5 ms·

How forced arbitration is legal in the US never made sense to me. If the clause was "In the case of a dispute, we win.", it'd be deemed invalid by the courts.

by deogeo 8y ago

How forced arbitration is legal in the US never made sense to me. If the clause was "In the case of a dispute, we win.", it'd be deemed invalid by the courts. But since it's "In the case of a dispute, we have an overwhelming advantage in a private court.", that makes it valid?

shados 8y ago
> In the case of a dispute, we win Wasn't there an article recently about some predatory lending practice where the lender made you sign a clause essentially letting them win in any dispute? And it got enforced a bunch?
- nowarninglabel 8y ago
  https://news.ycombinator.com/item?id=18560153 https://news.ycombinator.com/item?id=18560153 (which also links other comment threads on it)
- frei 8y ago
  Confession of judgement is what the clause is called.
secabeen 8y ago
We should really pass a federal law prohibiting arbitration in contracts of adhesion.
- gpm 8y ago
  We should just ban arbitration outright. It's a clear violation of the right to a fair and public trial (seventh amendment in the US, but more generally the human right), no matter what the courts say. Even if you believe that arbitrators attempt to be fair and correctly apply the law, there are numerous public policy issues with them, for some examples: - The well known principle that it's not enough for the system to seem fair, it must appear to be fair. - The lack of an appeals system. Real courts screw up all the time and there is 0 evidence to believe that arbitrators are better. - The lack of case law developed, leading to re litigating issues and no clarity for future controversies. - The lack of checks and balances, regardless of how fair arbitrators are today there is no way to stop them from becoming corrupt in the future.
  - xur17 8y ago
    We should specifically ban forced arbitration. If both parties are okay with using arbitration I see no reason to restrict that.
    - ashelmire 8y ago
      There's no forced arbitration. Both parties do agree to it in employment contracts. The problem is the balance of power is overwhelmingly with employers, so if you don't agree, you don't get a job... anywhere.
      - krageon 8y ago
        You've just described force.
      - secabeen 8y ago
        That's a contract of adhesion, where one party (the employer) writes the standard employment contract, and the employee can either sign it (and take the job), or not. Yes, you can rarely get small one-off changes applied, but significant re-writes of any company's standard employment contract are off the table if every job I've ever taken. Aribtration seems fine if it's business-to-business, and both sides have full-time counsel on staff, a contracts department in accounting, etc. etc.
  - BonesJustice 8y ago
    Also, the intense secrecy surrounding arbitration proceedings. If I have to give up my right to talk about how I’ve been wronged in order to even seek a remedy, then that is reason enough to ban the practice. This makes it a first amendment issue, but it’s more than that. We as a society lose out when cases are settled behind closed doors with no public record. We cannot make informed decisions about employment if we don’t know who the bad actors are.
    - kevin_b_er 8y ago
      The secrecy is so the corporations know all the arguments that work and on which arbiters, and you don't.
JoshTriplett 8y ago
> But since it's "In the case of a dispute, we have an overwhelming advantage in a private court.", that makes it valid? In theory, arbitration firms are supposed to be independent and unbiased. I'd love to see some statistics backing that up. If there were a case for arbitration firms heavily backing companies over individuals, then that'd be a much stronger case.
- deogeo 8y ago
  Such as https://www.epi.org/publication/mandatory-arbitration-unfairly-tilts-the-legal-system/ https://www.epi.org/publication/mandatory-arbitration-unfair... ?
  - JoshTriplett 8y ago
    Helpful, thank you! That's quite an interesting result to consider. I'm curious why I haven't seen any signs of people going after the arbitration firms and their impartiality, rather than going after the companies using those firms.
    - Decathect 8y ago
      It’s because the problem is the existence of the system, not that the instigating companies haven’t learned or cared to learn how to obscure the unjust advantage they are buying.
      - JoshTriplett 8y ago
        Would you say the same thing if arbitration firms ruled in favor of employees more often than courts did? (I'd also be interested in knowing why the comparison was with "federal court" and not "any court".)
    - fhrow4484 8y ago
      > I'm curious why I haven't seen any signs of people going after the arbitration firms and their impartiality, rather than going after the companies using those firms. I think the reasoning people have is the alignement of incentives is messed up: Big companies will use arbitration if it provides them a cheaper alternative than going to actual courts. The arbitration firm that is more employer friendly will save more money to a company than a firm that is less employer friendly, therefore the company is more likely to hire the first one. And arbitration firms are more likely to be employer friendly since their financial success is impacted. Ending arbitration isn't necessarily the right solution, since courts could be too crowded, but maybe authorizing it, only if the case is handle in a timely fashion, and the employee has a right to "appeal" to a regular court , could make it more fair and more economical to both sides?
manigandham 8y ago
It's not a court, it's arbitration which is provided by certified and regulated firms that are supposed to be objective. And you willing agree to it. There's nothing illegal about it. If you think arbitrators are compromised then it would be no different with a civil court, which probably has even worse objectivity.
- jkaplowitz 8y ago
  The firms aren't certified, regulated, or required to be objective. Civil courts have a much more balanced mix of outcomes; arbitrations almost always rule in favor of the business against the individual.
- intopieces 8y ago
  “Willingly agreed” is a just a bit of a stretch here. When one party has substantial leverage over the other, consent is not really meaningful.
  - manigandham 8y ago
    You can find another job. What leverage do they have? If you're talking about the only factory in town with jobs available to feed your family, then it would be an understandable situation but high-paying white-collar positions with these benefits and flexibility are an unimaginable luxury for most and do not qualify as any sort of forced scenario.
    - throwaway2048 8y ago
      What happens when every job in your field has Mandatory Binding Arbitration in the employment contract?
      - manigandham 8y ago
        Then that would be a problem, but that's not the case. People just find it easier to claim no accountability.
theproblem223 8y ago
It makes a lot of sense and I'm likely to sign a forced arbitration clause if I think it will be a fair process. People respond to incentives and there are lawyers specialized in trying to grab huge payoffs from companies. They are not allowed in arbitration. This is a sensitive issue and the last time I posted, some innocent bystander got banned. You can review my post history, which is serious. Yes, people respond to incentives, and yes, massive payoffs by companies when a seedy lawyer is one of these incetives is one of these. Why people here don't understand this is beyond me. People understand that giving equity in a company produces great labor from early employees. It should be equally obvious that allowing massive, inflated, and ungrounded lawsuits encourages the opposite result. If done well, there is nothing wrong with forced arbitration. I can only repeat: I myself will sign a forced arbitration clause, if I expect it to be vaguely fair, even if it deprives me of the chance to file a huge golddigger lawsuit. I prefer to play on the winning team, not sue them. Forced arbitration, done well, helps this. Why would I sign if it's so evil?

