Arbitration Clauses

WASHINGTON -- The government's new consumer watchdog is launching an inquiry into the use of arbitration clauses in financial contracts, which keep disputes over credit cards and other products out of the court system. Consumer advocates long have complained that so-called "pre-dispute arbitration clauses" gave too much of an advantage to financial firms over average Americans, who often don't realize they've signed away their right to sue. But companies said third-party arbitration is fair and saves money because it's faster and less-expensive than going to court.

Re "Anti-doping officials aren't playing fair," Column, Aug. 26 Mike Hiltzik's indictment of the U.S. Anti-Doping Agency's prosecution of seven-time Tour de France winner Lance Armstrong illustrates a larger problem with the American legal system. Courts have increasingly enforced arbitration clauses in a wide variety of contracts. It is a legal fiction to hold that signatories voluntarily consent to waiving their fundamental right to have their grievances adjudicated in court.

Does the Consumer Financial Protection Bureau have the power to trump theU.S. Supreme Court? That's the intriguing question raised by a seemingly routine announcement last week that the watchdog agency is seeking public comments on "how consumers and financial services companies are affected by arbitration and arbitration clauses. " "Arbitration clauses are found in many contracts for consumer financial products," the bureau's director, Richard Cordray, said in a statement.

Does the Consumer Financial Protection Bureau have the power to trump theU.S. Supreme Court? That's the intriguing question raised by a seemingly routine announcement last week that the watchdog agency is seeking public comments on "how consumers and financial services companies are affected by arbitration and arbitration clauses. " "Arbitration clauses are found in many contracts for consumer financial products," the bureau's director, Richard Cordray, said in a statement.

In what could be its first major review in 20 years of binding arbitration clauses in health plan contracts, the California Supreme Court agreed Thursday to consider a case in which the giant Kaiser Foundation Health Plan is accused of stalling an arbitration hearing until after the claimant died. The move may have saved Kaiser as much as $250,000 in damages. At issue in the case is Kaiser's mandatory arbitration clause, which forces its more than 4.

A 1996 law sought to protect struggling consumers from businesses promising to improve their credit rating, and specifically gave customers the right to sue any firm in violation. But the U.S. Supreme Court ruled Tuesday that credit repair companies could block such lawsuits and instead force disgruntled customers into binding arbitration if they had agreed to such a provision in the fine print of their agreements. The 8-1 decision is another in a string of high court rulings in recent years that have backed an arbitration clause over a customer's right to file a lawsuit.

The Supreme Court dealt a blow to class-action lawsuits that involve small claims affecting thousands or even millions of people by ruling that corporations may use arbitration clauses to block dissatisfied consumers or disgruntled employees from joining together. In a 5-4 decision, the justices said Wednesday the Federal Arbitration Act of 1925, originally aimed at disputes over maritime and rail shipments, trumps state laws and court rulings in California and about half the states that limit arbitration clauses deemed to be "unfair" to consumers.

Thanks to the U.S. Supreme Court, you may not have the right to sue a company you think has wronged you. Instead, if the company prefers, you could have to arbitrate the dispute — a process that consumer advocates say tips the scales of justice in favor of businesses. That imbalance would be remedied with passage of the Arbitration Fairness Act, a bill under consideration in Congress that would supersede the Supreme Court's ruling and reestablish consumers' right to sue and to join with others in class-action lawsuits.

The Securities and Exchange Commission on Wednesday approved rule changes designed to make the securities industry's arbitration system more fair to disgruntled customers. By a 5-0 vote, the commission authorized a series of changes, spurred by complaints from unhappy investors who discovered after the October, 1987, stock crash that they had signed away their right to sue their brokers. Many firms, in the fine print in paper work required to open an account, require customers to agree in advance to settle any disputes through industry-administered arbitration proceedings, rather than through the courts.

Re "About that day in court," Opinion, March 3 I remain unconvinced that binding arbitration is detrimental to anyone but trial lawyers. While Peggy Garrity's example of workplace sexual assault is certainly harrowing, I can tell many more stories, from my experience alone, of unbridled assault by trial lawyers on decent, middle-class small-business owners. These lawsuits, sometimes based on fully fabricated injurious events, raise consumer prices, bankrupt businesses and destroy families with the full support of lawyers' professional associations that call it justice.

