What's wrong with Forced Arbitration? This will shock you.

Dec 15, 2014 @ 11:20 AM — by Josh Silverman

Arbitration clauses are in just about every contract you sign including even some legal retainer agreements but certainly not mine. Essentially in the fine print of most contracts including nursing home admission agreements, credit cards, cell phones, lift tickets for ski resorts, etc. are terms that take away your right to seek justice in a court of law. Instead you must hire an arbitrator at $300+/hour to have your case heard. That is unrealistic for most people and certainly is not an even playing field.

Here is what happened to 88 year old Kenny Johnson. Mr. Johnson rents a refrigerator from Rent-A-Center. According to news reports, the refrigerator breaks and Rent-A-Center sends an employee out to service it. The employee brutally beats Mr. Johnson and then robbed him. The assailant was prosecuted for the assault.

The victim arguably should have understood that if there was a dispute about the refrigerator that his rights would be limited by the forced arbitration provision stuck in the fine print of the contract. Who would have ever thought that an arbitration agreement to a rental contract could be used to deny an 88 year old victim of a criminal assault his day in court? Well the trial court ruled that the arbitration agreement to rent a refrigerator was enforceable to keep Mr. Johnson from pursuing his case in court.

One can ask shouldn't he get a fair shake in arbitration? First there is a reason the right to a jury trial is contained in the Bill of Rights (7th Amendment for those keeping score). A jury of the one's peers is the fairest way for society to judge conduct. Secondly, the arbitrators are paid by the hour and want further business. Rent-A-Center and other corporations may have thousands of claims to arbitrate, but the Mr. Johnson's of the world probably only have 1 claim. Naturally the arbitrator has an incentive to go with the repeat customer.