By: Russell Keener  —  February 16, 2011
 

What is Forced Arbi­tra­tion?

Just by tak­ing a job or buy­ing a prod­uct or ser­vice, most Amer­i­cans have given up their right to go to court if they are harmed by a com­pany. Instead, peo­ple are forced into a pri­vate sys­tem of jus­tice with­out a judge, jury, or an appeal. The arbi­tra­tors don’t have to fol­low the law, and there is no pub­lic review of deci­sions or real account­abil­ity. Unfor­tu­nately, bind­ing manda­tory arbi­tra­tion clause pro­vi­sions, which are often buried within pur­chase, ser­vice, or employ­ment con­tracts, are achiev­ing their intended pur­pose by under­min­ing con­sumer and employee pro­tec­tions and allow­ing pow­er­ful cor­po­ra­tions to take advan­tage of indi­vid­u­als with unequal bar­gain­ing power and resources.

Forced or Manda­tory Arbitration

Forced arbi­tra­tion clauses are included in nearly all auto­mo­bile sale con­tracts and leases. Fran­chise laws in all 50 states give auto­mo­bile deal­ers a spe­cial monop­oly over new car sales, allow­ing them power to decide what they want to include in their sale/lease con­tracts. Con­se­quently, con­sumers pur­chas­ing or leas­ing a new vehi­cle are a cap­tive
audi­ence with no choice but to enter into the sales/lease con­tract put before them.

In addi­tion, forced arbi­tra­tion clauses are included in many used car sales con­tracts. Car deal­ers who pur­pose­fully com­mit fraud on their cus­tomers use forced arbi­tra­tion as a way to shield them­selves from liability.

Arbi­tra­tion Clause Mis­use and Abuse

In 2005, four indi­vid­u­als and two cou­ples, all African Amer­i­can, filed suit in fed­eral court against Jim Koons Auto­mo­tive Com­pa­nies, a major Wash­ing­ton, D.C., area deal­er­ship. They alleged that they had been vic­tims of racial dis­crim­i­na­tion when they financed their pur­chases through the deal­er­ship because they were charged higher inter­est rates than sim­i­larly sit­u­ated white cus­tomers. The court required them to take the case to arbi­tra­tion because the “Buy Order” for their pur­chases (though not the inanc­ing agree­ment that was the focus of their com­plaints) con­tained a bind­ing manda­tory arbi­tra­tion clause. To do this, the six claimants would have had to pay a total of $85,800 in arbi­tra­tion fees. After a lengthy
dis­pute, Koons agreed to pay the fees. The dealer sub­se­quently agreed to a set­tle­ment in which they paid the buy­ers, but admit­ted no wrong­do­ing. See Fair Arbi­tra­tion Now – Auto­mo­bile Arbitration.

Con­tact Us about Manda­tory Arbi­tra­tion Clauses

If you have a claim against a nurs­ing home, assisted liv­ing facil­ity, per­sonal care home, used car deal­er­ship, bank, satel­lite tele­vi­sion provider, or other busi­ness, the defen­dant may seek to enforce an arbi­tra­tion clause against you to reduce the value of your claim. The Lit­i­ga­tion Lawyers at The Keener Law Firm can review your case, answer your ques­tions, and tell you whether your arbi­tra­tion clause is valid, and if pos­si­ble, how to get your claim in front of a jury as promised by the Sev­enth Amend­ment to the United States Con­sti­tu­tion. Con­tact The Keener Law Firm today to ask about avoid­ing invalid arbi­tra­tion clauses and forced arbi­tra­tion, (770) 955‑3000 or Toll Free (800) 900‑2400.