A post at the blog Overruled lays out the details about how the use of "arbitration" circumvents rights to due process and has made it all legal:
"One day, when Dantz arrived at work a paper was shoved into her hands and she was ordered to sign it. The paper contained something called a “binding mandatory arbitration agreement” which said that, if Applebees broke the law, Dantz no longer had the right to hold it accountable in court and instead would be shunted into a privatized, biased justice system. Dantz refused to sign, and was told that until she did, she would be paid nothing but tips—a violation of federal minimum wage laws. Nevertheless, Dantz needed her job, so she didn’t quit.
After nearly three years of harassment, abuse and long hours for little or no pay, Dantz finally decided that she’d had enough. She filed suit against her employer—and the court kicked her to the curb. Even though Dantz refused to sign the binding arbitration agreement, the court said that merely by continuing to work for Applebees, she was bound by its terms. Debbie Dantz’ employer illegally abused her for almost three years, and Dantz was powerless to hold it accountable.[NOTE: She did not receive a paycheck and her only earnings were from tips.However, the wisdom of her decision, or lack of it, is not the point here.]
Lest there be any doubt, when Dantz was thrown out of court and relegated to privatized arbitration, her opportunity for justice ended right there. Let’s explore a few ways that arbitration differs from real courts:
- Most importantly arbitration is biased in favor of corporate interests. According to a study by Public Citizen which examined almost 20,000 arbitration decisions, the corporate party won a massive 94% of the time. In one case, an arbitrator awarded $11,000 to a debt collector against a woman who owed no money whatsoever, but who had the same name as a woman who did.
- Arbitration is often pay to play. If you bring a suit in federal court, you pay a $350 filing fee, and that’s it. Arbitrators, on the other hand, frequently offer an a la carte menu. If you want to file a motion, that’s $500. If you want a live hearing, $1500. If you want a written explanation of the arbitrator’s ruling, $1500 more. In some cases, consumers have been charged $10,000 or more for the privilege of losing their case before a biased arbitrator.
- Arbitration is secret. Except in California, arbitrators are not required to publicly disclose their decisions. Because they can keep their past history from the public, many arbitration companies market their services to corporations by highlighting their pro-business bias, even as they lobby Congress with claims that they are just as fair and balanced as real live judges.
So in summary, arbitration is expensive; it is secretive, and it is fundamentally unfair. Even worse, it is almost always forced on ordinary Americans. If you have a credit card. Or if you have a job. Or if you have a cell phone. Or if you have a loved one in a nursing home. You have probably been forced to sign an arbitration agreement. Virtually all banks, many employers and some nursing homes will even refuse to do business with you unless you sign away your power to hold them accountable for their actions. If you refuse to sign an arbitration agreement you can lose your credit card, lose your phone service, or even be fired.
The reason why these binding mandatory arbitration agreements are legal is a series of wrongly decided Supreme Court decisions that began in the 1980s. Needless to say, business groups like the Chamber of Commerce are very interested in blocking any legislation which might overturn these wrongful decisions, and they have hired a veritable army of lobbyists to block a bill called the Arbitration Fairness Act, which would prevent companies from coercing their customers and employees into signing away their rights."
Sen. Russ Feingold sponsored a bill, the Arbitration Fairness Act, which died in committee last year. Perhaps now with the passage of the Lilly Ledbetter Fair Pay Act, it's time to bring up that bill again.
In 2007, the National Employment Lawyers Association offered the following testimony before Congress -- their testimony includes documentation on just how many U.S. companies offering just about any type of service have warped the rights of employees nationwide:
"As NELA members can attest from the cases they see in their practices, the use of MA programs as a tool for companies to “stack the deck” in their favor in disputes with their employees has grown exponentially over the last 15 years. Today, 15% to 25% of United States employers use MA programs – covering a conservatively estimated 30 million workers, a greater number than union contracts cover. The attached NELA fact sheet, “Data Points: Increasing Prevalence of Mandatory Arbitration Programs Imposed on Employees,” reviews available statistics showing the dramatic growth of these programs.
"Thousands of American companies use or have used mandatory arbitration, including such household names as Circuit City, Hooter’s, Dillard’s Department Stores, Cisco Systems, Anheuser-Busch, and Halliburton. These companies are in virtually every industry – retail, food services, manufacturing, and financial services, to name a few. The attached list of companies for which the American Arbitration Association (AAA) held at least five employment arbitrations between January 1, 2003, and March 31, 2007, is, of course, just the tip of the iceberg, but it again shows that the use of mandatory arbitration is alive and well in the United States in the 21st Century."