This is a letter I wrote on www.Change.gov in the Citizens Briefing Book to be presented to President Obama. You can go to the Citizens Briefing Book and add your own comments, or you can comment on existing entries. Just search "arbitration" and you will find the listing below along with others. Vote for the entries and they will move up and be more likely to be read by someone in the administration.
Click here to get there:
Dear Mr. President:
It gives me great satisfaction to know that an attorney with respect for the Constitution and the law is now in charge of our great nation. While I know that there are far more pressing concerns facing our nation, I also know that your government will be able to absorb and respond to all of the issues before us in time.
My concern is with CONSUMER ARBITRATION. Arbitration may be a viable option for many, but for consumers, it is a complete dead end. I have handled several consumer arbitrations and one homeowner case against a national home builder cost over $50,000 in arbitration fees alone. Obviously, no average homeowner could ever afford any justice at that price, but the arbitration was forced on the consumer anyway. Even when a business agrees to pay for the arbitrations costs, the consumer can still be saddled with the arbitration costs at the end of the arbitration and that would lead to bankruptcy for most. Additionally, the arbitrators are told who bears the fees and that fact is undoubtedly influential in their decisions.
There is hardly a consumer anywhere, who isn't an attorney, who would even understand what arbitration even is. More importantly, I have deposed the sales agents for pest control service companies as well as homebuilders and not one of these agents even understand what an arbitration is. The average consumer has no idea that they are giving up their constitutional rights to a trial by jury. The sales agents equally have no idea that is what they are selling. So, fundamentally, there can never be any mutual assent or meeting of the minds necessary for any contract to be valid. Yet in millions of boilerplate contracts , the arbitration clause is forced down the consumer's throat in order to deny them not only a trial by a jury, but also to deny them access to real justice.
Arbitrators routinely charge $400-$500 per hour or $3000 per day. Just a disagreement with a business can cost a consumer $1500-$3000 even if they are right. The process favors the wealthy and affluent and penalizes those with less means. In a dispute in a state or federal court, the cost of filing a suit is less than $500 and it costs nothing to go before a judge when a disagreement about what corporate documents will have to be produced.
Arbitration has its place between businesses that make the election to do so. It has no place burrowning into the lives of average Americans in boilerplate language and eliminating their chances of rectifying wrongs committed by major corporations and businesses.
If the average American knew that arbitration ended their chance at a trial by jury and that the cost could exceed the value of their house, thier possessions and their problem, they would never willingly submit to arbitration.
As it is, the Supreme Court will not provide relief. They have granted special status to the arbitration clause and only Congress can end this nightmare for consumers.
Mr. President, you have the power to do this one thing and it will be a great thing of lasting value to every American in every corner of this country. May your presidency be as meaningful and successful as your campaign.
Evin G. Dugas
President Elect, Consumer & Commercial Law Section
State Bar of Texas