Forced Arbitration Leaves Consumer in the Dirt
By: Anonymous Consumer
In 2014, I finally was able to save enough money to landscape my backyard. As a first-time homeowner, what should have been an enjoyable experience that resulted in the increase of my home’s value quickly turned into an ongoing nightmare wrought with loss and a backhand from the legal system.
I had hired a licensed contractor who had earned my trust with his 28 years in business and persuasive promises and reassurances. After agreeing to the pricing and layout of the yard, I was surprised with a contract that contained a forced (or pre-dispute binding mandatory) arbitration clause. He read only parts of the contract and none of the arbitration agreement. When I had inquired about the contents of the agreement, he stated that it was one, mutually beneficial, two, the most economical option, and lastly, did not involve lawyers.
At the time, I was unaware that none of these claims were true. I later discovered through research and inquiry that forced arbitration, in actuality, strongly favors corporations, is oftentimes much more costly than court and the agreements usually contain an attorney’s fees provision, as did mine.
It is hard to overstate the contractor’s recklessness. The contractor’s failure to measure the yard resulted in a significant increase in the prices of each item contracted for by several thousands of dollars. Ultimately, this mistake resulted in him being unable to provide some of the items, and others only at significant additional cost. He charged for a shipment that was never delivered and for an order that was never made. He also denied ever hiring his subcontractor. Having already been charged an excessive downpayment — for services not rendered — I eventually stopped the work. However, by that time, I had already handed over a large sum of money.
To make matters worse, the contractor did not obtain permits and damaged my property with the improper installation of an electrical conduit that violates local fire safety law. I was left with property damages and a few unfinished, improperly installed items — but mostly with a large, expansive field of dirt in my still desolate backyard.
In response to my formal request for the contractor to rectify the situation, he admitted that he could tell that I had no experience in construction-related matters and even made an analogy that it’s not like your typical clothes shopping experience.
The arbitration language in the contractor’s contract effectively blocks my constitutional rights to due process, appeal, a trial by jury and a meaningful day in court. In court, I would receive discovery, a judge assigned at random who is obligated to follow the law, and the results of the case would be made available to the public. I cannot even waive some of the damages and access the cheap and expeditious process of small claims court. Instead, my case will be decided, not by an impartial judge in a public court, but in secrecy by an arbitrator who cannot award punitive damages and is extremely less likely to order full restitution, let alone a judgment in my favor.
Private arbitrators have a heavy financial incentive to decide cases in favor of corporations who bring in substantial amounts of money from repeat business. As a result, they are often pursued by arbitration associations eager to retain them as customers. Arbitrators’ decisions are binding regardless of how outrageous or baseless their foundation.
And if you’re thinking, “I would never sign that. It won’t happen to me!” then think again.
Binding arbitration agreements affect everyone. They run rampant in consumer, employee and small-business, civil rights and anti-trust cases. If you have a cell phone, credit card or a student loan, you are probably bound by an arbitration agreement. Corporations will frequently refuse to provide any services if you do not consent to arbitration — the terms, as written, are take-it-or-leave-it. Moreover, they oftentimes find devious ways to include an arbitration agreement where it may not be perceptible at all — tucked into the fine print of a 465-page manual or enclosed in an updated terms of service mailed years after the opening of an account.
Instead of pursuing my claim with the arbitration firm as listed in the clause, I was able to convince the contractor to agree to arbitration with the California Contractor’s State License Board (CSLB). However, there is no guarantee that the CSLB will be able to provide arbitration, as there are several requirements that need to be met. I will have to play the waiting game for a process that could take up to a year due to the high volume of claims, and in the meantime, leave my weed-ridden yard untouched. As a legal maxim says, “Justice delayed is justice denied.”
This life experience has now become a narrative of my life — and it’s not just mine. It is the experience of nursing home patients who have died from neglect, of consumers who have lost their homes to fraudulent builders and of investors who have forked over their entire retirement savings in their 401(k) plans to deceptive brokers. It is OUR collective experience — none of us is immune from the disastrous consequences of forced arbitration.
Forcing consumers, employees and small businesses into arbitration is an affront to the constitution. Please help preserve our constitutional rights to pursue justice through public court system by supporting the Arbitration Fairness Act, which would effectively abolish the use of forced arbitration clauses.
How many more arbitration horror stories are needed in order to implement change?