To trial lawyers, arbitration is a dirty word. We have fought tooth and nail against any forced arbitration clauses as they take away your Constitutional right to a trial by jury for any dispute. Have you signed an arbitration clause and didn’t even know it? Most likely, yes. I would venture a guess that most American citizens have and you would never know it until a dispute arises. That’s when the wrongdoer throws the arbitration clause in your face and (figuratively) says “you can’t sue me (i.e., you can’t hold me responsible). Here are five things to know about arbitration clauses:
- “Mandatory” Arbitration clauses are not mandatory. An arbitration clause is nothing more than a waiver of the right to a jury trial to decide any dispute. But for a waiver to be valid it must be “knowing,” i.e., you must know what you are giving up or “waiving” at the time you give it up. Arbitration clauses, by definition, are not “knowing” because you are required to sign or submit to them pre-dispute or pre-injury, before you even know what harm has or may be done. How can that possibly be a “knowing” waiver? It can’t. Many courts have invalidated so-called “mandatory arbitration” clauses for his very reason. Arbitration clauses often appear, for example, in the admission papers of a nursing home. The admitting family member must sign 20 pages or so to get their loved one admitted into the nursing home and the “mandatory arbitration” clause is hidden somewhere on page14 in fine print that no lay person could possibly read or understand. The family member must sign these documents at what may very well be once of the worst times in his or her life, when the decision to place his or her spouse or partner, who perhaps they have lived with and loved for 40 years, into another living facility to be cared for by other people. The loved one’s health is probably failing. And yet nursing homes are slipping these “mandatory arbitration” provisions under the noses of their customers every day in America, without explaining what it is or what it means, during a life crisis for the consumer. What’s fair about that? Nothing.
- “Mandatory” arbitration clauses protect the institution not the consumer. I have had some success in the nursing home scenario described above in getting Georgia judges to invalidate arbitration clauses because they are not a “knowing” waiver of a known right. One such arbitration clause I defeated stated that the arbitration must be conducted in “accordance with the American Health Lawyers Association (AHLA) Alternative Dispute Resolution Service Rules of Procedure for Arbitration….” The American Health Lawyers Association is roughly 13,000 lawyers, which “includes in-house counsel, compliance and privacy officers, finance officers, health care consultants, regulatory professionals, those employed in health care, public health, government, and academia.” This means the AHLA members are lawyers for the nursing homes. They are not lawyers for the patient or family member. Does that seem like a level playing field to you, conducting this forced arbitration according to the rules devised by the nursing home lawyers? Not hardly.