Something is missing from Bruce Stern’s November 27 guest editorial in the Star Ledger lambasting arbitration – a recognition that there is really no such thing as “forced arbitration.”
I don’t know about you, but I’ve never been forced to deposit my money in a bank I didn’t prefer to other banks, buy a cell phone I didn’t want, or commit my loved ones into the care of a nursing home managed in a manner I disagreed with. All the goods and services I buy (aside from the ones the government forces me to purchase) are bought voluntarily, and the terms and conditions tied to each product are something I take into consideration when shopping around.
The only thing forced about arbitration is the fact that companies are being forced to arbitrate rather than litigate in order to keep costs to consumers down because arbitration is faster, cheaper, and recognized by the court system itself as being just as fair as litigation.
So if arbitration isn’t as bad as it’s made out to be, why are we seeing a movement urging policy makers to curtail it? A clue to the author’s real motivation for writing his hit piece is hidden in the text – money.
Stern, a trial attorney, correctly notes that in an arbitration, “the customer may also have to cover the costs of the arbitrator, meaning an effort to recoup $50 of illegal overdraft fees could result in hundreds of dollars in arbitration costs.” When consumer suits are brought in court, and the plaintiffs are successful, the attorney’s fees often must be paid by the defendant as part of their punishment. This sort of fee-shifting is not mandatory in arbitration, so attorneys end up earning less in each case.
Money is also the hidden reason trial attorneys so ardently support class actions over arbitration of individual disputes. It is no secret that in a lot of consumer class action cases the attorneys walk away with millions while the class members get an award so small it’s basically a token of appreciation for participating. Consumers would often be better off bringing their claim outside the court system, but attorneys would not.
Policy makers should consider all of the facts before making a judgment about arbitration, just as consumers do when they decide what goods and services to buy. Nobody should be forced into doing something they would not choose for themselves – whether by the government or by corporations – but should retain the freedom to choose how to structure their own lives.