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Arbitration First-Hand

posted by Elizabeth Warren

In our running discussion of arbitration, the data are useful, but sometimes it helps to get the flavor of how an arbitrator makes a decision. An attorney forwarded this email to me, which I post with permission of the author:

Had a very interesting experience today. Responded to an arbitration claim by FIA Card Services f/k/a MBNA denying client agreed to arbitration and disputing amount owing.  Requested an in-person hearing and client paid $250 fee for the hearing. Originally the hearing was scheduled at a location more than 3 hours away from my office. I objected and it was rescheduled about an hour away. The arbitration was Harold Curry. I showed up at 12 noon. At 12:45 no one from FIA appeared or called. The arbitrator called NAF to find out what he should do and left a message that was not answered. Mr. Curry and I went into an office and talked a while. I pointed out to him that the claim was based on breach of contract, but no contract was ever produced, so he could not possibly determine the parties' obligations or damages. He asked me what my client owed MBNA. I told him I did not know and that it was not my job to help MBNA establish damages. If they were so concerned, they could have shown up for the arbitration hearing. He admitted that they never show up and he has never had an attorney show up before. Just before I left, he suggested that we might reschedule. I told him I would not agree to rescheduling and that I believed he had no choice but to find an award in favor of my client. This made him extremely uncomfortable and he indicated he would need to talk to someone at NAF first. I reminded him that he was supposed to be impartial and he told me he would give me his decision in a few days.

I need to review NAF rules because I believe the claimant (FIA) was supposed to provide all documents well before the hearing. Mr. Curry told me that he usually does not get a contract, but the claimant provides an explanation. That tells me that all these arbitration awards are BS (I already strongly suspected that). I need to brush up on arbitration rules and procedure.

When I asked if I could publish this, the attorney added:

I just want to clarify that the arbitration notice states that FIA will appear by telephone. Mr. Curry told me that they never appear in person and often don't call. 

And, according to the Christian Science Monitor, they still manage to win 98.4% of the cases?


I would add that, aside from the procedural and substantive unfairness evidenced by this account (and in other posts) the old myth that arbitration is expedient and inexpensive is so much eyewash. When cases are stayed pending arbitration we go through an interminable series of status conferences where it's regularly reported the parties are waiting for a list of arbitrators, waiting for an arbitrator assignment, waiting for a hearing date ... and on and on. This seems to be the case in commercial, as well as consumer disputes. Particularly in bankruptcy court, my bet is that most cases can be presented on the merits - and decided - far more quickly and inexpensively than through arbitration.

That is absolutely correct. Bankruptcy adjudication is faster and cheaper, especially in consumer matters. Even in adversary proceedings, matters are scheduled for trial (at least in this part of the world) within about 90 to 120 days, a period that includes time for discovery. The certainty of a hard trial date focuses both discovery and settlement negotiations. The opportunity for appellate review also keeps the court "honest" in the sense that the rules of evidence and procedure, as well as the substantive law, are followed.

In arbitration, with no review, there are less constraints on the arbitrator to follow the substantive law, or the rules of procedure, or the rules of evidence. More disturbing, there are less constraints on the arbitrator behaving unethically -- and I deem pulling punches to check on whether it will offend the party most likely to hire you for the next case as unethical.

I've a friend involved in a commercial arbitration dispute, involving claims north of one million dollars. The arbitration has dragged on for more than two years, has consumed over $500,000 in fees to date, and still has not been resolved. I'm told the tale is not unusual, either.

I volunteer for a consumer org that deals in builder complaints, primarily. Arbitration is ubiquitous in builder and warranty contracts, to the point where it SHOULD be considered adhesion but more and more it's not. The process is similar to the credit card arbitration described above. Arbitration firms compete for the business of builders and warranty co's, which they of course do repeat business with, or hope to. There is clear potential for bias. One arbitration firm was owned by a disbarred lawyer. We rarely hear of anyone winning in a house/warranty arbitration, and even if they do, the builder or warranty co may never pay. Awards, if they get them, are usually insufficient to cover all their repairs. We have seen people end up in foreclosure or bankruptcy due to bad builders, and arbitration only makes that situation worse, because the homeowner has no real legal recourse. Also, since this is private, there is no public record that would warn future home buyers of problems.

