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Corporations to humans: Arbitration is good enough for you, but not for us

Corporations to humans: Arbitration is good enough for you, but not for us

By Paul Bland, Senior Attorney

A big part of my job is listening to advocates for huge corporations explain how great arbitration is. Corporate lawyers are always insisting that arbitration is cheaper, fairer and faster than court. Some of them make it sound like arbitration is better than sunny days at the beach, watching baby tigers play or listening to great music. Panacea!

The reason they force their employees and customers to submit all their legal claims to arbitration, corporate advocates proclaim, is not because arbitration is better for the corporation. No, really, this is not a power grab or self-interest. They explain that they force their workers and customers to arbitrate because it’s better for everyone.

Hmm. Are nursing homes, credit card companies and employers like Haliburton really being this selfless? Putting aside everything we know about corporations and the world, one reason to doubt this “selfless” claim is that corporations’ love for arbitration is often selective: they like to force people bringing cases against them into arbitration, but for their own cases, fewer and fewer corporations are choosing arbitration.

A new scholarly study by two of the most respected academics working on alternative dispute resolution found that between 1997 and 2011 the use of arbitration in commercial disputes, business-to-business cases, dropped by more than 20 percent. Gee, if arbitration is so amazingly great, why don’t corporations want to use it for their OWN disputes?

This isn’t a new development. Going back more than a dozen years, many corporations’ arbitration clauses have provided that the company’s customers and workers have to arbitrate any claims against the corporation, but the corporation can still go to court if it has claims against the individuals. Relying on the well-known legal principle of Goose v. Gander, many courts have struck down these one-sided arbitration clauses as unfair. I argued and won one of these cases in the New Mexico Supreme Court.

The newly released study is just the latest evidence that people need to take corporation’s expressions of love for arbitration with a large grain of salt.

Corporations love arbitration when they think it helps them bottle up consumer and workers’ claims. But they don’t like arbitration when it comes to cases they want to see successfully pursued. This disconnect between their words and their actions shows they don’t actually mean all their happy talk about how great arbitration is.