(Thurmond) Floor: 38-36-6
co-authors: Bonta, M. Stone, Weber
Arbitration is the practice of resolving legal disputes outside the courts, often by placing judgments in the hands of employment attorneys or retired judges. Currently, businesses can require consumers to sign agreements wherein, when consumers purchase products like cell phones, vehicles or bank accounts, they are forced to relinquish their rights to judicial process should harm come to them while using these products. Many of the ‘agreements’ force consumers to waive their right to class action lawsuits, and arbiters overwhelmingly tend to render judgments in favor of companies, and against consumers. To make matters worse, often companies intentionally obfuscate the nature of these agreements so consumers have no idea what they are signing.
While this may sound like standard legal maneuvering, make no mistake — this is a civil rights issue. A federal judge in Boston called forced arbitration an attempt by businesses to “opt out of the legal system altogether.” This is exactly what happened when Sprint, a company with 57 million subscribers, allegedly overbilled customers — James Pendergast from Miami was just one consumer who was not allowed to bring a class action suit against the company because of the coerced forced arbitration document he had signed upon purchasing his phone. It is no mystery why big corporations use this tactic — a study by the Consumer Financial Protection Bureau found that victims without forced arbitration clauses earn three times as much in damages when suing big businesses as those who do.
Forced arbitration is, in short, a corporate bullying tactic used by Big Business to evade accountability. When this is allowed, we are all more at risk. AB2667 would have chipped away at this unjust practice by making it illegal for businesses to make these waivers a mandatory condition of entering into a contract.