by deogeo 8y ago

shados 8y ago

> In the case of a dispute, we win Wasn't there an article recently about some predatory lending practice where the lender made you sign a clause essentially letting them win in any dispute? And it got enforced a bunch?

nowarninglabel 8y ago
https://news.ycombinator.com/item?id=18560153 https://news.ycombinator.com/item?id=18560153 (which also links other comment threads on it)
frei 8y ago
Confession of judgement is what the clause is called.

secabeen 8y ago

We should really pass a federal law prohibiting arbitration in contracts of adhesion.

gpm 8y ago
We should just ban arbitration outright. It's a clear violation of the right to a fair and public trial (seventh amendment in the US, but more generally the human right), no matter what the courts say. Even if you believe that arbitrators attempt to be fair and correctly apply the law, there are numerous public policy issues with them, for some examples: - The well known principle that it's not enough for the system to seem fair, it must appear to be fair. - The lack of an appeals system. Real courts screw up all the time and there is 0 evidence to believe that arbitrators are better. - The lack of case law developed, leading to re litigating issues and no clarity for future controversies. - The lack of checks and balances, regardless of how fair arbitrators are today there is no way to stop them from becoming corrupt in the future.
- xur17 8y ago
  We should specifically ban forced arbitration. If both parties are okay with using arbitration I see no reason to restrict that.
  - ashelmire 8y ago
    There's no forced arbitration. Both parties do agree to it in employment contracts. The problem is the balance of power is overwhelmingly with employers, so if you don't agree, you don't get a job... anywhere.
    - krageon 8y ago
      You've just described force.
    - secabeen 8y ago
      That's a contract of adhesion, where one party (the employer) writes the standard employment contract, and the employee can either sign it (and take the job), or not. Yes, you can rarely get small one-off changes applied, but significant re-writes of any company's standard employment contract are off the table if every job I've ever taken. Aribtration seems fine if it's business-to-business, and both sides have full-time counsel on staff, a contracts department in accounting, etc. etc.
- BonesJustice 8y ago
  Also, the intense secrecy surrounding arbitration proceedings. If I have to give up my right to talk about how I’ve been wronged in order to even seek a remedy, then that is reason enough to ban the practice. This makes it a first amendment issue, but it’s more than that. We as a society lose out when cases are settled behind closed doors with no public record. We cannot make informed decisions about employment if we don’t know who the bad actors are.
  - kevin_b_er 8y ago
    The secrecy is so the corporations know all the arguments that work and on which arbiters, and you don't.

