
In Arbitration, a ‘Privatization of the Justice System’ - yesplorer
http://mobile.nytimes.com/2015/11/02/business/dealbook/in-arbitration-a-privatization-of-the-justice-system.html?hp&action=click&pgtype=Homepage&module=first-column-region&region=top-news&WT.nav=top-news&_r=1&referer=https://t.co/dCBa0wODBb?t=1&cn=ZmxleGlibGVfcmVjc18y&sig=0412b03d682114f12acb7519cc2a36701c44f4cc&al=1&iid=644b959be5494f2fb4c7ed16f404ec86&autoactions=1446991361&uid=321660521&nid=244+288
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PaulHoule
It's an issue that has more than one position.

For a long time I was a volunteer at a mediation center where maybe 70% of the
cases we did were parenting plans for divorced or separated parents.

The scientific evidence is that mediation is much more effective, for
parenting plans, than court both in terms of (i) people being happy with the
results, and (ii) people following their plan and not winding up back in
court.

The family court in the county has a close relationship with the mediation
center and tries to send as many cases to it as it can because it is cheaper
and faster, never mind getting the better outcomes that are mentioned above.

Now in the case of that center people can always go to court if they don't
come to an agreement, but I would say that the NYTimes assessment of
alternative dispute resolution is pessimistic and reflects the viewpoint of
the lawyers who are 99% of democratic congressmen and nearly 50% of the
republicans.

~~~
bsder
> Now in the case of that center people can always go to court if they don't
> come to an agreement

This is the key. Most arbitration clauses in contracts, however, seek to
prevent going to court. And, in addition, arbitrators side with companies what
appears to be far to often.

If people are required to seek arbitration, but can still go to court
afterward, I have no issue at all with arbitration.

~~~
DannyBee
"This is the key. Most arbitration clauses in contracts, however, seek to
prevent going to court."

Most mediated settlement agreements have the same clause.

The goal is finality.

"And, in addition, arbitrators side with companies what appears to be far to
often."

Based on _what_ data do you think it is far too often?

IE why is it bad that they side with companies often if the companies are
right?

In my experience, most of what our justice system deals with are bullshit or
worthless claims, and so if the private arbitrators agree with the companies,
instead of the company settling, that's _good_ not _bad_.

I'd love to see some independent org do an independent review of the
strength/merit of the claims of each arbitration case, and whether there is
still bias "accounting for that"

I realize how difficult such a thing would be ;)

Without such a thing, at least, given what i've seen, i remain unconvinced
that most complainers are is not just the whining of plaintiffs lawyers and
people they sold a bill of goods to.

Because arbitration is cheaper, faster, and probably better for _everyone_.

(plus, you don't need _lawyers_ to represent you. In fact, i could start a
company that handled thousands of arbitration claims for folks much more
effectively than i could handle thousands of class action lawsuits. Because i
don't need $500 an hour lawyers to manage the case, legally.

It happens that lawyers are really slow and haven't noticed this yet, but i
expect arbitration will end up better long term for people once they do)

"If people are required to seek arbitration, but can still go to court
afterward, I have no issue at all with arbitration. "

If they could, there would be no point in arbitration!

Someone is going to lose. If the next step is to go to a judge and have them
re-decide the whole thing, why bother with the arbitration step?

~~~
bsder
> Based on what data do you think it is far too often?

Let's start with these:

[http://www.responsiblelending.org/credit-cards/research-
anal...](http://www.responsiblelending.org/credit-cards/research-
analysis/stacked_deck.pdf)

[http://www.nasaa.org/5698/state-securities-regulators-say-
ne...](http://www.nasaa.org/5698/state-securities-regulators-say-new-study-
clearly-shows-investors-view-securities-arbitration-as-biased-and-unfair/)

And from the second, let's grab this quote: "A striking 75 percent of
customers who compared their arbitration process to their civil litigation
process indicated that arbitration was “very unfair” or “somewhat unfair”
compared to court."

Given that civil court absolutely sucks, that's quite telling.

~~~
tptacek
That statistic doesn't tell you enough, because you don't know the rate of
valid claims to invalid claims, and it's very possible that the "legal dispute
with this particular company" filter exerts a powerful bias on that rate.

------
r_sreeram
> And unlike the outcomes in civil court, arbitrators’ rulings are nearly
> impossible to appeal.

> When plaintiffs have asked the courts to intervene, court records show, they
> have almost always lost. Saying its hands were tied, one court in California
> said it could not overturn arbitrators’ decisions even if they caused
> “substantial injustice.”

This seems like a really serious problem. If arbitrations are, as they are
claimed to be, generally better on the average (cheaper, faster, better
compromises, etc), one could tolerate even "forced" arbitrations (by way of
fine print that few people read). But the lack of avenues to appeal (if true)
seems to me a fatal flaw.

Is this generally true of all arbitrations? Or is this only a few unusual
cases?

~~~
DannyBee
Most arbitrations are binding. That means they can't appeal _the facts and the
result_.

If the _arbitration process_ was unfair, they can appeal that. But if the
process was fair, ....

