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Use of this web page is not intended to and does not establish any attorney-client relationship between the user and the Law Offices of Steven C. Shane. Do not send any confidential documents to the firm without first obtaining permission to do so from one of the firm's personnel. We are trying to provide information helpful to consumers, including legal information. However, you cannot rely on this information as legal advice.

 

This is general information; not advertising, solicitation, or legal advice. If you have a legal question, please contact a lawyer in your state to protect yourself. Do not rely on anything you read here, especially in lieu of contacting a lawyer directly. Every case is different, and every case turns on its own individual facts.

Arbitration

 

Many will disagree but, in the opinion of the undersigned, Arbitration is a cancer that is metastasizing within our society at an unfortunate pace. The concept of arbitration originated as a means for resolving disputes more efficiently and economically between parties than what normally takes place in a congested Court setting. This made sense in many situations where a quick resolution of certain controversies is necessary. This usually involved the inclusion of a provision for arbitration in a contract between parties of equal bargaining power where each freely negotiated for and consented to arbitrate. A typical example might be a contract between an Architect and an Owner involving the design and construction of a building. In other words, persons on relatively equal financial footing and with equal bargaining power. Unfortunately, today this has evovled into placing a forced arbitration provision in preprinted contracts prepared by all types of businesses and financial entities who then present them to consumers on a take-it or leave-it basis. These are referred to as "contracts of adhesion" where the consumer, obviously, has no input or power to negotiate if he or she wishes to obtain the product or service that he or she desperately needs for the family.

 

The typical arbitration provision in a consumer contract will require that any and all disputes that arise between the parties must be submitted to arbitration with no option to engage in litigation. This means that the consumer does not have the right to have his or her claim determined by a jury. Additionally, the decision of the arbitrator, unless it is the result of fraud or corruption, will be final and binding with no right of appeal no matter how incorrectly decided on the law or facts presented. The provision will also coveniently contain a waiver of the right to pursue any claim on a class action basis. Of course, we know how much class actions are favored by Big Business.

 

The height of absurdity found in this area is having to deal with any of the Jeff Wyler automobile dealerships in the Greater Cincinnati area. Not only do you find an arbitration provision in all their retail installment sales contracts but you can't even fill-out a basic Wyler Credit Application without being bound by one of these evil provisions. Note how this provision is literally buried in the document which I have highlighted. Note also the breadth of this provision. It not only covers any contract you might sign but every possible claim arising out of contract or tort involving not only Wyler but any of their affiliate entities with which you may not have had any dealings and of which you may not even be aware.

 

The process of arbitration itself is not much fun. Basic discovery that one needs to succesfully prosecute a claim is extremely limited. The procedural rules of any of these arbitration organizations severly restrict the ability to obtain evidence. You are at the mercy of an arbitrator with little or no trial experience and who may have no idea of how to succesfully try a case. You literally have to beg to take a deposition of the opposing party and good luck obtaining any written discovery assuming you are even given sufficient time before the final hearing to obtain such evidence.

 

Now brace yourself for the final irony. The for profit arbitration companies which draft the rules of procedure, arange for the proceedings and provide for the arbitrators are, essentially, in bed with the large businesses who will designate them in their arbitration clauses as the outfilt to be used in the event of a dispute. These "clients" pay large sums of money in fees to Arbitration operations to set them-up and, essentially, make them available to resolve disputes between themselves and consumers. Of course, it could not be anticipated that these outfits would feel any obligation to rule in favor of their clients. One such operation is the National Arbitration Forum (NAF) in Minneapolis, Minnesota. Statistics revealed that, by a strange coincidence, the cases decided by this particular operation resulted in favorable decisions for their business clients in, at least, 90% of the time. Things got so bad that the Attorney General for the State of Minnesota had to bring a civil action which, essentially, put it out business, at least, with regard to consumer disputes. Minnesota vs. NAF.pdf. We normally think of this kind of conduct in our society as corrupt but, surprisingly, this kind of information given to Courts in an effort to avoid arbitration has made little impression.Courts, both state and federal, have consistently refused and still refuse, to pay much attention to these unfortunate facts. This is not to say that there aren't Courts, both state and federal, who will apply fundamental principles of contract law such as fraud, duress and unconscionability resulting in the refusal to enforce mandatory arbitration. Unfortunately, these Courts and judges are few and far between. Although my colleagues laugh at me for this belief, I'm cynical enough to suspect that the average judge is thrilled to have the opportunity to rid his or her docket of a case that can be disposed of in arbitration.







 

 
 
 
 
 
 

 

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Steven C. Shane
Attorney-at-Law
606 East Ninth Street, Newport, Kentucky 41071
Mail:
Steven C. Shane
P.O. Box 73067
Bellevue, Kentucky 41073
Telephone
Local: (859) 431-7800
Toll Free: (800) 573-4387
FAX: (859) 431-3100