JoshTriplett 8y ago

> But since it's "In the case of a dispute, we have an overwhelming advantage in a private court.", that makes it valid? In theory, arbitration firms are supposed to be independent and unbiased. I'd love to see some statistics backing that up. If there were a case for arbitration firms heavily backing companies over individuals, then that'd be a much stronger case.

deogeo 8y ago
Such as https://www.epi.org/publication/mandatory-arbitration-unfairly-tilts-the-legal-system/ https://www.epi.org/publication/mandatory-arbitration-unfair... ?
- JoshTriplett 8y ago
  Helpful, thank you! That's quite an interesting result to consider. I'm curious why I haven't seen any signs of people going after the arbitration firms and their impartiality, rather than going after the companies using those firms.
  - Decathect 8y ago
    It’s because the problem is the existence of the system, not that the instigating companies haven’t learned or cared to learn how to obscure the unjust advantage they are buying.
    - JoshTriplett 8y ago
      Would you say the same thing if arbitration firms ruled in favor of employees more often than courts did? (I'd also be interested in knowing why the comparison was with "federal court" and not "any court".)
  - fhrow4484 8y ago
    > I'm curious why I haven't seen any signs of people going after the arbitration firms and their impartiality, rather than going after the companies using those firms. I think the reasoning people have is the alignement of incentives is messed up: Big companies will use arbitration if it provides them a cheaper alternative than going to actual courts. The arbitration firm that is more employer friendly will save more money to a company than a firm that is less employer friendly, therefore the company is more likely to hire the first one. And arbitration firms are more likely to be employer friendly since their financial success is impacted. Ending arbitration isn't necessarily the right solution, since courts could be too crowded, but maybe authorizing it, only if the case is handle in a timely fashion, and the employee has a right to "appeal" to a regular court , could make it more fair and more economical to both sides?

manigandham 8y ago

It's not a court, it's arbitration which is provided by certified and regulated firms that are supposed to be objective. And you willing agree to it. There's nothing illegal about it. If you think arbitrators are compromised then it would be no different with a civil court, which probably has even worse objectivity.

jkaplowitz 8y ago
The firms aren't certified, regulated, or required to be objective. Civil courts have a much more balanced mix of outcomes; arbitrations almost always rule in favor of the business against the individual.
intopieces 8y ago
“Willingly agreed” is a just a bit of a stretch here. When one party has substantial leverage over the other, consent is not really meaningful.
- manigandham 8y ago
  You can find another job. What leverage do they have? If you're talking about the only factory in town with jobs available to feed your family, then it would be an understandable situation but high-paying white-collar positions with these benefits and flexibility are an unimaginable luxury for most and do not qualify as any sort of forced scenario.
  - throwaway2048 8y ago
    What happens when every job in your field has Mandatory Binding Arbitration in the employment contract?
    - manigandham 8y ago
      Then that would be a problem, but that's not the case. People just find it easier to claim no accountability.

theproblem223 8y ago

It makes a lot of sense and I'm likely to sign a forced arbitration clause if I think it will be a fair process. People respond to incentives and there are lawyers specialized in trying to grab huge payoffs from companies. They are not allowed in arbitration. This is a sensitive issue and the last time I posted, some innocent bystander got banned. You can review my post history, which is serious. Yes, people respond to incentives, and yes, massive payoffs by companies when a seedy lawyer is one of these incetives is one of these. Why people here don't understand this is beyond me. People understand that giving equity in a company produces great labor from early employees. It should be equally obvious that allowing massive, inflated, and ungrounded lawsuits encourages the opposite result. If done well, there is nothing wrong with forced arbitration. I can only repeat: I myself will sign a forced arbitration clause, if I expect it to be vaguely fair, even if it deprives me of the chance to file a huge golddigger lawsuit. I prefer to play on the winning team, not sue them. Forced arbitration, done well, helps this. Why would I sign if it's so evil?