Arbitration the truth not the hype or spin we were fed:
#1 Some businesses offer a hardship to consumers to assist them in paying the fees associated with arbitration. Does his not provide a solution to those consumers who argue they cannot pay the fees?

In my experience with AAA, the American Arbitration Association, there is a spin on just about everything to do with the process. Hardship is a prime example. When we were filed on the first time we were supporting two houses, one we could not live in and an apartment. We were paying for testing of all kinds on our house, moving, storage expenses and legal fees. We could not afford arbitration. During the process our credit was ruined and we could not borrow the money since we had been posted for foreclosure. Some of our credit cards automatically raised their interest rates because of that one adverse credit reporting. Discover Card was the first. We were told we could pay them off or assume a ridiculous interest rate. We had never been late with a payment or a house payment until all of this happened.

We ask for hardship, as we too had read their slick brochures. We had to fill out a raft of papers and give this omnipotent agency every shed of information about our financial crisis. It was demeaning.

After I filed for hardship, they would not tell me if it had been granted. Every time I asked I received blank credit card authorizations wanting my credit card information so they could charge their costs to me. After some time they finally admitted I had qualified. They said I could pay $750.00 up front, before arbitration began and the exact same amount, win or lose that I would have paid up front, as a balloon note at the end of arbitration just as if we had never had this exercise for hardship.

When we saw they could provide an arbitrator pro bono we applied for one. The builder was not participating in the process yet AAA had us jumping though hoops. We were afraid not too comply with everything AAA told us to do since this was supposed to take the place of court. We thought it was like being in contempt if we did not do everything they said. We thought they could put us in jail or rule against us because of something we did wrong. They sent out a list of arbitrators one of them, Marsha Higbee, had three on going cases with our builder. One case had been taken back to court from AAA for a ruling because the builder's lawyer was unhappy with her ruling during the process. It had not been ruled on so we chose her. All this was in her disclosure. We thought at least she would know what they were really like. We sent in our list on the appointed day. There was always a deadline for everything. We met every deadline. We chose Ms. Higbee. She was assigned and said she would give us one free day of arbitration, this was after our builders' lawyers said to AAA and to us that they could dispose of us in one day. A conference call was scheduled. Then a couple of days later, the builder's lawyers said, they did not want Ms. Higbee. They had changed their mind, now it might take three to five days and they wanted not one, but 3 arbitrators. So AAA thanked Ms.Higbee for her offer and released her.

We were sent out notices again. This time the fees were so high per hour that I told them we could not pay $475 an hour for 6 to 8 hour for 3 to 5 days and for pre and post study for what ever length of time the arbitrator chose. I told them I could not in good conscious hire someone that I could not pay because it was dishonest. AAA knew we had no money so for the first time they denied the builders' lawyer's request for 3 arbitrators. AAA is a "non profit” agency. They are careful if they think they are not going to get their money. So they said only one arbitrator. They knew they could probably squeeze that much more out of what was left of us.

So the builders' lawyer, with our AAA solutions manager and myself on the phone told me I would chose or he would go to court and have an arbitrator appointed by the court, outside of AAA. He said that he had done it many times before and he could assure me it would not be free. I chose an arbitrator. Then I wrote the arbitrator and told him I could not pay him. I no longer owned the house by then. I did not pay the arbitrators fees but then neither did the builder. I was puzzled; the builders' lawyers told me if I did not pay they could go to arbitration without us and get a ruling in abstensia. I thought that was what was going to happen.

In the AAA rules, the more affluent party can pay both of the parties fees to force the process. The builders lawyer said he was not paying my fees. So the arbitrator dismissed the case for non payment of fees by both parties.