~~~
wfo
For a definition of "fair" set by the arbitrator.

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wfo
Truly disgusting -- so unimaginably perverse injustice that I can't imagine a
coherent lucid defense being presented that this should be legal, though if
you have one please prove me wrong. If you want to protect rights, it's vital
to not only have a statute against certain entities violating them (primarily
government), but to ensure people cannot sign them away. If something is
permitted, it will occur -- there will always be people desperate enough or
uninformed enough to agree to anything that's permitted for them to agree to,
and all of a sudden your rights only exist if you're wealthy enough to avoid
being forced into a contract like this.

In our case it's become so ubiquitious that in job offers, not having binding
arbitration is a perk -- companies sometimes choose to allow their employees
the ability to exercise their rights in order to attract better talent. That's
not good enough.

------
forrestthewoods
People who think the "normal" legal system is "fair and honorable" have very
clearly never dealt with it. It's many things but neither fair nor honorable
are among them.

Arbitration can be good and can be bad. I'm not sure the best way to reduce
the bad. It best not come at the expensive of Freedom of Contract.

~~~
zyxley
"Freedom of contract" is a silly thing to uphold as an absolute principle. The
reason to uphold contracts is for the general good of society, not just
"because a contract is a contract", and companies being able to put mandatory
arbitration clauses in contracts of adhesion to circumvent the standards of
normal courts is not generally good for society.

------
colindean
Assertion: the rise of arbitration is caused by the rise in the expense and
time-to-resolution of the government judicial system.

Thoughts?

~~~
mannykannot
Having one of the parties to the dispute being the primary and continuing
source of income for the decision-maker does seem likely to improve those two
measures of the process.

------
onetwotree
"For many people, when the choice is between giving up the right to go to
court or the chance to get a job, it is not a choice at all."

Nice that we have luxury tech careers and can tell employers to fuck off.
Remember to read your contracts before you sign them!

In general, I'm sure that voluntary mediation works well, but to take away a
persons right to seek legal recourse is deeply wrong.

------
learc83
To really make arbitration fair (or at least as fair public courts) you'd need
so many regulations and oversights that you'd just end up with a parallel
court system that would likely have the same problems that arbitration tries
to solve in the first place (mainly time and expense).

------
leesalminen
Related article:
[https://scholar.princeton.edu/sites/default/files/mgilens/fi...](https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf)

The United States is essentially an oligarchy. Why is this surprising? Are we
stuck with the nationalistic sentiment that America is the Best TM and are
blind to the issues that affect all of us?

~~~
webkike
How does the second part of what you said relate to the article?

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6stringmerc
In my view, "binding arbitration" is a very lopsided concept by which a large
entity can use an intimidation tactic against a smaller entity or individual
at, essentially, a lower cost than going through the US court system. This
doesn't mean that the large entity is incapable or unwilling to spend capital
in defense of a position, but it's akin to an "up front" legal investment to
save money later. Why bother fighting in court, where an entity like the EFF
or ACLU might be willing to provide financial means to support a fight in
pursuit of justice, when there's an avenue to block such a process from even
happening?

Thus, I've been happy to have my own "Personal Terms and Conditions" on file
(somewhere around here, it was written several years ago) that intends to help
tilt the scale back to even. What do I mean? I mean that as a condition of
taking my money in Good Faith, whatever business entity I'm working with will
have to abide by my own parameters of negotiation - as in, if I'm dealing with
a large conglomerate, their means are significantly disproportionate to those
that I have. So, as a rule of doing business with me, should there be a
dispute, the corporate entity agrees to only use the same budget that I have
available. It's highly subjective whether such things could be defensible in
court, but it's just one way that I believe it's a US Citizen's right to
declare when there's a fight, it's going to be as fair as it can be.

For example, a friend recently had a dispute with their major healthcare
provider over a short vs. long-term prescription issue. The friend's Doctor
wrote out a 90 day supply prescription for the incurable issue requiring
maintenance medication. The insurance company refused to fulfill the 90 day
supply, and said that they would only approve a 30 day supply. If you know
about US health insurance programs, you'd know that a 90 day has a copay of
$XX, and a 30 day has a copay of $YY. Thus, this person would have to pay
nearly 2x in copay monies out of pocket simply because the insurance company
didn't want to fund the actual, written prescription. Eventually the mail-
order fulfillment service started calling up this friend, demanding $X,XXX in
back co-pays. The friend pointed out that the fulfillment service had emptied
out the Health Savings Account for several years, taking co-pays for each 30
day supply, which was unfair because the actual amount to be billed shouldn't
exceed the 90 day cost. 5 phone calls later, and with the stubbornness of a
ram, the friend finally got the company to give up on trying to extort him for
money that wasn't owed. To this day, the insurance company refuses to fulfill
the 90 day prescription, and he's simply waiting, fangs sharp, for if they try
to come at him again.

How would the above situation work out in arbitration paid-for by the
insurance company? They broke the binding agreement of fulfillment, then
wanted to make it the responsibility of the party with the least means. That's
injustice, and it's important for individuals to understand, or be willing to
stand up and argue, when a large entity decides to "change the rules" to
benefit themselves, it's fair game to change the rules right back and punch
hard. I'm not presenting this kind of stuff as some kind of quick-fix or
blanket approach for each and every person, life is more complex than that.
However, the erosion of rights and personal liberty is another complex
subject, one that I'm glad to study for its nuances and application in small
and large battles.

