Arbitration clauses are becoming an effective tool for employers and certain litigation-prone professions like medical doctors, hospitals, nursing homes and automobile manufacturers to bypass the legal system. The vast majority of people who sign an employment contract, service agreement, or purchase contract have no idea that they are signing away their right to take the company or person to court should a dispute arise.
People who are injured in accidents, suffer medical malpractice, or are sexually harassed or otherwise wrongfully terminated from their job are shocked when they file legitimate civil claims suing their doctors, employers and manufacturing companies and have their cases thrown out of court, not being heard by a judge that cites the arbitration clause present in the contract.
The NY Times lists several cases where legitimate civil claims were forced into the arbitration process instead of being heard by a judge in court:
- A 94-year old women who died of a festering head wound was forced into arbitration rather than a malpractice lawsuit.
- A women in Alabama who sustained injuries when the brakes failed on her car was barred from suing Honda.
- A women who sued her obstetrician for negligence when her baby was born with serious deformities had her case thrown out of court and forced into arbitration instead.
And the list of abuses in arbitration continues from there.
- Arbitration officials can be a lawyers and not a judges.
- There is nothing prohibiting the lawyer from having pre-existing or on-going relationships with the defendant.
- The appeals process is non-existent.
- Witnesses can be paid for their testimony by companies.
- Employees can be threatened with termination for not testifying in favor of the company.
And the cost of arbitration can be prohibitively expensive. The Times article cites arbitration cases running as much as $150,000 for a six-hour session and if that wasn’t enough to discourage one from pursuing their case, the arbitration hearings are often held in the offices of the lawyer that represents the defendant!
Arbitration is fast becoming an alternative justice system and is denying people many of the rights that the legal system affords them. Lawyers feel that there is an alarming and growing trend for the current legal system to be bypassed in favor of arbitration. What’s to prevent every company from shielding themselves from their legal responsibilities by adding a simple arbitration clause to all their employment contracts and purchase agreements?