Friday, May 6, 2011

Do We Really Want to Privatize the Justice System?: Ethical and Constitutional Problems With Arbitration

In more and more cases I see employers requiring prospective employees to sign an agreement to arbitrate employment disputes, including discrimination cases. This is problematic on several fronts. There inherent conflict of interest issues for arbitrators, no matter how fair and just they may be.

Arbitrators are paid by one or both parties, unlike judges and juries who are paid by taxpayers. If AAA rules are followed, the arbitrator is mainly paid by an employer. And the money an arbitrator is paid is not insignificant. The arbitrator's pay is dependent on repeat business or word of mouth. Some law firms, usually representing large employers, use the same pool of arbitrators. Lawyers use who they know and trust as arbitrators and mediators. If the result of the arbitration is not to one lawyer's liking, he or she will not use the arbitrator again. I know of a partner in one large law firm who declared he would not use the arbitrator in the future in a case where our client was fired from a big employer and our client won the arbitration. That situation potentially cuts into the income of the arbitrator. And arbitrators can rarely keep both sides happy. Regardless of how ethical and moral a person is, it is hard to ignore that increased income comes from increased business, and that usually means repeat business. Large businesses and large firms are at an inherent
advantage in arbitration for that reason.

Plus, it seems that Courts increasingly ignore the Seventh Amendment to the United States Constitution which guarantees a jury trial to those in civil cases. The Seventh Amendment is ignored all of the time in federal court, in summary judgment decisions, in decisions on remittitur and in arbitration enforcement against people who usually don't even realize that they have entered into an arbitration agreement and the implications of that agreement. There is a reason the founding fathers believed so strongly in disputes being resolved by trial by a jury of ones peers. The Seventh Amendment is part of the Bill Of Rights, yet it is so frequently ignored or disregarded. We hear a lot of discussion about the Second Amendment's right to bear arms, yet no discussion regarding the fundamental American right tova jury trial in a civil case.

A poor African-American employee who has been harassed or fired because of his or her race may be at the mercy of a lawyer/arbitrator repeatedly hired by the company that fired him. That was not the intent of founding fathers who guaranteed those with civil claims the right to a trial by a jury of one's peers. I hope that the big business of arbitration is substituted by the Bill Of Rights during my career. This trend toward arbitration is frightening.

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