~~~
Natsu
Problem is, the much of the same can be said about lawsuits themselves. They
also favor the larger party, especially when you factor in court costs.

I do wonder if it would be more fixable by requiring arbitrators to adhere to
certain standards and register, then pick one at random for each arbitration
request so that no one can stack the deck with their choice of arbiter.

------
littletimmy
"[Capitalism] has resolved personal worth into exchange value, and in place of
the numberless and indefeasible chartered freedoms, has set up that single,
unconscionable freedom — Free Trade. In one word, for exploitation, veiled by
religious and political illusions, naked, shameless, direct, brutal
exploitation." \- Karl Marx, The Communist Manifesto

This is quite the end game of capitalism, isn't it?

Individuals do not matter, capital does. Given that corporations have capital,
they're the ones who matter. People, especially the disadvantaged ones who
lack capital, are not important. Justice means the service of capital. If we
agree to that, we'd see that this "new" system is not that unusual. If you
have unfettered capitalism, you give up all other values to capital, including
individual justice.

------
tn13
I think this is a very one sided view of things (its NYTimes after all).

The purpose of arbitration is not to take away customer's right to seek
justice. The purpose is to reduce costs of fighting a lawsuit in court which
is far too expensive.

I do see the risk that arbitrators might favor the right of company more than
the customer but such a company and arbitrator eventually lose credibility and
market share.

Imagine we had to outlaw the whole arbitration process, what would happen that
? Courts will have more cases to address and both involved parties end up
spending more money than usual which increases the cost of business for
everyone.

I would rather opt in for arbitration and get my car for $500 less than see
the arbitration process go away.

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fiatjaf
It's great to know something like this exists. We should have arbitration like
this here in Brazil too, instead of arbitrarion subjected to public courts.

~~~
borkabrak
I find this viewpoint surprising, given the problems with arbitration pointed
out in the article.

What are your reasons for preferring arbitration? Are the courts in Brazil
that corrupt? If so, how would arbitration be better?

~~~
fiatjaf
They are very very slow, both in judging and in executing decisions, and at
the same time consume a huge bunch of State money. They are probably corrupt
as well.

------
MichaelBurge
People should be encouraged to use the courts. It's a good thing that people
use the court system to resolve their disputes. At least they're not dueling
in the streets - or worse, leaving their disputes unresolved and suffering
without any way to resolve them. Court systems are how modern societies
resolve their disputes.

I think the US court system is - on average - fair to the parties involved.
One example: The US doesn't award legal fees to the winner, because then
everyone would immediately hire the most expensive lawyer to get a higher
chance of winning. This would raise the stakes of any lawsuit, and make people
far more scared to go to court. This means people might genuinely be suffering
from some issue that they can't get resolved.

There's a legitimate issue where companies are afraid of losing millions on
legal fees from one of their millions of customers that paid $20 for a cable
and got shocked or hurt. Maybe the product was genuinely flawed or the company
genuinely treated the customer poorly. Maybe the company is in the right but
the customer feels slighted and wants their righteous indignation, or is just
greedy for a payout.

For smaller claims, there is small-claims court which is supposed to handle
this at much lower cost.

For larger claims: Well, the stakes are intrinsically higher, so maybe it
makes sense for the legal system to be expensive.

But for mid-claims - claims too large for small claims court and too small to
spend millions on a legal campaign - maybe there is room for improvement. And
maybe that room involves arbitration companies. If two parties of equal power
consent to using them to save money on a $100,000 contract, that seems okay to
me.

But if a million dogs get shocked to death by defective dog collars, it seems
wrong that people couldn't use the court system to get resolution. Maybe it's
a bad example - but companies engaging in some trouble worth tens of millions
of dollars _should_ end up in court. Society doing this is a good thing, even
for the companies involved - although they might not feel like it at the time.

When you hear about some large corporation getting off the hook with what
seems to be a slap-on-the-wrist million dollar fine, it's almost a good thing:
it means you can use the court system to sue large companies to resolve
disputes and get them to change their behavior without burdening everyone with
a draconian court system.

I say arbitration should either always be appealable to a real court, or we
should set up a new cheaper court system that reviews the evidence and makes a
preliminary opinion but doesn't set precedent and can be appealed.

~~~
crdoconnor
>There's a genuine issue where companies are afraid of losing millions on
legal fees from one of their millions of customers that paid $20 for a cable
and got shocked or hurt.

That's a feature not a bug. That paranoia has probably saved many tens of
thousands of lives, maybe more.

