By Trap or By Trick: How Corporations Break the Law and Get Away With It

Note: A version of this post appeared at my personal blog, Overruled.

Debbie Dantz worked at an Applebees, a job she desperately needed to take care of her two teenage daughters and a terminally ill father. It was not a high paying job, but because Dantz couldn't afford a car or even a bed to sleep on, she needed work within walking distance of her home and the Applebees fit the bill.

So when Dantz' boss made a pass at her, she didn't quit because she needed the money. She stuck with the job as her manager's behavior became increasingly bizarre and cruel. He ordered all the waitresses to wear skirts, and would regularly lift them up and make crude comments as he looked under them. Sometimes, he would order Dantz to sit in a chair while he quietly circled her, staring at her like a predator. When Dantz complained about this treatment, her manager and her male co-workers threw food at her.

One day, when Dantz arrived at work a paper was shoved into her hands and she was ordered to sign it. The paper contained something called a "binding mandatory arbitration agreement" which said that, if Applebees broke the law, Dantz no longer had the right to hold it accountable in court and instead would be shunted into a privatized, biased justice system. Dantz refused to sign, and was told that until she did, she would be paid nothing but tips--a violation of federal minimum wage laws. Nevertheless, Dantz needed her job, so she didn't quit.

After nearly three years of harassment, abuse and long hours for little or no pay, Dantz finally decided that she'd had enough. She filed suit against her employer--and the court kicked her to the curb. Even though Dantz refused to sign the binding arbitration agreement, the court said that merely by continuing to work for Applebees, she was bound by its terms. Debbie Dantz' employer illegally abused her for almost three years, and Dantz was powerless to hold it accountable.

Lest there be any doubt, when Dantz was thrown out of court and relegated to privatized arbitration, her opportunity for justice ended right there. Let's explore a few ways that arbitration differs from real courts:

• Most importantly arbitration is biased in favor of corporate interests. According to a study by Public Citizen which examined almost 20,000 arbitration decisions, the corporate party won a massive 94% of the time. In one case, an arbitrator awarded $11,000 to a debt collector against a woman who owed no money whatsoever, but who had the same name as a woman who did.
• Arbitration is often pay to play. If you bring a suit in federal court, you pay a $350 filing fee, and that's it. Arbitrators, on the other hand, frequently offer an a la carte menu. If you want to file a motion, that's $500. If you want a live hearing, $1500. If you want a written explanation of the arbitrator's ruling, $1500 more. In some cases, consumers have been charged $10,000 or more for the privilege of losing their case before a biased arbitrator.
• Arbitration is secret. Except in California, arbitrators are not required to publicly disclose their decisions. Because they can keep their past history from the public, many arbitration companies market their services to corporations by highlighting their pro-business bias, even as they lobby Congress with claims that they are just as fair and balanced as real live judges.

So in summary, arbitration is expensive; it is secretive, and it is fundamentally unfair. Even worse, it is almost always forced on ordinary Americans. If you have a credit card. Or if you have a job. Or if you have a cell phone. Or if you have a loved one in a nursing home. You have probably been forced to sign an arbitration agreement. Virtually all banks, many employers and some nursing homes will even refuse to do business with you unless you sign away your power to hold them accountable for their actions. If you refuse to sign an arbitration agreement you can lose your credit card, lose your phone service, or even be fired.

The reason why these binding mandatory arbitration agreements are legal is a series of wrongly decided Supreme Court decisions that began in the 1980s. Needless to say, business groups like the Chamber of Commerce are very interested in blocking any legislation which might overturn these wrongful decisions, and they have hired a veritable army of lobbyists to block a bill called the Arbitration Fairness Act, which would prevent companies from coercing their customers and employees into signing away their rights. To be honest, I can't blame them. If I had total immunity from following the law, I would want to preserve my ill-gotten gains as well.

If the business lobby succeeds in blocking the Arbitration Fairness Act, however, it will be a tragedy not just for women like Debbie Dantz, but for thousands of Americans who are victimized by abusive credit card companies, whose loved ones are neglected by nursing homes, or who are fired because their boss doesn't like the color of their skin. People and corporations must be accountable for their actions, they cannot be allowed to hide behind the Supreme Court's mistakes.

Debbie Dantz' story is far too common. It is the story of Lilly Ledbetter, who was tossed to the curb by a Supreme Court more concerned with protecting businesses than preventing pay discrimination. It is the story of James Lind, who lost his ability to work and became disabled after his insurance company suddenly refused to pay for the drug that kept his MS at bay--and who was later tossed out of court because of Supreme Court decisions saying that employer provided health insurers may treat their customers this way with impunity. And it is the story of Bridget Robb, who was electrocuted from the inside by a defective device implanted in her heart, and thrown out of court because of a Supreme Court decision giving lawsuit immunity to the makers of dangerous medical devices.

