Millions of consumers in the United States alone have signed credit card, mobile phone, car rental and other agreements without realizing that they contain compulsory arbitration provisions. Little does the average consumer know that by signing these agreements, you are agreeing that if any law suit comes up, arbitration must be used in lieu of other legal remedies.
Arbitration has become a much-used procedure for resolving disputes. Every day, thousands of arbitrators are involved in hearing business, employment, construction and personal injury disputes. In this procedure, parties select one or three arbitrators to hear the facts of the case. The hearings are more informal than a court trial, and the award is binding. However, no appeal is permitted. So, it is a faster remedy than traditional litigation, and leaves for little lee-way. The major perk of arbitration is that it is cost-effective and relatively efficient.
The case DIRECTV Inc. v. IMBURGIA et al. (Dec. 14, 2015 No 14-462, p. 11) states that, “By inserting individual arbitration clauses into a soaring number of consumer and employment contracts, companies [have] devised a way to circumvent the courts and bar people from joining together in class-action lawsuits, realistically the only tool citizens have to fight illegal or deceitful business practices.” Keep your eyes peeled when you are signing the types of agreements listed above, so that you are prepared in case you make a claim and are faced with arbitration.
In October 2015, the Consumer Financial Protection Bureau announced it was considering regulation that would require banks and other consumer financial institutions to include a term expressly permitting class action lawsuits in all pre-dispute arbitration agreements. A major effort will be necessary to obtain legislation or agency rulings to preserve lawsuits and class actions or class arbitration rights in cases of non-routine consumer agreements such as nursing homes, hospitals, doctor’s offices, urgent care, employment or construction. A possible solution to this matter is establishing maximum threshold amounts for personal injury and service agreements; claims above these amounts could be made in a court action.
Please contact HoganWillig with any questions about the above material, and if you wish to speak to an attorney, at (716) 636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York 14068, with additional offices in Buffalo, Ellicottville, Lancaster, and Lockport.