We had gone though the process and been dismissed. So we mistakenly thought we had earned our right to a trial by jury finally and filed charges of fraud against the builder. After 8 hearings we were ordered back into arbitration. There are so many ins and outs in arbitration agencies. They do not give a direct answer they intimidate and harass and frighten you to death. This time they made us pay. And pay we did. We paid $9,300.00 up front and then $1,687.00 for post study.

What no one seems to understand about this entire process is that you pay this out stretched handed agency, this third party, and then pay to prepare to go to arbitration. You incur all the costs of a trial. Plus, AAA got their money.

#2 From a consumers perspective and someone who has lived though the process how would you change arbitration to make it fair to all parties to a dispute?

After what we went though and what I have been appalled to know after meeting and talking to not only the victims of my builder, but hundreds of others, I have seen nothing but flaws.

How can anything be upheld by the courts, if the rules of laws do not apply? How can we be taken behind closed doors and allowed to be humiliated and lied about and the evidence be ignored and this be called justice? How can it be fair when the builders already are in a contractual agreement with the arbitration company? How can it be fair when the arbitrators are dependent on the builders to chose them again so they will have a constant stream of income? How can it be fair if there is no appeal? How can it be fair when people are frightened under gag orders and cannot even talk about what happened to them? I have been to people's houses who had repeated the mantra "we reached an amicable settlement with our builder.” If that were true why is the house still falling apart, why is the owner sick and moving out of the state, why does his dog have no hair and why is his wife crying. This is amicable?

It is not more fair or cheaper and it is not in the consumers’ best interest. We have all been sold a bill of goods. Many people just walk away from arbitration and their homes and move in with family members. Many are forced to live in deplorable conditions. The red tape and complicated procedure is something I have studied for 4 years and been a victim in arbitration twice. I have talked to people who actually came out of arbitration owing their builder. It is so unfair we feared that prospect. The arbitrator ruled that we should pay our builder's lawyers for breach of contract for trying to sue him in court for fraud. How can the perpetrator file on the victim? This is so backwards, it is upside down. A consumer has the right for small claims to go to small claims court. We do not need to pay an arbitrator. We have paid for a judge with our taxes. There is nothing redeeming about a middle man's cut as we seek truth and justice.

#3 In your testimony during June 12, 2007 hearing, you indicated that in Texas you can sue someone selling you an existing house. But you cannot sue someone selling you a new house, Please explain how you have come to understand this, including any research of the laws and regulations in Texas, and whether you have determined that persons in other states are similarly prohibited from suing new home builders?

In new home contracts the builders include mandatory arbitration clauses and will generally refuse to sell a home to a consumer who objects to such arbitration clauses. Moreover, builders typically select American Arbitration Association which requires very high financial burdens just to participate. In either case, the consumer will never have a true measure of justice.

With respect to homes purchased from subsequent owners, not builders- using standard TREC forms, an arbitration clause is completely optional.

In fact you can actually sue a builder in Texas, but the laws purchased by the builders from our Legislature make it so difficult and expensive that it is out of reach of all but the wealthy who have a standing relation with an attorney from the start of the transaction due to short time deadlines and intricate traps that a layman could not be expected to negotiate.

For comparison, let's first consider what a buyer can do if there are severe problems with a house he buys from an individual. Most individual home sales involve at least one licensed real estate broker/sales person and often two. The substantial majority of licensed real estate brokers/sales people are knowledgeable, well-trained and want to do a good job for their client, be it the seller or the buyer. Even if a person sells their home without a broker/sales person, the seller must provide the buyer with a rather detailed Property Condition Disclosure promulgated by the Texas Real Estate Commission. It requires disclosure of a wide range of details with attention to past problems that have been remedied, current problems that need attention a number of specific representations. You can find the form at www.trec.state.tx.us/pdf/contracts/OP-H.pdf.

Most lawsuits against sellers involve allegations of misrepresentations in the Disclosure or failure to disclose material facts. The suit can be brought in the Justice of the Peace Court if for not more than $5,000; the County Civil Court at Law if for not more than $100,000; or in the District Court where there is no dollar limit on claims.

