Legal, Laws, and Regs

Fight is on for fair arbitration

The fight has started for fair arbitration. TortDeform has an extensive write-up on the second day of hearings associated with the Arbitration Fairness Act of 2007. I’m familiar with all of the cases mentioned in the testimony, and they just barely demonstrate how far reaching the problems of binding mandatory arbitration agreements are.

I noticed that the National Arbitration Forum was not asked to testify. I rather expected them to roll out Mary Pawlenty, wife of current Minnesota governor Tim Pawlenty and, I thought, NAF’s General Counsel, to testify. What I missed earlier in the year was Ms. Pawlenty stayed with NAF less than a month. I’m not surprised she left. One peek into the workings of NAF was more than enough to send her running.

Yet this is the same company one of Utah’s Congressional representatives, Chris Cannon would like to have adjudicate many of our employee civil rights, and consumer law civil cases. If I were a resident of Utah, I would take a closer look at Representative Cannon’s campaign contributors.

Deborah Williams, a Maryland woman (and another lifelong Republican) who, along with her partner Richard Welshan, had a franchise with the Coffee Beanery, which cheated her in a variety of ways. Despite a finding by the Maryland Attorney General that the Coffee Beanery committed fraud, she was forced by the American Arbitration Association to arbitrate her claims in Michigan (500 miles from her home), spent more than $100,000 on arbitration fees to the AAA. For all of her pains, the arbitrator disagreed with the Maryland Attorney General and entered a large award against her. The arbitrator also entered a “loser pays” attorneys’ fee award against her, requiring Ms. Williams and her partner to pay the Coffee Beanery’s attorneys’ fees. In the low point of the hearing, Rep. Cannon essentially tried to get Ms. Williams to agree that all of her problems were her fault for not researching the Coffee Beanery on the internet and discovering in advance that they were defrauding people. Ms. Williams described the various steps that she had taken to do due diligence about the Coffee Beanery prior to becoming a franchisee, but Rep. Cannon persisted in trying to get her to say that her problems were all her own fault.

However, this is not a Democrat versus Republican issue. There are Republicans who are also appalled at the abuses resulting from mandatory arbitration clauses.

The evidence against mandatory arbitration agreements is overwhelming, but I’m still concerned. There’s a lot of money being spent to fight the Arbitration Fairness Act. A lot. It disturbs me to realize that the money is being spread around to the Democrats, as well as the Republicans. In fact, Hilary Clinton is the second highest recipient of financial institution campaign contributions, which has really led to me to question her candidacy. At one point, I was ready to vote for her. Now, I’m not.

What’s more difficult, though, is getting people to become interested enough in the issue of fair arbitration to contact their congressional representative and encourage support for this bill. If it doesn’t bleed, blow up, blow over, or burn, America doesn’t care.

update Mandatory binding arbitration kills grandparents.

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