... and Justice for All

the Arbitration Scam Puts Families, Consumers and Employees at the Mercy of Corporate Minions

The New York Times publishes today a lengthy analysis of the arbitration scam concocted by corporate interests to facilitate and enable them to rip off and harm American families, consumers and employees: Arbitration Everywhere: Stacking the Deck of Justice.  

There are two main, basic problems with the arbitration clauses that corporate America relies on:

• First and with all due respect to the arbitrators, the system is structured to favor the repeat players, which is the corporations.  Arbitrators get paid when they preside over an arbitration, so they want to be selected to arbitrate a matter.  If they don't get picked, they don't get paid. So this leads them inevitably to tilt in the favor of the corporations who will again have an arbitration. It's like buying the jury, and it is not fair.
  
  
• Cost. Most arbitration clauses require the consumer and the corporation to share the arbitrator's charges and fees, which are likely to run into quite a hefty sum, perhaps tens of thousands of dollars. Individuals and families rarely have the money to pay for this.  You could say that lawyers could represent them on a contingent fee basis; well, in reality, taking a case on a contingent fee basis where the arbitrator is likely to naturally and inherently favor the opposition adds a level of risk that sometimes is too much to bear.
  
  Robert L. Abell
  www.RobertAbellLaw.com

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What Does "All" Mean?

Does "all" really mean "all"? And it is "all" of what? These questions were presented the Sixth Circuit in Russell v. Citigroup, Inc, No 13-5994 (April 4, 2014). 

Keith Russell worked at a Citicorp call center from 2004 to 2009. In January 2012, Russell filed a class action against Citicorp seeking unpaid wages and overtime relating to time employees "spent logging into and out of their computers at the beginning and end of each work day." Later in 2012 and while the class action was still pending, Russell was rehired by Citicorp and was presented with and signed an arbitration agreement applicable to "all employment-related disputes" between the two. 

Armed with this sweeping, expansive agreement applicable to "all employment-related disputes" between it and Russell, Citicorp moved to compel arbitration of the class action. After the district court denied its motion, Citicorp appealed and thus presented the Sixth Circuit with the opportunity to define the meaning of "all," arguing that "all employment-related disputes" in the arbitration agreement included and reached the class action Russell had filed and which was pending before the arbitration agreement existed.

The Sixth Circuit didn't fall for Citicorp's contention that the arbitration agreement applied retroactively. After a brief review and parsing of some of the contract's language and its preamble, the Court dismissed Citicorp's argument as follows:

Citicorp claims: The provision before us -- "This Policy [covers] all employment-related disputes ... which ... arise between [Russell] and Citi" still proclaims with a clear throat that the arbitrator will decide pending and impending cases alike. But milieu limits the reach of general words like "all." See United States v. Palmer, 3 Wheat. 610, 631-32 (1818)(Marshall, C.J.). If the poissonier tells the chef, "I have marinated all the salmon," we know from context that he means all the salmon on the kitchen counter, not all the salmon in the universe. So too here. We know from context -- from the use of "arise," from the preamble and from the parties' probable expectations -- that the contract refers to all future lawsuits, not all lawsuits from the beginning of time to the end.

So, "all" means all employment-related disputes between Russell and Citicorp that may or do arise in the future.  

Circuit Judge Jeffrey Sutton authored the Sixth Circuit's opinion and deserves special mention and kudos for the salmon analogy and working the term "poisonnier" into a judicial opinion. Judge Sutton's opinion was joined by Senior Circuit Judge Gilbert Merritt and Circuit Judge Richard Griffin.

The case was also discussed on the Kentucky Employment Law Blog: Does a New Arbitration Agreement Apply to an Already Pending Lawsuit? 

Robert L. Abell
www.RobertAbellLaw.com

 

 

 

 

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    Business Week reports in "Banks vs. Consumers (Guess Who Wins)" that National Arbitration Forum (NAF), one of the country's largest for-profit arbitration companies courts corporations against consumers by claiming that it will enable credit card companies to markedly increase their recovery rates over their existing collection methods.  Business Week also reports that NAF marketing materials brag that creditors may use NAF procedural maneuvers to tilt the process in their favor.  A Harvard Law School professor testified under oath that she found NAF processes so unfair and biased that she resigned as an NAF arbitrator, Business Week also reports.  Arbitration provisions are contained in many consumer agreements and many consumers unknowingly and unwittingly agree to submit a dispute to be decided by an arbitrator.  There are strong incentives for arbitration companies to favor the corporations that are their best customers.  Ask yourself: what if a judge solicited cases from big corporations by offering them a business-friendly venue to resolve their disputes with consumers and individuals?  Would that be fair? 

Robert L. Abell
www.RobertAbellLaw.com

It Is Presumed That You Have Given Up Your Constitutional Rights

As a general rule, before a court concludes that an individual has given up or waived an important right it must be demonstrated that the individual was fully and adequately informed of the existence of the right, that the individual understood what that right meant in practice, that the individual knew that whatever they were about to say or sign or do would cause them to give up that right and that the individual knowingly and voluntarily gave up the right.  There is, as a general rule, a presumption against the notion that an individual has given up an important right.

It says here that among our most important rights is trial by jury.  But don't take my word for it.  The Seventh Amendment to the United States Constitution preserves the right to trial by jury; Section 7 of the Kentucky Constitution states: "The ancient mode of trial by jury shall be held sacred, and the right thereof remain inviolate, subject to such modifications as may be authorized by this Constitution." 

Increasingly in recent years businesses and employers have sought to evade the very possibility that they will be held responsible by a jury for their misconduct by demanding that employees and consumers arbitrate any dispute of any kind that they may have with them.  Consumers that sign lengthy and complex form agreements find that in the teeny-tiny fine print that they have waived their right to trial by jury and agreed to arbitration.  Employees that are sent an e-mail stating that their employer has adopted a new policy of arbitrating any and all employment-related disputes including employment discrimination claims and show up for work the next day are deemed to have given up their right to trial by jury.  It is estimated by the National Employment Lawyers Association that up to one-fifth of workers (approximately 30 million people) are subject to arbitration agreements in their jobs.  Furthermore, courts rule that if there is a question or close call whether an individual has agreed to arbitration, the presumption is that they have.  In other words, it is presumed that you have given up your constitutional and sacred right to trial by jury.  Well.

Robert L. Abell
www.RobertAbellLaw.com