The cost is no more than any other lawsuit and a JP claim can be handled without a lawyer with reasonable success—providing that the other party doesn't have a lawyer.

To file a suit on a builder:

1. Make a warranty claim to your builder within the applicable warranty period (1 year for workmanship/materials is what most claims fall under. More serious claims have a two year warranty and the foundation has a ten year warranty). I will use a one year warranty claim in explaining this below.

2. If they don't respond/fix, send them a certified letter demanding repair in 30 days.

3. If they don't respond/fix, make a claim with TRCC (Texas Residential Construction Commission) within 30 days after the conclusion of your warranty period. The cost to file the complaint is $250. (As you can see, logistically you have to start this process WELL before the end of your 1 year warranty period. If your problem doesn't show up until close to the end of your warranty period you have a problem. The TRCC complaint form must be filled out extremely carefully. If the problem is not described with adequate precision or you can lose that item since you cannot amend your complaint.

4. TRCC "claims" that you'll have your inspector and inspection completed within about 30 days. In reality it takes months. Remember, the inspector you get could be a builder or have no real inspection qualifications, and you have to go through a lengthy process to object and get a new inspector. However, I have met at least one TRCC inspector who was first class—but he is the only really good one I have seen.

5. If the inspector says in his report that there is a problem with any item (the report is done item by item) there is a problem then the builder can---- 1) offer to repair or 2) give you $ to repair. The builder gets to choose whether to repair or pay, not the homeowner. The builder has 15 days to make this determination after he receives the inspector's report and you have 25 days to accept whichever alternative the builder chooses. (This is assuming no one appeals the inspectors report). If the owner rejects a reasonable offer (reasonableness is determined later), then the owner's remedies are significantly curtailed. Should the case finally make it to trial (or arbitration), the inspector's report has a presumption of correctness with the burden on the owner to rebut/disprove the inspector's findings. (This is called a rebuttable presumption.)

6. Builder has 45 days to complete repairs. (Remember the same idiot who screwed it up the first time is coming in to fix his own mistakes. This is like having the doctor who left a pair of forceps inside of you during surgery have the opportunity to do the removal and repair.) The builder almost always chooses to repair it himself rather than offer a dollar sum to the owner so the owner can go hire another builder of his choice.

7. If the builder doesn't fix the problem (to the satisfaction of the original inspector) or doesn't offer to repair at all (or makes an unreasonable offer of repair) or give you money, only then you can sue.

8. If you DON'T do steps 1-6 then you are FOREVER BARRED from suing. If you file suit, your claim is dismissed with prejudice and there is a good chance the builder will seek sanctions against the owner and his attorney for filing a suit in bad faith. (if the statute of limitations is an issue then you can file suit and make your TRCC demand at the same time. The suit will be abated until the TRCC process is completed). Also remember that any photos. documents, expert reports, inspection reports and the like not handed over by the owner during the TRCC inspection may not be used at trial. The builder is not required to turn over his evidence.
8. BUT HERE IS THE NEXT CATCH 22. If the Purchase Contract has a mandatory arbitration clause in it, and they almost always do, you still don't get to sue. You have to arbitrate or just go away and drop your claim. IS THE OWNER TIRED AND BROKE YET? NO? THEN COMES—

9. File your arbitration demand with the American Arbitration Association (AAA) and pay their fee, which usually starts at $1200+ or so. MOST builders include a provision that the Federal Arbitration Act applies so as to preempt any state arbitration laws that might be kinder to the owner. There are other arbitration groups, but the AAA is almost always the one the builder names in his contract. Remember, most builders are dues paying members of the AAA, but the AAA doesn't consider this a conflict of interest.

10. Go through arbitration. That is a separate nightmare that routinely costs more than litigation. And arbitration is routinely a secret procedure and the arbitrator is free not to follow the law, as a judge would have to do, but may substitute his judgment as to "what is right."

