Never Use Uber Again!
Beware Forced Arbitration Terms
A New Jersey couple seriously injured when their Uber driver ran a red light and collided with another car has lost a bid to take legal action against the company in court.
John McGinty and Georgia McGinty argue Uber is enforcing an arbitration agreement after their daughter clicked “agree” when presented with updated terms and conditions while ordering food via her mom’s Uber Eats account.
. . .
With online products such as Uber on cellphones and apps, companies can “squeeze a 50-page conditions document into a little box”, a personal injury lawyer, Richard Staggard, said. Many people click “accept” without reading the terms and are unaware of what they are agreeing to, he noted, . . . .[1]
Deceived and snookered! Actually, what choice do you have? Either agree, or don't use the service! Do you give away your rights if you call a taxi? We will probably never know the outcome of the forced arbitration in this case (or others) -- the terms will likely include non-disclosure -- and whether it was "fair"!
To be an effective deterrent, the results of arbitration would need to be transparent. Yet they are typically confidential, making it difficult for victims to recognize common problems that a company may have already resolved for other customers. While the lack of transparency makes it difficult to pinpoint outcomes, there is some evidence that consumers are also less likely to win in arbitration than in class actions.
. . .
When arbitration is a required mechanism from the start rather than a voluntary way to settle disputes with consumers and workers, it gives companies a free pass for low quality and abusive practices. When the risk of being held accountable is low, there is less incentive for companies to do the right thing. In addition, because arbitrators are likely to want to do business with a company in the future, they have a built-in reason to side with the company over the consumer.
The most economically vulnerable individuals are also the most likely to be affected by these clauses.[2]Mandatory arbitration contracts, typically signed at the time of hiring, bind workers to resolve their employment disputes through a third-party arbitrator rather than in court. Opponents of the practice have long pushed Congress to invalidate the pacts because they say the dynamics of arbitration benefit employers by taking away workers’ right to a jury trial and preventing class actions.
But steadfast opposition to arbitration bans from business groups and Republicans remains as they argue that companies can dictate the terms of their employment contracts. Moreover, the US Supreme Court has long held that the agreements are constitutional.
“Our courts have failed us in terms of enforcing our Seventh Amendment right, it’s like they ignore it,” Rep. Hank Johnson (D-Ga.) said of the right to a jury trial. “The Seventh Amendment is meaningless to the United States Supreme Court.”[3]
I happened upon the above article about Uber in The Guardian newspaper today (see endnote [1]). The injustice of it is alarming. The US Supreme Court and lower courts provide little or no redress.
Republicans generally support mandatory arbitration and decry lawsuits; but Republican Senator Lindsey Graham is an exception:
"Opponents of mandatory arbitration are taking a piecemeal approach to slowly diminish the enforcement of the pacts in areas where they can find consensus, even as the political climate remains inhospitable to proposals to ban the use of such agreements altogether.
The current target for worker advocates and lawmakers is a carveout for employment discrimination cases involving older Americans that would invalidate forced arbitration agreements signed prior to such allegations. Leading the charge on Capitol Hill are Sens. Kirsten Gillibrand (D-N.Y.) and Lindsey Graham (R-S.C.), an unlikely duo that successfully pushed for a landmark 2022 law that, following the #MeToo movement, allowed alleged victims of workplace sexual harassment and sexual assault to get their day in court."[3]
Note: The following notes expand on these kinds of forced agreements and efforts to limit their uses; they were composed using Open AI GPT-4o and Microsoft CoPilot.
Understanding Mandatory Arbitration Agreements
Mandatory Arbitration Agreements have become a critical topic in both the legal and business worlds. These agreements stipulate that parties must resolve disputes through arbitration rather than through court litigation.
Definition and Overview
A Mandatory Arbitration Agreement is a contract clause requiring parties to settle disputes outside of court, through the arbitration process. Often found in employment contracts, consumer agreements, and various service contracts, these provisions compel the involved parties to submit their disputes to an arbitrator, whose decision is typically binding.
Impact on Employee Rights
One of the most debated aspects of these agreements is their impact on employee rights. Critics argue that:
Employees often don't fully understand what they are signing.
Arbitration can limit their ability to seek redress for grievances.
Employers typically have more influence over the arbitration process.
Court Enforceability
Despite controversies, courts routinely enforce Mandatory Arbitration Agreements, provided they meet certain legal requirements such as mutual consent and fairness. However, recent rulings have occasionally challenged overly restrictive or unjust agreements.
Pros of Arbitration Agreements
Efficiency: Arbitration tends to be faster than court litigation, allowing for quicker resolutions.
Cost-effective: Generally, arbitration is less expensive than going to court due to reduced legal fees and other court-related expenses.
Confidentiality: Arbitration processes are private, unlike court cases which can be public.
Flexibility: The process is relatively flexible, allowing for more informal proceedings tailored to the parties' needs.
Cons of Arbitration Agreements
Bias: Arbitrators, who are often chosen by businesses, might be biased.
