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Stuck in an Arbitration Clause?

Contracts from cell-phone packages to financing plans to liability releases are increasingly including arbitration clauses. Generally, consumers do not read all the fine print of what they are signing, and even when they do, they do not have the option to negotiate the terms of the contract. An arbitration clause is language in a contract that requires the parties to handle any dispute regarding the contract in arbitration rather than through a traditional lawsuit.

Arbitration vs. Litigation

Arbitration has many advantages over traditional litigation. It is typically much faster and cheaper. However, arbitrations are not bound to follow the rules of civil procedure that were designed to keep courtroom trials fair and impartial. In the landmark 2012 case CompuCredit Corp. v. Greenwood, the U.S. Supreme Court ruled that while individuals will always have a “right to sue” companies that have wronged them, the “right to sue” is not necessarily construed as the right to a lawsuit, but as the right to a forum to resolve the dispute.

In arbitration, an arbitrator will hear both parties present evidence and then make a decision, which can later be enforced in court if needed. Traditional trials can take years and cost hundreds of thousands of dollars; arbitrations take months and are significantly cheaper. Arbitration is an excellent alternative to litigation if both sides have equal resources. The problem with arbitration clauses hidden in contracts, however, is arbitrators tend to be biased. An arbitrator is much more likely to side with a large company who will need to hire them again repeatedly than an individual who will likely only ever have a single case.

Most importantly, arbitration limits the ability of consumers to create a class-action lawsuit, which, historically, has been the most effective way of consumers being compensated for faulty products and services. In a case where the damages are very small, it can be counter-productive to spend a lot on legal fees and attorney costs. Previously in these cases, people would join together in a class-action lawsuit so even small claims would be worth pursuing if they affected enough people. Arbitration clauses are typically written to limit class action lawsuits.

Another problem with arbitration is that the arbitrators are not bound by traditional court rules. The rules for presenting evidence are much more relaxed as the traditional discovery process, which consumes much of the time and money in litigation, is abandoned. The judgements are not required to follow the precedent of similar cases and can be literally anything the parties agree to. Also, instead of being a matter of public record, it is commonplace for judgements to be made private with non-disclosure agreements. The traditional court system is very reluctant to regulate or interfere with arbitrations.

Let Our Attorneys Help You

If you find yourself injured and have signed a contract with an arbitration clause preventing you for suing for that injury, contact us for a consultation. The Eighmie Law Firm, P.A. in Port St. Lucie has the knowledge and experience to help you navigate your arbitration successfully.

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