Source: John O’Donnell, Public Citizen, September 2007
From the summary:
This report details how arbitration firms and credit card companies enjoy a cozy, mutually beneficial relationship at the expense of consumers they force into binding mandatory arbitration. Using data from California, the findings provide a glimpse of how arbitration traps consumers throughout the country in unfair, secret proceedings where for-profit arbitrators make the rules. Public Citizen’s research uncovered consumers who spent years fending off collection agencies, cleaning up identity theft messes and struggling to bounce back from credit rating hits.
• Read the press release
• Read our news coverage
• Read the testimony of Laura MacCleery [pdf] before the House Judiciary Subcommittee on Commercial and Administrative Law regarding the Arbitration Fairness Act of 2007
• Read Public Citizen’s rebuttal to industry’s misleading statements about the report.
• Read our fact sheet on the Arbitration Fairness Act of 2007
• Read a letter of support of the Arbitration Fairness Act of 2007 signed by 32 groups
• Take action now
• Learn ways to protect yourself
• Read the blog
• Read the statement of Joan Claybrook, Public Citizen President
• Read the statement of Laura MacCleery, Director of Public Citizen’s Congress Watch
• Read the statement of Troy Cornock, victim of binding mandatory arbitration
• Read the statement of Sen. Russ Feingold (D-Wis.), sponsor of Arbitration Fairness Act of 2007.
• Read our bibliography of law review articles critiquing binding mandatory arbitration
• Examples of BMA clauses from MBNA (April 2006) and JPMorgan Chase & Co. (2005)
• NAF California data Jan. 2003 to Mar. 2007* [Excel file]
Source: Mark C. Weidemaier, University of Michigan Journal of Law Reform, Forthcoming UNC Legal Studies Research Paper No. 1095111
From the abstract:
A growing body of empirical research explores the use of arbitration to resolve employment disputes, typically by comparing arbitration to litigation using relatively traditional outcome measures: who wins, how much, and how quickly. On the whole, this research suggests that employees fare reasonably well in arbitration. Yet there remain sizeable gaps in our knowledge. This Essay explores these gaps with two goals in mind.
The first and narrower goal is to explain why it remains exceedingly difficult to assess the relative fairness of arbitration and litigation. The outcome research does not account for a variety of “filtering” mechanisms that influence the relative merits of the cases adjudicated in each system. This Essay explores these filters, focusing on one in particular: most employee grievances are resolved within the workplace through relatively informal procedures. Workplace structures thus filter out most employee grievances before they reach arbitration. This fact has significant implications for efforts to interpret the arbitration outcome research. It also highlights the significance of the workplace as a locus of dispute resolution activity. Indeed, a growing body of research focuses directly on workplace compliance and grievance procedures.
Recognizing the significance of workplace dispute resolution leads to this Essay’s broader goal. That goal is to expose, and hopefully bridge, an artificial conceptual divide that separates the arbitration research from research into workplace dispute resolution. Many researchers view internal compliance and grievance procedures as a means of harnessing the employer’s own regulatory capacity. This conception drives a research agenda that explores the role of workplace structures in generating private norms and in implementing (or subverting) public norms like anti-discrimination. By contrast, the arbitration outcome research conceives of arbitration narrowly as a court surrogate, one that should ideally yield equivalent outcomes at lower cost. Although legitimate to a degree, this conception artificially separates arbitration from other employer-structured disputing procedures and yields an empirical agenda that leaves fundamental questions unanswered. This Essay closes by discussing two of these questions: First, do arbitrators play a meaningful regulatory role, either by shaping other arbitrators’ practices or by shaping the terms of arbitration contracts? Second, under what circumstances do arbitrators effectively generate and enforce norms?
Source: Robert Berner and Brian Grow, Business Week, June 5, 2008
The business of resolving credit-card disputes is booming. But critics say the dominant firm favors creditors that are trying to collect from unsophisticated debtors.
What if a judge solicited cases from big corporations by offering them a business-friendly venue in which to pursue consumers who are behind on their bills? What if the judge tried to make this pitch more appealing by teaming up with the corporations’ outside lawyers? And what if the same corporations helped pay the judge’s salary?
It would, of course, amount to a conflict of interest and cast doubt on the fairness of proceedings before the judge.
Yet that’s essentially how one of the country’s largest private arbitration firms operates. The National Arbitration Forum (NAF), a for-profit company based in Minneapolis, specializes in resolving claims by banks, credit-card companies, and major retailers that contend consumers owe them money. Often without knowing it, individuals agree in the fine print of their credit-card applications to arbitrate any disputes over bills rather than have the cases go to court. What consumers also don’t know is that NAF, which dominates credit-card arbitration, operates a system in which it is exceedingly difficult for individuals to prevail.
Source: Stephanie Mencimer, Mother Jones, Vol. 33 no. 2, March/April 2008
More employees are being forced to sign mandatory-arbitration clauses. But is it legal?
Source: David B. Lipsky and Harry C. Katz, Public Personnel Management, Winter 2006, Volume 35, no. 4
Scholars have not taken adequate account of variation in the interest arbitration process in their research on the effects of interest arbitration on bargaining outcomes. There are two fundamental approaches to interest arbitration, which they term the “judicial prototype” and the “negotiation prototype.” The recent cases involving the Patrolmen’s Benevolent Association (PBA) of New York City and the city of New York illustrate the differences in these two approaches. There is a relationship between the arbitration prototype and the bargaining power of the parties. A party with greater bargaining power should prefer the negotiation prototype in interest arbitration. The New York City police cases—especially the effects of the attack on the World Trade Center on September 11, 2001—are analyzed to determine whether changes in the parties’ bargaining power affected their approach to interest arbitration.
Source: David B. Lipsky, Perspectives on Work, Summer 2006, Volume 10, no. 2
The U.S. industrial relations system has undergone a historic transformation over the past three decades. One of the most significant features of that transformation has been the dramatic rise of alternative dispute resolution (ADR) as a means of addressing workplace conflict. ADR can be defined as the use of arbitration, mediation, and other third-party techniques instead of litigation to resolve workplace disputes. In the view of some experts, the rapid diffusion of ADR in employment relations, especially in the non-union sector, has represented nothing less than a revolution in dispute resolution. The ADR revolution has spread to so many other types of disputes, including family, consumer, construction, and financial disputes. In many ways, transferring the resolution of workplace disputes from public to private forums constitutes the de facto privatization of the American system of justice.