WASHINGTON -- The government's new consumer watchdog is launching an inquiry into the use of arbitration clauses in financial contracts, which keep disputes over credit cards and other products out of the court system. Consumer advocates long have complained that so-called "pre-dispute arbitration clauses" gave too much of an advantage to financial firms over average Americans, who often don't realize they've signed away their right to sue. But companies said third-party arbitration is fair and saves money because it's faster and less-expensive than going to court.

The Supreme Court once again gave its backing this week to the notion that businesses can deny consumers the right to file lawsuits and can instead require any disputes to be mediated by an arbitrator. The high court overturned an earlier ruling by a U.S. appeals court in San Francisco that the 1996 Credit Repair Organizations Act prevented so-called arbitration clauses in certain agreements. Writing for the court majority in the 8-1 decision, Justice Antonin Scalia said it wasn't Congress' explicit intention to prohibit arbitration of disputes when it set rules for companies that claimed to be able to improve people's credit scores.

A 1996 law sought to protect struggling consumers from businesses promising to improve their credit rating, and specifically gave customers the right to sue any firm in violation. But the U.S. Supreme Court ruled Tuesday that credit repair companies could block such lawsuits and instead force disgruntled customers into binding arbitration if they had agreed to such a provision in the fine print of their agreements. The 8-1 decision is another in a string of high court rulings in recent years that have backed an arbitration clause over a customer's right to file a lawsuit.

The Supreme Court ruled Tuesday that companies that try to repair a consumer's credit rating can force unhappy customers into arbitration rather than face lawsuits. The case involved whether disputes over the cost of credit cards provided by CompuCredit Corp. of Atlanta should be handled in arbitration, which traditionally is more friendly to businesses, or must be allowed to go to court under a 1996 law covering credit repair companies. The justices voted 8-1 in favor of CompuCredit, which asserted that disputes must by handled by arbitration.

Thanks to the U.S. Supreme Court, you may not have the right to sue a company you think has wronged you. Instead, if the company prefers, you could have to arbitrate the dispute — a process that consumer advocates say tips the scales of justice in favor of businesses. That imbalance would be remedied with passage of the Arbitration Fairness Act, a bill under consideration in Congress that would supersede the Supreme Court's ruling and reestablish consumers' right to sue and to join with others in class-action lawsuits.

The Supreme Court's recent 5-4 decision preventing consumers from bringing class-action suits against corporations is part of a disturbing trend of the five most conservative justices closing the courthouse doors to injured individuals. This is nothing other than a conservative majority favoring the interests of businesses over consumers, employees and others suffering injuries. The case involved Vincent and Liza Concepcion, who purchased a cellphone from AT&T Mobility. The form contract they signed provided for arbitration of all disputes between the parties.

A Los Angeles Superior Court judge has tossed out a test case challenging employment contracts that force workers to arbitrate labor disputes instead of going to court. The case involved a Long Beach legal secretary who claimed he was fired from two separate law firms after he refused to sign employment agreements that required arbitration of labor disputes.

Re "Anti-doping officials aren't playing fair," Column, Aug. 26 Mike Hiltzik's indictment of the U.S. Anti-Doping Agency's prosecution of seven-time Tour de France winner Lance Armstrong illustrates a larger problem with the American legal system. Courts have increasingly enforced arbitration clauses in a wide variety of contracts. It is a legal fiction to hold that signatories voluntarily consent to waiving their fundamental right to have their grievances adjudicated in court.

The Supreme Court dealt a blow to class-action lawsuits that involve small claims affecting thousands or even millions of people by ruling that corporations may use arbitration clauses to block dissatisfied consumers or disgruntled employees from joining together. In a 5-4 decision, the justices said Wednesday the Federal Arbitration Act of 1925, originally aimed at disputes over maritime and rail shipments, trumps state laws and court rulings in California and about half the states that limit arbitration clauses deemed to be "unfair" to consumers.

As consumers, we're generally accustomed to getting kicked in the teeth by big companies. But sometimes -- not very often, but sometimes -- we fight back . . . and win. That was the case with a residential service agreement inflicted by AT&T Inc. on its millions of California customers in August. As originally written, the 8,000-word contract was a triumph of consumer-unfriendliness. Among other things, it required customers to arbitrate disputes with the telecom giant rather than suing.