11. If you don't like the arbitrator's decision there is no right of appeal like there is in court.

12. You may have a shot at vacating the arbitrator's decision (called an "arbitrator's award") if you can prove that your arbitrator failed to disclose information regarding bias (e.g.--the arbitrator has represented the builder; is his brother in law; or perhaps is the builder's golf partner). But, you have to file you Motion to Vacate within 90 days of the award. If you don't discover that the arbitrator didn't disclose what he should have until after the 90 days, there is NOTHING you can do. If your arbitrator failed to follow the law there is NOTHING you can do.

13. If your arbitrator acted "fraudulently", you can move to vacate the award. But you must do so within 90 days of discovery of the fraud. However, the cases reveal that NOTHING is fraud (not even ex parte communications—the other party talking to the arbitrator about the case without your presence or knowledge). Arbitrators are immune from suit and on a recent case from the 6th Court of Appeals in Texas, arbitrators have been given greater immunity that that of a judge. Remember, a judge can be appealed, grieved against to a state's judicial ethics commission or, if elected, voted out of office. The AAA is also immune from suit and has greater immunity than that of a judge, even though they perform no judicial function such as exercising discretion or interpreting the law. The AAA's only job is administrative, yet they are immune from suit for such acts. Even an arbitrator's administrative acts are immune. However, a judge is not immune from suit for administrative acts that are not considered judicial in nature.

So, can you sue a builder? Only maybe and it is going to be expensive. But if you do get the chance, you will already have spent months and countless amounts of money. And then you start with the same costs you would have if you had been allowed to sue in the first place.

The laws in other states are often just as oppressive, although California has enacted a new law that makes arbitration much closer to fair. And a boondoggle like the TRCC appears to be something that is "only in Texas".

In Texas an existing homeowner is required to fill out a “Seller’s Disclosure” promulgated by the state which inquires about a number of aspects of the home, its current condition and any defects. You may sue on the disclosure or get out of the transaction if it contains false statements or material omissions. By contrast when suing the original builder or anyone repairing or performing work on your home you are subject to the Residential Construction Liability Act which preempts the Texas consumer protection law (Deceptive Trade Practices Act) and any common law claims. The act purports to apply only to “defects” in construction but as the builder can rarely be shown to have absolute knowledge of the problem, fraud, misrepresentation and breach of warranty are often subsumed under the heading “defect.” The Legislature recently amended this statute so that it requires, as a prerequisite to litigation that a party must go through the newly formed residential construction commission (a state agency made up entirely of builders) before bringing any claim in state court or arbitration. In this process the state agency appoints a “third party inspector” who issues a finding about the alleged defect. If the finding is adverse to the builder, the builder can repair the defect and the existence of the defect remains confidential with the agency. If the builder does not make the appropriate repairs the agency can then decide if the inspectors finding are correct and issue a ruling with accompanying findings of fact and conclusions of law. Whatever the ruling either side may appeal the judgment of the agency to a state Court (“ or arbitrator if so agreed in the original contract”) which must generally defer to the agency and the inspector on factual matters and which has the power to reverse the application of law to facts only if no legal theory supports the finding. Technically therefore a home purchaser does have resort to an arbitrator or court for the final appeal of any finding of the state agency but must overcome the ruling and factual findings of the board as found by the “third party inspector”. As a practical matter therefore there are at least two levels of litigation through which a homeowner is required to proceed with limited opportunity to recover damages even in the face of facts which would otherwise support the award of additional damages for breach of warranty, deceptive trade practices or fraud.

Also, the National Association of Homebuilders, as set forth in their own mission statement, wants arbitration in all clauses in every state and the “right to cure" or "right to repair" in all states and there are 31 so far. The NAHB Research Center is a subsidiary of the National Association of Home Builders (NAHB). In their report titled: "Making the Quality Connection: Improving the Building Industry Insurance Situation Through Quality Assurance Programs" the Research Center lists one of their objectives as: To reform limits of liability, to limit the frequency of litigation, and reduce excessive punitive damage judgments while still providing consumer protection. Action steps recommended:

o Establish laws providing for the right to repair, or the right to cure construction defect claims in each state.

o Include binding arbitration clauses in all builder / trade contractor contracts.

o Provide written warranty that waives implied warranty laws (where allowed) in lieu of building industry adherence to strong performance standards."

