A recent investigation by the New York Times called into focus the alarming and devastating efforts by corporations, insurance companies, and financial institutions to take away fundamental rights of individual consumers.[1] The right of a US citizen to be heard by a jury of peers is one of the most important aspects of our democratic system. Our nation’s founders considered the right to a jury trial to be indispensable, and arguably the most important right of citizens to combat tyranny. Our founders considered the right to trial by jury so essential that it was preserved in the Bill of Rights as the 7th Amendment to the Constitution. In a 1979 case, United States Supreme Court Justice William Rehnquist stated:
[T]hose who oppose the use of juries in civil trials seem to ignore [that] the founders of our Nation considered the right of trial by jury in civil cases an important bulwark against tyranny and corruption, a safeguard too precious to be left to the whim of the sovereign, or, it might be added, to that of the judiciary.[2]
Unfortunately, the right to a jury trial in our civil justice system is under attack by insurance companies, corporations, and lawmakers, who have succeeded in forcing binding arbitration clauses into various consumer contracts in order to block an individual’s right to access the courts. With just a few simple words innocuously embedded in the fine print of a contract, a corporate entity can mandate that any dispute between the individual consumer and the company “shall be resolved by individual arbitration.” The clause allows the corporate entity to select, and pay for, a single arbitrator to “resolve” a dispute. These clauses are often buried in a lengthy contract and are not obvious to the lay person. Preventing an aggrieved person the ability to challenge a wrong in court, before a jury of peers, denies that person the basic right to challenge tyranny and corruption on a level playing field.
Binding arbitration clauses have become increasingly common in contracts of all kinds, including insurance policies, credit card and bank account agreements, loan applications, cell phone agreements and employment contracts, to name a few. Nearly every automobile insurance policy contains binding arbitration clauses in the context of Personal Injury Protection (PIP) or Uninsured/Underinsured Motorist Coverage (UIM) coverages. This means that an insured whose policy contains a mandatory arbitration clause, and who has a dispute with their insurance company, cannot present a claim in court before a judge and jury, but rather is forced to argue their case before a single arbitrator, paid by the insurance company. The result is a staggeringly uneven playing field when a dispute arises between the individual and the corporate entity that drafted the contract. The insurance company has the upper hand and the individual consumer is powerless to challenge any wrongdoing.
Mandatory arbitration frustrates the design of our civil justice system intended to level the playing field for the “little guy” through established procedural rules, the right to know and challenge evidence before trial, and the right to an impartial judge who is guided by the law that instructs a jury of impartial peers. Binding, or “forced” arbitration clauses are hardly voluntary. These clauses are buried in the fine print of consumer contracts and insurance policies and written in legalese that is indecipherable to most consumers. During arbitration, rules of evidence and rules of procedure are more relaxed than they are in court, and there are often limitations on what evidence can be obtained by the parties prior to the claim being heard, which may make it difficult for individuals to have access to evidence important to their case. Arbitration proceedings are typically private and not open to public view, as are jury trials. The decisions rendered by the arbitrator is binding and not subject to appeal, even though the decision may not be legally correct. Finally, the injured party typically must share the sizeable cost of the arbitration with the company or insurer, who is in a far better financial position to bear such cost. In the event the company covers the cost, it has the ability to delay or freeze the arbitration if it senses the proceeding is not going favorably.
For the survivor of serious injury, the right to a fair hearing is essential to that person’s physical, mental, spiritual and financial recovery. The attorneys at Adler Giersch, ps are available to assist those who have been harmed by the negligence of others and work hard to level the playing field on behalf of their clients.
[1] “Arbitration Everywhere, Stacking the Deck of Justice.” The New York Times, Jessica Silver-Greenberg and Robert Gebeloff, Oct. 31, 2015. http://www.nytimes.com/2015/11/01/business/dealbook/arbitration-everywhere-stacking-the-deck-of-justice.html?_r=0
[2] Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 99, 99 S. Ct. 645.