Limited recourse: Decisions are binding and offer limited opportunities for appeal.
Costs: Despite generally lower costs, fees can still be significant, particularly for the individual.
Lack of Public Scrutiny: Confidentiality can sometimes lead to unfair practices going unnoticed.
High-Profile Arbitration Cases
High-profile cases in arbitration have ranged from claims of gender discrimination in large corporations to disputes over significant sums in the tech industry. For example, recent cases involving Uber and Google have garnered significant media attention, highlighting both the potential for arbitration's efficiency and the concerns over fairness.
Common Industries Using Arbitration
Arbitration is common in industries where disputes are frequent but parties prefer not to engage in protracted litigation. Common industries include:
Financial services
Healthcare
Technology
Construction
Consumer goods
Consumer Awareness and Consent
A significant issue with Mandatory Arbitration Agreements is the degree of consumer awareness and genuine consent:
Many consumers are unaware they are bound by such agreements.
Often, arbitration clauses are buried in lengthy terms of service documents or fine print.
The presumption of mutual consent is therefore debatable.
Arbitration vs. Litigation
Arbitration
Time-efficient: Typically leads to a quicker resolution.
Less Formal: Procedural rules are more relaxed.
Confidential: Proceedings are private.
Litigation
Public Record: Court cases are part of the public record.
Right to Appeal: Decisions can be appealed in a higher court.
Procedural Rigor: Strict adherence to procedural rules and laws.
Consumer Protection Laws
Consumer protection laws have started addressing some of the imbalances created by Mandatory Arbitration Agreements. Legislation like the Dodd-Frank Act in the U.S. has empowered regulatory bodies to scrutinize these agreements, especially in the financial industry.
Cases of Misuse
Instances of misuse are not uncommon, often in scenarios where companies have:
Imposed arbitration clauses to avoid class-action lawsuits.
Used arbitration to enforce unfair terms on employees or consumers.
Manipulated the arbitration process through biased arbitrator selection.
Legal Framework
The legal framework governing arbitration is built on the Federal Arbitration Act (FAA) in the United States, which supports the validity and enforcement of arbitration agreements. However, state laws also play a significant role and can sometimes offer protections that the FAA does not provide.
Role of Arbitration Organizations
Arbitration organizations, such as the American Arbitration Association (AAA) and JAMS, play a pivotal role by:
Providing forums for arbitration.
Creating and enforcing rules and procedures.
Accrediting arbitrators to ensure integrity and fairness.
Recent Legal Challenges
Recent legal challenges have questioned the fairness and transparency of Mandatory Arbitration Agreements. Notable among these are:
Class-action waivers being struck down in certain jurisdictions.
Lawsuits challenging the fundamental fairness of arbitration procedures imposed by corporations.
Future of Arbitration Agreements
The future of Mandatory Arbitration Agreements will likely be shaped by:
Legislative changes aiming to protect consumer and employee rights.
Increasing scrutiny from both courts and regulatory bodies.
Shifts in public perception demanding greater fairness and transparency.
Disclaimer: This note offers a summary of common perspectives on Mandatory Arbitration Agreements and does not constitute legal advice. For specific legal concerns, consult a qualified attorney.
SOURCE:
TheBrain[4] OpenAI GPT-4o 202410011520
There have been several recent legislative efforts aimed at addressing the issues related to mandatory arbitration agreements:
Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021: This law, signed in March 2022, prohibits the enforcement of mandatory arbitration agreements for claims of sexual assault and sexual harassment. It allows survivors to choose whether to pursue their claims in court or through arbitration.
Forced Arbitration Injustice Repeal (FAIR) Act: This proposed legislation seeks to eliminate forced arbitration clauses in employment, consumer, antitrust, and civil rights cases. The FAIR Act has been introduced multiple times in Congress, most recently in 2023, but has not yet been passed.
Protecting the Right to Organize (PRO) Act: This bill, which aims to strengthen workers’ rights to unionize, includes provisions that would limit the use of mandatory arbitration agreements in employment contracts. The PRO Act passed the House of Representatives in 2021 but has faced challenges in the Senate.
Several countries have taken steps to address the issues related to mandatory arbitration agreements:
European Union: The EU has stringent consumer protection laws that limit the enforceability of mandatory arbitration clauses in consumer contracts. The Unfair Terms in Consumer Contracts Directive (93/13/EEC) aims to protect consumers from unfair terms, including mandatory arbitration clauses that could be deemed unfair1.
Canada: In 2020, the Supreme Court of Canada ruled in the case of Uber Technologies Inc. v. Heller that the arbitration clause in Uber’s driver agreement was unconscionable and unenforceable. This decision highlighted the need for fairer arbitration practices and greater protection for workers2.
Australia: The Australian government has implemented laws to protect consumers and employees from unfair arbitration clauses. The Australian Consumer Law (ACL) provides protections against unfair contract terms, including those that mandate arbitration3.
Source:
Microsoft CoPilot 202410011628