Lieff Cabraser Civil Justice Blog
Hidden Arbitration Clauses Restrain Constitutional Rights

Hidden Arbitration Contract Clauses Restrain Consumers’ Constitutional Rights

A specter is haunting consumer contracts. In the last few years, there has been a veritable explosion of forced arbitration clauses thrust into contracts in industries ranging from banking to insurance, medical to retirement care. GrubHub food delivery service just updated their user agreement to force their customers into mandatory arbitration over any disputes that might arise as a result of their using the service to get Chicken Masala or local pizza. This routine addition to many companies’ dealings with customers has resulted in the deprivation of consumers’ basic constitutional rights, as these forced arbitration agreements require individuals to give up certain fundamental legal protections, including the right to a fair court trial in front of a neutral judge.

According to a report by the Economic Policy Institute (EPI), there has been a massive shift in the civil justice system, where forced arbitration has essentially privatized justice since the 1980s. “By delegating dispute revolution to arbitration, the [Supreme] Court now permits corporations to write the rules that will govern their relationships with their workers and customers,” the report states.

Giant corporations thus now have the ability to force customers and employees into binding arbitration agreements that compromise state and federal laws — laws originally designed to protect citizens from corporate wrongdoing, including consumer fraud, the release of unsafe products into the stream of commerce, employment discrimination, and nonpayment of wages. These mandatory arbitration clauses also prevent consumers from filing class action suits in cases where large numbers of people are similarly harmed.

“Within this pre-scripted alternative court system, the final verdict in typical civil legal disputes – whether they involve a boss refusing to promote female employees, or getting defrauded by a predatory student loan provider, or being unfairly denied overtime pay at work – can be easily manipulated in an opaque extrajudicial arena,” states The Nation (subscription).

An employee may find that certain legal protections, including rest breaks, rules against worker discrimination, unjust dismissal, rights to overtime pay, privacy protection, and family leave, may be trampled and exploited in the wake of one’s signing a forced arbitration contract. The EPI explains that “while some arbitration agreements include due-process protections, others shorten statutes of limitations, alter the burdens of proof, limit the amount of time a party has to present his or her case, and otherwise impose constrictive procedural rules.”

Consumer Rights Attorneys at Lieff Cabraser

Lieff Cabraser advises consumers as well as businesses on whether and how to pursue legal action to halt and obtain compensation for the deceptive practices of large corporations. With a blend of courage, superior legal skills, and high principles, we protect our clients’ interests and help them achieve their goals by winning highly-complex consumer protection lawsuits against those that have defrauded consumers.

Read the Arbitration Everywhere, Stacking the Deck of Justice blog.

Read the Forced Arbitration: A Privatization of the Justice System blog.

Read the Elizabeth Cabraser Comments on Proposed Class Waiver Ban blog.

Read the Religious Arbitration, Where Scripture Makes the Rule of Law blog.

Read the New York Times Editorial: Arbitrating Disputes, Denying Justice blog.

Read the CFPB Proposal to Regulate Arbitration Agreements blog.

Read the Forced Arbitration Dangers and Rights Erosion blog.

Read the Forced Arbitration in Financial Products blog.