Nursing Home Arbitration

Will courts enforce arbitration agreements covering wrongful death claims? Generally, yes, if the patient signed the agreement. But what if a family member signed on the patient's behalf? The New York Times discusses: Plaintiffs' lawyers "argued that unless family members had power of attorney, they lacked the authority to agree to arbitration." This argument often works: "Appeals courts across the country have been throwing out arbitration agreements signed by family members of nursing home residents." Basically an agency law question, although with undertones of unconscionability.

Workplace Arbitration

Workplace arbitration is the subject of a new website ArbitrationInfo.com by the Center for the Study of Dispute Resolution at the University of Missouri School of Law and the National Academy of Arbitrators 

Class Waivers in Consumer Arbitration Agreements

A "class waiver" is a contract clause requiring disputes to be resolved individually rather than in a class action. The Consumer Financial Protection Bureau plans to prohibit class waivers in consumer financial services arbitration agreements. Adding fuel to this fire is yet another NY Times article portraying aggressive businesses preying on vulnerable consumers and then depicting the class action as the only practical redress for consumers -- squelched by the dreaded arbitration clause.

The most recent article: "By inserting arbitration clauses into the fine print of consumer contracts, they have found a way to block access to the courts and ban class-action lawsuits, the only realistic way to bring a case against a deep-pocketed corporation."

Supreme Court Rules for DirectTV in Class Arbitration Case

The full text of DIRECTV, INC. v. IMBURGIA ET AL addresses whether a California choice of law clause chose California law on arbitral class waivers over federal law on them.

Commentary on the case by Georgetown Law professor Greg Klass says "all the opinion says is that when a state court is messing around with preempted state law, it should be really, really clear that it understands that in the end federal law always wins"

Arbitration Clauses in Credit Cards Not Antitrust Violation

The US Court of Appeals for the Second Circuit affirmed the trial court's ruling that the card issuers' "final decision to adopt class-action-barring clauses was something the issuing banks hashed out individually and internally", not collusively.

Chamber of Commerce Pushes Back Against CFPB on Arbitration

Today's NY Times reports:

The U.S. Chamber of Commerce and others have said the [CFPB]’s findings do not support its proposed rules. “By ignoring its own data that clearly shows major deficiencies with court-based litigation and disregards the real-world advantages of arbitration, the C.F.P.B. has demonstrated its bias for trial lawyers over average Americans,” Mr. Webb, of the chamber’s Institute for Legal Reform, said.

Considerable sums of money are at stake. Late last month, the bond-rating firm Moody’s Investors Service warned that if enacted, the bureau’s proposed rule might leave companies more vulnerable to class actions that could “force changes to company practices that cut into revenues” or “draw regulatory scrutiny.”

Separately, the NY Times writes "the Justice Department issued a proposal to protect military service members from arbitration requirements. Earlier this month, Senator Al Franken, Democrat of Minnesota and a longtime opponent of arbitration, renewed his push for Congress to pass a bill he introduced this year that would prevent companies from requiring employees to go to arbitration."

NY Times Critical of Religious Arbitration

NY Times explains "For generations, religious tribunals have been used in the United States to settle family disputes and spiritual debates. But through arbitration, religion is being used to sort out secular problems like claims of financial fraud and wrongful death."

Some examples: "Customers who buy bamboo floors from Higuera Hardwoods in Washington State must take any dispute before a Christian arbitrator, according to the company’s website. Carolina Cabin Rentals, which rents high-end vacation properties in the Blue Ridge Mountains of North Carolina, tells its customers that disputes may be resolved according to biblical principles. The same goes for contestants in a fishing tournament in Hawaii."

Good commentary on the NY Times articles by North Carolina Law Professor Mark Weidemaier

NY Times Keeps Criticizing Adhesive Arbitration Agreements

Today's criticism goes beyond yesterday's criticism in arguing that the process of arbitration is biased in favor of businesses and against individual consumers and employees.

The Times asserts that arbitration’s “rules tend to favor businesses, and judges and juries have been replaced by arbitrators who commonly consider the companies their clients.” That’s quite a strong allegation and one that I think most arbitrators would dispute. Arbitrators are supposed to be neutral and a ground for vacating an arbitration award is evident partiality of the arbitrator.

Good commentary on the NY Times articles by North Carolina Law Professor Mark Weidemaier

NY Times Attacks Adhesive Arbitration Agreements as Defeating Class Actions

Today's article describes the "soaring number of" arbitration clauses in consumer and employment contracts as the "center of a far-reaching power play orchestrated by American corporations"" "to circumvent the courts and bar people from joining together in class-action lawsuits, realistically the only tool citizens have to fight illegal or deceitful business practices."

