The forced arbitration seems a bit odious... general mills just got dinged for that and had to apologize...I wonder if the same thing will happen here. For those who don't know, forced arb basically gives them carte blanche to harm you and have the case handled by their "friends" instead of the justice system.
Forced arbitration is a terrible policy and terrible for consumers[1]. I remember when Al Franken fought to amend the "forced arbitration" policy in the Department of Defense Appropriations Act[2]:
"Jamie Leigh Jones is a courageous woman who stood up to KBR and Halliburton when they tried to force her into arbitration after she was allegedly gang-raped by fellow employees in 2005."
It's a way for corporations to avoid being held legally liable for criminal behavior against consumers and employees. So if Atlasssian screws you, either as an employee or a consumer, you're forced into arbitration instead of being able to challenge them in court.
Jurisdiction would be the pressing issue in that specific case. I do not believe bases were sovereign at that time, and as the parties are not military they would not be prosecutable under the UCMJ. I am not certain on the process to charge someone with a crime while in a different country and outside US jurisdiction.
I am not making excuses for KBR, but I do not know how else a corporation can protect itself from the actions of its employees in a scenario where jurisdiction is not enforceable in its host country. In other words what court would have heard this case, presumable it would have been Iraqi, in which case she would have had a much more difficult case.
Sorry if this was a ramble, but the issue is very complex and has little to do with arbitration requirements, and more to do with vague international prosecution policies inside a war zone.
NACA is not exactly unbiased, since it's mainly consumer class action lawyers.
They also make some claims that are not really true:
"Individuals often have to pay a large fee simply to initiate the arbitration process. "
Please pick any large company you desire to ever sue (amazon, ebay, general mills, etc). I challenge you to find a single one that requires you pay for the arbitration process in all but frivolous cases.
Let's take Amazon's:
"Payment of all filing, administration and arbitrator fees will be governed by the AAA's rules. We will reimburse those fees for claims totaling less than $10,000 unless the arbitrator determines the claims are frivolous. Likewise, Amazon will not seek attorneys' fees and costs in arbitration unless the arbitrator determines the claims are frivolous. You may choose to have the arbitration conducted by telephone, based on written submissions,"
Paypal goes further, in fact:
"If the value of the relief sought is more than $10,000 and you are able to demonstrate that the costs of arbitration will be prohibitive as compared to the costs of litigation, PayPal will pay as much of the filing, administration, and arbitrator fees as the arbitrator deems necessary to prevent the arbitration from being cost-prohibitive"
NACA's next complaint is that you don't get an in-person hearing, but at the same time complains about the expense of arbitration?
This is non-sensical.
Naca also makes some more falsehoods:
"Forced arbitration clauses generally bind the consumer—not the company. The way many forced arbitration clauses are written, the seller retains its rights to take any complaint to court while the consumer can only initiate arbitration.
"
Again, i've yet to see any of these. Amazon's doesn't.
Maybe paypal, that bastion of horribleness, says something here:
" You and PayPal each agree that any and all disputes or claims that have arisen or may arise between you and PayPal shall be resolved exclusively through final and binding arbitration, rather than in court, except that you may assert claims in small claims court, if your claims qualify. The Federal Arbitration Act governs the interpretation and enforcement of this Agreement to Arbitrate."
Whoops, nope, they agree to arbitration bilaterally too
(they also agree to pay the fees)
They cite exactly zero examples of any of these claims, btw.
Part of my life is reviewing TOS'en, and i've got to have reviewed thousands. I have not seen any that are either unilateral, or where you would pay fees. All I ask is for one example :)
I also doubt such a thing would be upheld even under current supreme court precedent.
The rest of the NACA complaints basically come down "you can't take them to court". Which is yes, the point of arbitration.
To avoid the cost of court.
The truth is, NACA doesn't like arbitration because the lawyers involved in it are class action lawyers.
Shocking.
It says in the exceptions to arbitration that Dropbox still retains the right to take consumers to court for intellectual property infringement, but if Dropbox has a massive data breach and every private file you have shared becomes public, you're on your own facing Dropbox in forced arbitration.
Dropbox's ToS is one-sided because what Dropbox did was carve out the ways it would want to go to court and eliminate the ways most consumers would ever take it to court. Most consumers are not suing Dropbox over IP.
For another example of companies carving out justice for themselves, check out Wells Fargo. They say they will not initiate arbitration for debt collect (translation: they still have their right to take you to court if you owe them money) but if you want to hold them accountable for fraud and negligence, you are going to forced arbitration. https://www.wellsfargo.com/downloads/pdf/credit_cards/agreem...
One last thing on Dropbox's opt-out, why should you have to opt back into your constitutional rights?
Arbitration is private court where the judge is paid by your opponent. If you legitimately think this is awesome enough that we should all be gung-ho about it just because the companies who benefit choose to pay the fees, I don't think there's really anything else to discuss.
