Ken Connor

"America needs more lawsuits. That's the message hundreds of plaintiffs' trial lawyers from across the country are taking to Capitol Hill this week as they lobby Congress to make it easier to bring more lawsuits." It was clear from the opening paragraph of Lisa Rickard's article "Lobbying for Lawsuits" (posted 10/3/07) that Town Hall readers were in for yet another trip into the U.S. Chamber of Commerce's fantasy land, where "greedy trial lawyers" abuse the legal system with "frivolous lawsuits."

No one should be surprised that this latest excursion was led by Ms. Rickard. She is head of the Chamber's Institute for Legal Reform and its chief in-house advocate for measures to erode individuals' rights in the civil justice system.

But Ms. Rickard started this trip off on the wrong foot. The lawyers who were on Capitol Hill last week were there primarily to lobby members of Congress to support the Arbitration Fairness Act of 2007, a bill that supports voluntary arbitration while preserving the constitutional guarantee of citizen access to the courts.

You see, what the Chamber of Commerce and its corporate members want is mandatory binding arbitration—the kind of arbitration that permanently precludes deserving individuals from ever seeking legal redress in the courts when they are injured by the negligence or misconduct of others.

As a trial lawyer who specializes in cases of nursing home abuse of the elderly, I am frequently confronted with the Chamber's model of arbitration in my practice. In many small communities across America, the elderly and their families often have only one nursing home conveniently available to them. Capitalizing on their monopoly, these facilities often require incoming residents (many of whom are demented, medicated or otherwise suffering from some form of diminished capacity) to check their rights at the nursing home door by waiving their right to receive justice through America's court system. No waiver of rights, no admittance! The alternative that's offered to residents who may suffer abuse or neglect at the hands of their caregivers is "mandatory binding arbitration," a system rigged in favor of nursing home owners. The owners provide a steady flow of business to those arbitrators who predictably "low ball" residents victimized by abuse or neglect. A tremendous boon to the corporate bottom-line, of course, but it has little to do with justice.

The elderly in nursing homes are not the only Americans affected by mandatory binding arbitration and the loss of their legal remedies to achieve justice.

Virtually all investors who open accounts with Wall Street brokers must sign an agreement to remedy any disputes through binding arbitration. The National Association of Securities Dealers (NASD), the primary self-regulator in the U.S. securities industry and funded directly by industry members, is usually the entity that operates the arbitration forum. When bringing a dispute, not surprisingly, investors seldom win. In a newly released study of 14,000 cases brought against brokers and submitted to arbitration panels during a recent 10 year period, investigators found that investors recovered only about 34% of their claims. "The vast majority of cases are getting a tiny fraction of what they are entitled to," said Daniel Solin, a lawyer who represents investors against brokers. "In my view, the NASD is largely in the business of protecting the rights of industry members."

A study released by Public Citizen just last month examined the use of mandatory binding arbitration as required by the credit card industry. According to the report, The National Arbitration Forum (NAF), often the industry's arbiter of choice, is the "go-to dispenser of swift decisions" against customers of credit card companies. The study revealed that NAF arbitrators routinely ignored repeated consumer protests that identity theft was the source of the debts in controversy. And, out of more than 19,000 cases in which an NAF-appointed arbitrator was involved, an astonishing 94 percent of decisions were for business!

Because the companies often retain the right to hire the entity that administers the arbitration, arbitrators have a strong financial incentive to rule in their favor. Companies are the source of their business and top arbitrators can charge up to $10,000 per day. Some make as much as $1 million dollars a year. Companies track how arbitrators rule and reject arbitrators who do not rule in their favor. According to Public Citizen, "One NAF arbitrator, a Harvard law professor, was blackballed after she awarded $48,000 to a consumer in a case in which a credit card company filed a claim against the consumer." The professor later resigned from service with NAF, citing the company's "apparent systematic bias in favor of the financial services industry." Public Citizen understandably concluded that mandatory binding arbitration is a "rigged game in which justice is dealt from a deck stacked against consumers."

Let's be honest. The Chamber of Commerce doesn't want its members to be held financially accountable for negligent or abusive conduct or for faulty products that injure consumers. They know that one way to avoid full accountability is to substitute mandatory, industry-friendly arbitration panels for the right of citizens to have disputes resolved by a jury of their peers.

Plaintiff attorneys support voluntary arbitration. It is in no one's interest to see the court system overloaded with cases that can be fairly and easily resolved through honest arbitration. But let's not kid ourselves that mandatory binding arbitration is a means to justice. It is anything but.

The Bill of Rights guarantees that every citizen should have access to the court system. Every constitutional right is precious, and should be zealously protected. That's what the lawyers who were lobbying Congress last week were doing.


Ken Connor

Ken Connor is Chairman of the Center for a Just Society in Washington, DC.
 


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