceability of the arbitration agreement to the plaintiff's tort claims has yet to be decided, and an arbitrator may determine that the tort claims are not within the scope of the arbitration clause.
  • [95]
    • Arbitration "means that if the consumer cannot resolve any problem or dispute with the company, the consumer cannot bring a claim in court to be heard by a judge and jury and is instead required to have the case heard and decided by an arbitrator, which is a lawyer or retired judge who was picked by the company."
    • "The arbitrator does not have to explain his or her decision; it can simply be arbitrary." The AAA and JAMS consumer rules require a written explained decision at the request of the consumer.
  • [96]
    • The linked article follows the Lost in the Fine Print claptrap pretty closely, so many of the comments in that Conservapedia article are relevant to this article's attacks on arbitration.
    • The article states "Several major firms offer arbitration services from which business can choose. These firms have a financial incentive to rule for the company that selects them if they want to retain a long-term business relationship. These companies will remove an arbitrator who is not on board." The AAA and JAMS have no such procedure, and the article provides no evidence backing up the assertions therein.
    • The article states "'One NAF arbitrator, a Harvard law professor, was blackballed after she awarded $48,000 to a consumer in a case in which a credit card company filed a claim against the consumer,' states the 2007 Public Citizen report, 'The Arbitration Trap.' NAF didn’t want to use her anymore. Compelled to resign, she said that NAF had a bias in favor of the financial services industry." This description of Elizabeth Batholet's service with the NAF is incorrect; in fact, it was not the NAF that requested that Bartholet be removed, but rather a business using its one peremptory challenge per case. Also, Bartholet may have nevertheless heard other cases after the $48,000 case.
  • [97]
    • "95% of credit card agreements are subject to mandatory arbitration." This statistic was out of date at the time the post was written (September 21, 2014); the CFPB's arbitration study indicates that 17% of credit card issuers had arbitration provisions in 2012, accounting for 50.2% of total outstanding loans (p. 22).
    • "Do you put money in a bank, maybe? Basically every bank has one." According to the report "Banking on Arbitration: Big Banks, Consumer, and Checking Account Dispute Resolution" (November 2012), 56% of the "50 [l]argest [f]inancial [i]nstitutions" and 30% of the "[n]ext 50 [l]argest [f]inancial [i]nstitutions" had arbitration clauses: a far cry from "[b]asically every bank."
    • "Apple’s iTunes has [an arbitration clause]." It does not.
    • "Google any major business and 'arbitration' and you will see they have one, and you probably signed it without even knowing about it. (Google’s Terms of Service do not have an arbitration clause as of the date of this post. Hooray! But I only checked their all encompassing TOS, not any individual ones for Google Wallet, Play, and so on, which may be different.)" I love points that are self-refuting.
  • [98]
    • "Almost every online retailer, merchant and service provider requires that dissatisfied consumers submit to arbitration." In October 2014, the Upshot (published by The New York Times) found the proportion of online retailers with arbitration clauses to be about 1 in 3.
    • "The arbitration process Bland says is often secretive, run by corporate defense lawyers and heavily weighted against the consumer." Bland's statement lacks substantiation and contradicts the available evidence.
  • [99]: February 2015 article uncritically describing "findings" from "The Arbitration Trap" without mentioning that the article was from 2007 and concerned an arbitration administrator that no longer administers consumer arbitrations.
  • [100]
  • [101]
    • "According to the Consumer Financial Protection Bureau (CFPB), business wins 93% of that cases going to arbitration." I don't recall seeing such a statistic in the report, and it does not mention where it found the statistic.
    • "Depending upon the contract you’ve signed, you can still lose even if you win at arbitration because of processing fees and the fact the hearing could even be held in another state." The CFPB report found that most financial services arbitration clauses specified the federal judicial district of the consumer's residence as the location for the arbitration proceeding. Also, presumably, a successful consumer would be able to recover their portion of the arbitration costs if successful (I understand that the CFPB in its initial study in December 2013 interpreted the AAA Consumer Fee Schedule's bar on fee-shifting as also limiting the authority of the arbitrator to make the business reimburse the consumer's arbitration fees, but I think the CFPB is mistaken.)
    • "Worse yet, consumers with small claims – perhaps just a few hundred dollars or so – are frequently required as a condition of these arbitration agreements to pay more than the value of their claim to pursue justice. Think small claims court is an option? Wrong. You can’t go there either because you agreed to give up your rights to sue." Consumer arbitration agreements specifying AAA or JAMS (which is nearly all consumer arbitration agreements) must allow consumers to pursue claims in small claims court instead of arbitration.
  • [102] -- an uncritical summary of the previous article, so many of the same factual errors and omissions above apply to this one, too
  • [103] -- "Often, there are additional expenses like traveling out of state to have a complaint arbitrated" The CFPB report found that most financial services arbitration clauses specified the federal judicial district of the consumer's residence as the location for the arbitration proceeding.
  • [104] -- The article quotes a consumer law attorney, "Here you have one party — the stronger one — saying that any disputes are to be handled by a company that they choose. No need for courts and the messy democratic process, no public record, just let my brother-in-law decide." In fact, many consumer credit agreements allow for multiple arbitration administrators. Also, arbitration by an evidently partial arbitrator is pretty much certain to result in a vacated award for evident partiality, which is why it is unheard of in consumer arbitration.
  • [105] -- an interview with an "expert in the field" Larry Bodine (whose qualification appears to be editor-in-chief of personalinjury.com)
    • For Mr. Schlafly's amusement (1:20): "I think our Founding Fathers would be rolling in their graves if they knew how commonplace these arbitration clauses are in consumer contracts."
    • (1:38) Mr. Bodine says that corporations include arbitration clauses because they want "to basically suppress legitimate claims and to make sure that if there is a dispute, the consumer loses."
    • (1:52) Mr. Bodine says that the CFPB's arbitration report found that consumers won 7% of the time. In fact, the CFPB found that at least 25% of the arbitration cases studied ended in settlement, and 73 of the 341 cases decided by an arbitrator resulted in consumers receiving relief on an affirmative claim. Mr. Bodine (2:05) states that all of the other 93% of the cases were won by the corporation, which is false.
    • (2:18) In response to the question "Who picks the arbitration company" Mr. Bodine says "the arbitrator is typically chosen by the corporation so that the arbitrator, of course, has an incentive to rule in favor of the corporation so that they get more business." False, and false.
    • (4:44) Mr. Bodine says that arbitration clauses only became popular after Concepcion. In fact, they had been increasing in use since the 1990s. (I also enjoyed Mr. Bodine's inaccurate summary of what Concepcion actually held.)
  • [106] (TODO: fill in details later when I have more time)
  • [107]--"Often, there is a complicated process to opt-out but doing so means that the bank will likely close the consumer’s credit card account." [citation needed]
  • [108]
  • [109] a push poll
  • [110]
  • [111] [TODO: write-up the episode]
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