Forced Arbitration: How Bad Business Avoids Accountability — And Makes Millions — at the Expense of the Public & Fair Business
By: Vess A. Miller, Attorney
The right of every person to an open and public jury trial of his or her civil case is so fundamental to the American system that the Founders made it the Seventh Amendment to the Bill of Rights of the United States Constitution. But, today, Bad Business is using forced arbitration to make it so that no case can be brought in open court—a practice even the most business-friendly organizations, like the Wall Street Journal, now have to admit is unfair.
The Seventh Amendment was passed to protect the “right of trial by jury” in civil cases (cases about money and injuries, not crimes). The original reason for the Seventh Amendment was to protect the People from judges deciding every court case, without letting a jury decide. The People at the time of the Revolution distrusted the judges because the judges were appointed by the King of England, and the People felt the judges favored the King’s side, not the People’s side, regardless of the facts of any case. To fix this, the States passed the Seventh Amendment so that juries would be in charge of deciding right and wrong in civil cases. If you can convince 12 randomly-selected people that someone harmed you, then you can recover. You shouldn’t have to worry about not getting your day in an open and fair court or before a judge that has to cow-tow to a King, the People said.
Fast-forward a few centuries, and the latest assault on the Seventh Amendment is by Bad Business and is aimed not at keeping decisions out of judges’ hands, but at keeping decisions out of court altogether. To do this, Bad Businesses make customers promise (often in tiny print in the middle of a long contract that no one ever reads) that in exchange for a normal transaction worth a few to a few hundred bucks, the customer will never go to court against the business. Not if the business poisoned the customer, not if the business charged the customer illegally, not if the business chopped off the customer’s right leg—never, under no circumstances, will the customer ever get a day in court. And there’s no way to opt out—take it or leave it. These forced arbitration clauses write Bad Businesses millions of Get Out of Jail Free cards from the entire civil justice system—something not even the King of England tried to do.
But Bad Business has lots of advocates to try to justify its self-serving forced-arbitration system—often by trying to pit victims against the lawyers who help them. For example, on December 23, 2013, the Wall Street Journal ran a story decrying that only “plaintiffs [sic] attorneys—and their yacht builders” would benefit from class action lawsuits, which are lawsuits brought to help thousands or millions of consumer who have been wronged by a business and who seek to hold that business accountable. Class action lawyers bring these cases at their own expense and receive a percentage of the recovery that often would never occur without them. The Wall Street Journal cited a faulty study by the U.S Chamber of Commerce, which has even supported a loansharking payday lender in its bid to avoid ever answering for its lending activities.
But even the Wall Street Journal later had to recognize that forced arbitration can be devastatingly bad for thousands and thousands of people. Recently, WSJ acknowledged that forced arbitration was the reason thousands of U.S. Servicemen could not get any justice when they were taken advantage of by illegal loans that payday lenders made. Hefty Bank Fees Waylay Soldiers. Courts can decide which class actions have merit and which do not, but if class actions in public court can never be brought, then even the Wall Street Journal must acknowledge that there will be many victims who can get no justice, just like those U.S Servicemen.
In very large transactions between large and powerful companies who may want to keep dealings between themselves secret, arbitration might make sense. But for the normal world of transactions between powerless consumers and powerful big businesses, if we take away the light of day that open and public lawsuits bring, we will not only encourage more Bad Business, we will encourage more economic victimization and less of the open and fair system of justice that was envisioned by the Seventh Amendment when this country was founded. Contact us for a free consultation.