This assures one more hoop for homeowners to jump though. It is a farce in Texas. You have to pay $360 to $650 and they say they give it back so I guess you could just say the homeowner has to lend them the money. My builder was not allowed by state law to do anything to us like court or arbitration it was against the law. They did it anyway by circumventing state law and our Texas residential Construction did not do anything about it. The builder said we did not qualify so even though the state said I did, the builder proceeded with arbitration not only at the American Arbitration Association but at the Better Business Bureau too all these things they did at once to confuse and frustrate us into silence. They were expelled from the Better Business Bureau for unethical practices and shadow companies.

I am not a lawyer nor do I give legal advice but I have done nothing but this for over 4 years. Since my name pops up often on the Internet and I have been written about in national magazines, I get calls from all across this nation from people who have suffered or are suffering unbelievable harm because of bad builders and arbitration clauses. That is how I know they exist.

I have personally had conversations with: Texas, Florida, Tennessee, Kentucky, Pennsylvania, Georgia, Alabama, Nevada, New Jersey, these are just the latest. When people first started calling me I did not keep a record. I was just someone they could call that understood what they were talking about. I never gave advice other than to be very careful. I also told them if they could afford to pay to have the repairs done without abandoning their homes they needed to look at the road blocks ahead: its unbelievable cost, in money, time, energy and stress on their families. Then they would have a frightening choice to make. I keep in touch with many of them just because I know what they are feeling and I am so sorry I could not help them or send them somewhere that someone would or could. I always tell them to write their Representatives. Most do not feel they would matter. They are so upset. They think they are just one person and since they are ordinary people without war chests of money no one will listen. And we have seen money does talk and watched who listened.

No one seemed to hear us until now. There are so many more of us than you can imagine. My prayer is that soon someone will admit the housing bust was bought on by the greed of the boom and check on these foreclosures and how many were actually caused by arbitration and defective homes. We need a big change and I know it is going to be very difficult to meet the opposition of big business. Every day that passes more peoples homes are taken and their lives are destroyed. Most will never recover from what is done to them. But even if they do something has been taken away: their belief in this county, our laws and that we are a democratic society. We waver in our belief that tyranny has not over powered, we the people.

My father was on Pearl Harbor when it was bombed and wounded at Guadalcanal. He was one of the most patriot men I have ever known. My earliest recollections are singing "from the halls of Montezuma to the shores of Tripoli..." as we rode in the car. I was proud of his service to his country. Now we are at war in this county and the working class is losing. Give us our right to a trial by a jury. Like my father so many have given so much so we could live in a county founded on the principles of democracy. Arbitration is not a democratic process. It is promoted by big business out of pure unadulterated greed and it should be outlawed.

When I came there to speak before the congressional committee, I was awe struck. I crossed the Potomac. I drove by the Lincoln memorial. I was there at the seat of our government. Maybe I am just a naive woman from Taylorville Alabama, but I believe in this county and most of all I believe in the constitution. And I believe...we the people were granted the right to a trial by jury.

Jordan Fogal
[email protected]

»Arbitration Fairness Act of 2007
July 21st, 2007 by Erich Vieth
Businesses are increasingly inserting arbitration provisions into contracts to prohibit the employees and consumers from resolving important disputes in courts of law. Such arbitration provisions compel the employees and consumers to present his or her case to an “private arbitrator,” who need not even be an attorney. There is no jury trial. There is no automatic right to engage in pre-trial discovery. There is no public access. There need not even be an in-person hearing (unless you pay extra). The arbitrator often has the right to decide the entire case by merely looking at paperwork and you might not even have a right to be there when it happens.