When judges ignore the law to serve their own deregulatory agenda, people suffer, they lose their jobs, and they even die. The Supreme Court can only ignore the law as long as Congress lets it, however. It is time for Congress to fix the mess the Supreme Court created.

UPDATE: If you are a victim of an abusive arbitration clause, the National Association of Consumer Advocates would like to get in touch with you. You can get in touch with NACA here.

Comments

[ramblin jack]

yes a simple but plain right would suffice no one by law can sign away their rights as the law itself protects you, even if you would sign one, the law better yet the law based on a basic right is no one can even by their own consent sign away their rights to due process which is what this all comes down to.

[cqyates]

Wow I am so mad. I came back to comment and couldn't even read the article again. That poor women!!!! Arbitration agreements should be illegal. and on and related note why is that the government passes a law to protect my medical privacy which I have to sign away to get treatment. WTF!

[QuietLightTraveler]

This is just another area where our government has failed us. Yea, we have all the freedoms and rights in the constitution - that is until we report to work in the morning. And let me say this, that corporations use other tricks to encourage you not to sue them. They offer a severance package if you sign an agreement not to sue them or ever talk about what happened to anyone. Most employees who are let go or fired need the severance pay and, in addition, when they consult with their own attorney are told that if they want to sue the company, it will take years and they will be up against an adversary with plenty of lawyers and deep pockets.

Worse than the corporations are our courts, which make many ridiculous rulings. Believe me, I have seen it many times. Our courts deliver many decisions but little justice. And may God have mercy on your soul if you are poor. The Courts have no ethics and a compromised class of justice for the poor and unfortunate. I wouldn't trust the legal system in this country to settle a children's argument fairly, let alone complex legal matters.

[kathy001]

Yes!! I get angry every time I read an arbitration clause. And, since I have a credit card and am employed and have contracted services for my home, I have been force to sign several.

I have heard arguments that the arbitration clause is necessary in order to prevent frivolous and abusive lawsuits. My answer to that is, if the suit is frivolous or abusive there should be penalties for the people who filed them, including their attorneys. Taking away the rights of every other American is not the answer.

[BBackSoon]

This is the most disturbing thing I have read in a long time. So much for the land of the free.

[LeftRight]

In that case she should sue the manager personally. Nothing in the binding arbitration agreement says that she, as a private citizen, cannot sue the manager, as a private citizen, for violating her personal rights and space. Not to mention that she should file CRIMINAL charges against him!!!!

[Ian Millhiser - Huffpost Blogger]

This is probably true, but many courts interpret federal civil rights law to not permit suits to be brought against individual managers and supervisors, only the employer itself. So Debbie Dantz might have no recourse against the manager as well.

That said, even if Dantz could sue the manager in state court or elsewhere, this is hardly a sufficient remedy to prevent more people like Dantz from having to suffer harassment in the future. Unless employers like Applebee's have a financial consequence whenever their managers engage in discrimination or illegal harassment, those employers have no incentive to monitor their employees and make sure that they aren't behaving like misogynists or bigots.

[LeftRight]

I agree with you, I'm just pointing out that she still has (or may have) some recourse available to her. She SHOULD be able to tell the company to go f**k themselves and take them to Federal Courts for violating her civil rights, but sadly the protections afforded us have been destroyed by the rightwingnutjobs!

[mlaiuppa]

She can sue for sexual harassment. Nothing in binding arbitration trumps the Federal laws regarding sexual harassment.

[SeenItBefore]

Arbitration will be the death kneel of American jurisprudence.

It circumvents the Founding fathers ideas of "trial by twelve just men".

This tells me the ride to perdition is financed by you and me.

[Skepticat]

Trials are not inherently better or worse than arbitration per se. As with all dispute mechanisms it depends on what safeguards are put in place to make the system fair and accountable. The problem with the arbitration described by the writer is that there are insufficient (NO) safeguards and little incentive to be fair or objective. Arbitrators dependent solely on the largesse of corporate clients could in theory vote against their benefactor - but I wouldn't expect it to happen often.
The current court system may be no better. Over the last decade congress critters have been tripping over themselves to protect corporations from lawsuits. I doubt if any of the original constitutionalists were so totally devoid of conscience that they would constantly rule that the rights and problems of living breathing people should be constantly subservient to those of fictitious people called corporations

[darker]

This is yet another example of some HORRIFIC legal decisions by JERKS IN POWER who
want their CORPORATE business PALS to be unaccountable for their crimes against
individuals in their employ whom they wish to victimize at will.

Our legal system bamboozles everyone they can by obfuscation,
misapplication of laws and outright criminality.

It's not anything to be proud of, America.

[mlaiuppa]

This is why who is appointed to the Supreme Court (and why) is so important.

Just ask those people in Connecticut who lost their homes to eminent domain.