I guess linking to NACA was more to highlight some of the other downsides of forced arbitration. I agree with your counterpoints to NACA's claims but ultimately forced arbitration still prevents someone from using the justice system simply because it's too costly to the corporations. Again, cases like the KBR/Halliburton can have atrocious consequences.
Again the NACA link was to highlight the problems with forced arbitration. I wouldn't want it to detract from the fact that forced arbitration is a terrible policy.
General Mills got banged up because they tried to claim that performing such actions as "Liking their facebook page" indicated your agreement to those terms. That was the part that was extreme.
Forced Arbitration is anti-consumer but unfortunately it's also pretty common these days. I'd wager you've already agreed to it with you cable, home internet, and phone providers.
It has stormed the front immensely in the last 10-15 years. Almost all contracts have an arbitration section to bypass the courts which has many to blame.
It is a strange world when we live 'free' but our companies are dictatorships/feudal while using military tribunal type justice in arbitration, but it is a byproduct of ludicrous overstepping of the bounds with lawsuits so the other side gets wacky.
What's gotten crazy in the last 2 years or so after some bad Supreme Court decisions is that corporations can get more and more sneaky about saying what constitutes your "agreement" to their terms - things like "liking" the company on Facebook or walking through the door of their fast food chain...
IMO the most "broken" part of the system is that the corporation gets to pick the "arbitrator" who they think will give them the best outcome (and they are paid by the corporations, too, generally). I'm not sure how "new" that part is, but when my father-in-law explained it to me (he's a trial attorney) I was like "No way - that sounds like some stuff that would happen in some 3rd world country." But I went and read up on it myself - and sure enough, that's the case.
Under AAA consumer rules (which is what roughly everyone is using) the corporation does not pick the arbitrator. The AAA does. Either side may provide factual objections, which, if upheld, only results in them picking someone new at random.
I'm not sure "where you went and read up on it itself"
Here's the rules:
I actually bought a shaver once, from a retail store, that included an unannounced forced arbitration contract thay claimed implied consent by using the shaver. It's ridiculous.
Surely I can still take them to court and argue the forced arbitration is part of my grievance. IANAL but surely one can argue that removing the judicial system from anything is illegal?
Of course you can take them to court, however, do you have enough money to sustain the effort?
Forced Arb. clauses mean little for large corporations (who have the legal muscle to either reach a settlement or win a battle of legal attrition), however they absolutely screw "the little guy" who has zero choice but to follow the contract.
You can argue anything; the question is how long and how hard can you afford to argue it, and what are going to be your ultimate chances of success based on the history of people making the same sort of argument, and which venues are you going to be forced to make that argument in.
Might be better for you to take the token settlement as an apology, and sign the papers.
According to the supreme court it will. The corporation gets to pick the "arbitrator" (who is most likely to decide your claim is worthless) and you have to go there instead of court. Read up on it.
I'm not sure why people hate on forced arbitration.
Outside of the occasional ridiculous damages award that happens, it's actually often better for consumers.
It's cheaper, doesn't require a lawyer, company usually pays, etc.
I'm not sure who their "friends" are. The arbitrators i've met in my time tended to be fair, unbiased folks. I'd expect in general civil cases, it's a mess.
The only claims that get preempted by forced arbitration are these small little $1-2 per person claims. But then people complain when lawyers litigate them as class actions, and settle for $1-2.
Researchers at Cornell University studied hundreds of cases where consumer / employees were forced into arbitration and found that the arbitrator ruled with the company 90-95% of the time. This can be attributed to what dccoolgai points out below.
Other Cons of arbitration you can confirm with readings:
- Arbitration can occur in secret, with the public finding out nothing about a company's illegal behavior. This is bad for a number of reasons I won't get into.
- Arbitration does not need to follow the rules of discovery or evidence found in a public court. This is most often in the favor of the company.
- Arbitration clauses mostly forbid banding together as a class. Which means you have to fight your case on your own, often times without a lawyer.
- Arbitration allows companies to get away with wage theft, discrimination, sexual harassment, illegal fees & fines, etc. b/c in arbitration their is no requirement for injunctive relief.
- Arbitration was never designed to be used the way it is used today. The Federal Arbitration Act (FAA) was passed by congress in the 1920s to allow businesses to engage in commerce and use an alternate form of justice (arbitration) they both agreed & negotiated on instead of public courts. Today, the reason arbitration is used in a way other than congress intended is because in consumer and employer relationships - there is NO equal bargaining power. Most arbitration agreements are never negotiated between consumers/employees and the company - its a take it or leave it contract. This is not how the FAA was conceived and not what congress intended.
Put your fork down and think about that for a second... let's say I do some kind of harm to you...you'd be okay with a guy that I paid and picked determining my liability to you over the normal justice system? And if it is so great for consumers, why not let them choose to do that? Why force it on them?