If the arbitrator fails to apply the law correctly or if the arbitrator refuses to consider important evidence, too bad. There is no appeal. There is no accountability. Your claim against a big company will simply disappear. And here’s another huge concern: the big corporations are repeat customers to the big arbitration companies, while you will be a one-time player. Under these circumstances, who is the arbitrator likely to favor?

Wouldn’t it be terrible if arbitration clauses started showing up everywhere? Well, they are. Arbitration clauses are increasingly appearing in consumer and employment contracts. Too often, these clauses take the form of unreadable fine print boilerplate, slapped onto the back of the contract. Almost no one reads such fine print, yet large corporations are increasingly killing off important legal claims in Court based on that unreadable fine print.

Powerful corporations increasingly filing “Motions to Compel Arbitration,” asking Courts to throw important cases out of court and into the hands of arbitrators. The effect? For too many people, it’s like putting a padlock on the doors to the courthouse. If this trend keeps up, our courthouses will become empty museums, places where we used to allow citizens to present their grievances against the rich and powerful.

Senator Russ Feingold and Representative Hank Johnson have both filed bills in Congress to restrict the use of arbitration clauses in certain types of contracts. The proposed legislation is entitled the “Arbitration Fairness Act of 2007.” The new law would amend the Federal Arbitration Act. Senator Feingold’s website describes his bill as making sure that Americans are not forced into signing agreements that mandate arbitration:

to resolve employment, consumer, franchise or civil rights disputes. The bicameral Arbitration Fairness Act of 2007 amends the Federal Arbitration Act to make pre-dispute agreements to arbitrate employment, consumer, franchise, or civil rights disputes unenforceable.

The proposed legislation does not prohibit arbitration, but limits it to situations where it is “knowingly and voluntarily” entered by both parties. Limitations are focused on employment, consumer and franchise disputes, as well as “transactions between parties of unequal bargaining power. The proposed legislation would also restrict bans on consumer class actions. The bill seeks to ensure Americans are not forced into mandatory arbitration agreements in employment, consumer, franchise or civil rights disputes.

Groups supporting the Act include the American Association for Justice, Center for Responsible Lending, Consumer Federation of America, Homeowners Against Deficient Dwellings, Home Owners for Better Building, National Association of Consumer Advocates, National Consumer Law Center.

Binding mandatory arbitration is an issue that affects each citizen of each state. Whether you are an employee who is being asked to sign an arbitration agreement even to apply for your job, or if your are taking out a loan, or if your are a franchisee who is required to arbitrate disputes with the franchisor, binding mandatory arbitration is a real problem that can deprive you of your hard-earned money and your legal rights.

You can step up and do your part to stop binding mandatory arbitration. You can click here to send an email to your representatives and senators. Please take the time to help fight for our right to open, accessible, and accountable justice. For the full text of the House version of the proposed legislation, go here.

In my “other” life, I work as a consumer lawyer. To learn more about other developments in consumer law, you are welcome to check this Consumer Law Blog (where I am one of several contributors) at my law firm’s website.

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This entry was posted on Saturday, July 21st, 2007 at 5:32 am and is filed under Corruption, Law, Civil Rights. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Arbitration Fairness Act of 2007”
Nancy Seats Says:

July 30th, 2007 at 1:58 pm
I attended the press conference announcing the Arbitration Fairness Act of 2007 on behalf of Homeowners Against Deficient Dwellings, and am a member of the Give Me Back My Rights group.

There was little understanding of the impact of binding arbitration clauses on homebuyers at the time I began working with the group.

Now it is understood that while many of the foreclosures today are due to subprime, predatory, or faudulent lending, there are foreclosures due to substandard construction and binding arbitration clauses in builder contracts and/or the worthless third party warranties that builders “give” their home buyers. Homeowners who contact us consider arbitration to be a kangaroo court that always favors the homebuilder who is a repeat user of the arbitration service. I have yet to meet a homeowner that was awarded enough to pay attorney fees let alone do tens of thousands of dollars to repair defects.

