Arbitrate This

Today, the Fair Arbitration Now Coalition – a group of civil rights and other groups working to defend the ability of consumers, workers, minorities, and the elderly, among others, to obtain access to justice – are marking “Arbitration Fairness Day,” aimed at raising awareness of the abuses of mandatory arbitration. Under this system – used by many banks, employers, nursing homes, and thousands of other corporations — consumers who believe that a company has violated their legal rights are nonetheless prohibited from seeking redress in court, but rather, are required to take their complaint into a private system in which their dispute is ruled on by an arbitrator, typically chosen by the company, resulting in rulings in favor of the corporation 94% of the time.

Last summer, following growing concern about the practice of mandatory arbitration, the Senate Judiciary Committee held hearings on recent Supreme Court decisions concerning corporate misconduct and regulation. CAC submitted written testimony (pdf) stating that decisions such as Preston v. Ferrer are inconsistent with the text, history, and principles of the Constitution, in that they favor “corporate rights and interests over the fundamental rights and liberties of individuals.” (In Preston, the Supreme Court held that even where a State agency has expressly assumed exclusive jurisdiction over a matter suited to its expertise and oversight, any questions related to a contract with an arbitration clause must be decided by an arbitrator, not a court of law or a State agency.) Among others testifying before the Committee was Elizabeth Bartholet, a Harvard Law professor and former arbitrator who was removed as an arbitrator by a credit card company after she had ruled against it.

As we stated in our testimony, “the Constitution and its amendments were intended to provide individual rights and structural safeguards to ensure the health of a government of ‘We the People,’ not ‘We the Corporations of the United States of America.’” Mandatory arbitration can blatantly violate this principle, and CAC applauds the Fair Arbitration Now Coalition for calling attention to the need to ensure access to courts and to end abusive uses of mandatory arbitration.