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June 2014
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President Jeff Pitman
(608) 257-5741
Dear Subscriber,

Americans are finding out the hard way that many businesses and employers are increasingly using forced arbitration to dodge responsibility for their harmful behavior. If you read any issue of You Should Know this year, I urge you to read this one!

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Hold Companies Accountable

William Kurth William Kurth died needlessly in a nursing home that didn't provide adequate care. The family's lawsuit was dismissed because of binding arbitration.

Forced Arbitration Stacks the Deck Against the Consumer

Forced arbitration clauses are fast becoming a favorite tool for a growing number of businesses to insulate themselves from liability. These clauses are often mislabeled and buried in mountains of contract legalese, thus rarely detected by the unsuspecting consumer. Then when something goes wrong – and in some cases terribly wrong – with an employer, service or product, the consumer is forced into arbitration. Snap, that's when the trap is sprung. Individuals almost always lose to businesses in arbitration (97 percent of the time according to a 2007 Public Citizen report) because arbitrators are hired and hand picked by the offending businesses. Decisions from the arbitration proceedings are secret, and there is no appeal. The San Francisco Chronicle called it “a system with no laws.”

So what's this look like in real life?

William Kurth, an 84-year-old World War II veteran, husband, father and proud grandfather, died in a nursing home as a direct result of negligent care. Admitted after hip surgery, Kurth was unable to move and soon developed serious bedsores. Left untreated, these wounds became so severe that bones and organs were exposed. When Kurth's family filed a claim in court after his death, the judge ruled that the case had to be arbitrated under an agreement buried in a 50-page admissions document signed by an unsuspecting Mrs. Kurth at the time her husband was admitted. William's son David tells their story here.

Dr. Deborah Pierce was the victim of blatant gender discrimination by a medical partnership in Pennsylvania. She would have sued the partnership but instead was forced to take her case to arbitration before the American Health Lawyers Association. After a long, expensive and biased process, the arbitrator ruled against her. “For me, the mandatory arbitration process was unbelievably expensive, unfair and biased. It took away my faith in a fair and honorable legal system, which is supposed to protect the civil rights of its citizens,” testified Pierce recently in a Senate hearing.

Think Forced Arbitration Doesn’t Affect You? Think Again

If you think stories like these are rare, and you or people close to you will never be affected by a forced arbitration clause, think again. Almost any time you buy a product or service and are asked to “agree” to the terms, a forced arbitration clause is hidden somewhere in the miles of fine print. Some employers won’t interview applicants unless they sign a mandatory arbitration agreement first. Even when vigilant, consumers often find that the forced arbitration clause was added after the contract was signed. All Americans in possession of the following should be concerned about forced arbitration (click a link to learn more):

Consumer Groups Fighting Back

Despite recent court decisions making it more difficult to challenge abusive mandatory arbitration clauses, there is hope in the fight against this mounting problem. The Consumer Financial Protection Bureau, created by Congress in the wake of the Wall Street meltdown, launched a public inquiry on forced arbitration in 2012 and recently announced preliminary findings.

In addition, the National Association of Consumer Advocates (NACA) has launched a 50-state public education campaign aimed at teaching consumers and the media the dangers of forced arbitration clauses and why millions of Americans are being harmed. NACA and numerous other consumer advocacy organizations, including Public Citizen, are also leading a citizens’ coalition called Fair Arbitration NOW to petition lawmakers for passage of the Arbitration Fairness Act.

In the meantime, it is important for all of us to recognize that forced arbitration is everywhere. Read any contracts before you sign on the dotted line and try and negotiate this clause – often referred to as “binding mandatory arbitration,” “arbitration,” “mandatory arbitration” or even a “dispute resolution mechanism” – out of the contract. Otherwise, look for another job or take your business elsewhere. Unfortunately for many people with limited options, this isn't always possible ... especially in tough economic times. Ultimately, in order to ensure that you can buy products and services and be employed without giving up your legal rights, legislation must be passed to ban forced arbitration.

Know Your Stuff Resource Center

Watch videos, download fact sheets and share your thoughts on forced arbitration. You could win an iPod Shuffle!

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AAJ Calls Out Businesses

Corporations are using forced arbitration to hide wrongdoing, says Gary M. Paul, president of the American Association for Justice.

Listen now

 
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