Gee, I thought no longer doing business with companies that displease me was another option that's been working well.

Seriously, class actions seem to me a mixed bag for consumers, especially consumers who don't realize they're being damaged by sometimes-complex "illegal or deceitful business practices," so I'm skeptical of both progressives who say class actions are the only thing protecting us from disaster and businesses who say class actions are a disaster.

I don't believe the Times article cites any data suggesting consumers fare worse in arbitration than in individual (as opposed to class) litigation.

More on arbitration and class actions

Good commentary on the NY Times articles by North Carolina Law Professor Mark Weidemaier

Consumer Financial Protection Bureau Director Criticizes Arbitration Clauses Reducing Class Actions

CFPB Director Richard Cordray said pre-dispute arbitration clauses “are often buried deeply in the fine print of many contracts for consumer financial products and services, such as credit cards and bank accounts. Companies use them, in particular, to block class action lawsuits, providing themselves with a free pass from being held accountable by their customers in the courts. Companies have been able to use these obscure clauses to rig the game against their customers to avoid group lawsuits.”

Alan Kaplinsky responds: “the data in the CFPB’s arbitration study ... demonstrates that most consumers derive no benefit from class action litigation.  The threat of a class action (presumably the ‘leverage’ Director Cordray is referring to) adds nothing but a huge layer of expense in defending these largely meritless lawsuits, benefiting only plaintiffs’ attorneys.”

Consumer Arbitration Case before the US Supreme Court

In DIRECTV v. Imburgia, the California Court of Appeal rejected DIRECTV’s efforts to compel arbitration. The case will be argued in the US Supreme Court October 6. Vikram David Amar expects the SCT to reverse the California court.

American Bar Ass'n Arbitration Competition Open for Registration

The ABA Law Student Division Arbitration Competition promotes greater knowledge in arbitration by simulating a realistic arbitration hearing. Participants prepare and present an arbitration case, including opening statements, witness examinations, exhibit introductions, evidentiary presentations, and summations. Experience what it is to be a professional, competent, and ethical advocate.

To learn more about the competition

The Politics of Arbitration Law and Centrist Proposals for Reform

The Politics of Arbitration Law and Centrist Proposals for Reform is a new paper of mine, just posted. I welcome comments and suggestions to ware@ku.edu

The abstract:

Arbitration law in the United States is far more controversial when applied to individuals than to businesses. While enforcement of arbitration agreements between businesses sometimes raises legal issues that divide courts, those issues tend to interest only scholars, lawyers, and other specialists in the field of arbitration. In contrast, enforcement of arbitration agreements between a business and an individual (such as a consumer or employee) raises legal issues that interest many members of Congress and various interest groups — all of whom have taken positions on significant proposals for law reform. The Consumer Financial Protection Bureau has extensively researched and reported on consumer arbitration agreements and is expected to issue a rule regulating, or even prohibiting, such agreements.

This Article both explains how issues surrounding consumer and other adhesive arbitration agreements became divisive along predictable political lines and introduces a framework to understand and compare various positions on them. This new framework arrays on a continuum five positions on the level of consent the law should require before enforcing an arbitration agreement against an individual. Progressives generally would require higher levels of consent than arbitration law currently requires, while conservatives generally defend current arbitration law’s low standards of consent.

This Article proposes an intermediate (or centrist) position. It joins progressives in rejecting conservative-supported anomalies that enforce adhesive arbitration agreements more broadly than other adhesion contracts on the three important topics: contract-law defenses, correcting legally-erroneous decisions, and class actions. Once these anomalies are fixed though, adhesive arbitration agreements should — contrary to progressives — be as generally enforceable as other adhesion contracts. In other words, this Article joins conservatives in defending general enforcement of adhesive arbitration agreements under contract law’s standards of consent. The Article briefly concludes with the language of a rule the CFPB could adopt to enact into law the reforms advocated in this Article

CFPB Timetable for Possibly Regulating Arbitration

Ballard Spahr's Bowen Ranney reports Consumer Financial Protection Bureau Director Richard Cordray said that the CFPB was “moving ahead” with rulemaking efforts that would address pre-dispute arbitration agreements in consumer financial products or services and “in due course” the CFPB would convene “a small business review panel as the first step” in the rulemaking process.

Arbitration Fairness Act of 2015

The Arbitration Fairness Act would prohibit pre-dispute arbitration agreements in a range of consumer, employment and other contracts. It has been introduced in Congress over many years and again in 2015. Plaintiffs' lawyer Jere Beasley discusses.