Jordan Fogal, a homeowner from Houston, TX testified before a subcommittee of the House Judiciary Committee about her experience with binding arbitration. They have been unable to collect the small award the arbitrator gave them, the home required $150,000 in repairs and ended up in foreclosure in spite of the fact that they had an affordable 30 year mortgage and perfect credit scores. The cost of repair was prohibitive and they couldn’t sell the home for enough to pay off the mortgage due to legally required disclosures.

I hope that everyone will support this legislation and other consumer protection legislation that is needed in every state to protect the largest purchase a family ever makes, their home.
google Jordan Fogal or myspace.com/jordanfogal for pictures


I've been searching,studying,investigating. The deeper I get, the deeper the you-know-what piles up. I am looking for answers that relate to court-ordered arbitration and the consumer finance industry. I've been sued by the 'What's in your wallet?' folks- the Capitol One Banksters I call them now. I didn't have to deal with any contractual mandatory arbitration clauses in my alleged contract (could have defended myself against that) with the bank because I'm being railroaded into court-ordered arbitration. I've done alot of research but there's very,very little that pertains to the court-ordered arbitration scenario. At a time where there are record-high abuses being perpetrated by the consumer finance industry on the American public, the courts are colluding with this by making it as difficult as possible for individuals to fight back. From all the investigating I've done,I know the arbitration is a sham. Just google it to Jeff Sedgwick's article on the American Homeowner's Association's website. The article is called- 'Housewife Sues Wells Fargo On RICO, Shames Attorney In Court'. As a newbie, I've been doing my best to do my due diligence to know the truth and it's not pretty. As explained in the above mentioned article the banks write off the bad debt on their corporate taxes and destroy the evidence ( you can verify this via a Government Accountability Office/GAO report), then they sell COPIES of the debt to lawyers, debt collection agencies who buy it for pennies on the dollar then turn around and sue in the name of the bank for the full face value of the note. The article tells all about this and how the courts are rubberstamping these transactions. You can also see my comment (posted under comments) which I posted in response. I looked in my case file and of course there's not one shred of evidence entered into the record by a competent fact witness. I did file an objection to the court-ordered arbitration that I didn't waive my right to a trial by jury (due process) and never agreed to arbitration,etc. but the judge denied it,saying I misunderstood because this isn't mandatory arbitration due to a contract with the bank,but it's court-ordered.He didn't respond at all to my argument that I believed the bank acted fraudulently and in bad faith and that since there's no evidence of a legal claim I demand strict proof. A successful civil rights attorney suggested ( not my attorney) that I amend my arbitration objection and also file motions both for interrogatories
and a motion for dismissal (or summary judgement) demanding that either the bank proves up their claim, or that the case be dismissed. I nearly gave myself a cerebral hemorraghe trying to figure out how. I believe everyone has a right to decent legal services and that all of us need to be educated with a basic,working knowledge of our God-given rights and how the court system works. My personal story is that I'd gotten sick and couldn't keep up with the payments. At first I tried working it out with the bank but they wouldn't hear of it. Shortly after that I began to research and found out about the seedy underside of the consumer finance industry, how it's gained a stranglehold on us turning us into debt slaves. For those who don't yet know and want to, just start researching and find out how the money for the credit line was actually originated. Look at the Generally Accepted Accounting Principles (GAAP) which banks are required to follow, read- 'Modern Money Mechanics', and 'The Two Faces Of Debt' (published by the Federal Reserve), Mary Elizabeth Croft's book (free online) -'How I Clobbered Every Cash-Confiscating Agency...' (somewhat dated). I confess great difficulty in understanding this stuff. I've researched enough to know the truth.But I do not
know how to defend myself in court (or should I say-against the court?)
I'm a consumer of modest means, a seeker of truth, unschooled in navigating through the convoluted maze that is our legal system. I am working only part-time due to health challenges and barely able to get by. I'm concerned for my well-being and my very survival because I'm on my own and I'm sure you can understand what kind of toll this takes on a person,especially with health issues.
I do not currently have the benefit of my very own legal protector/ally (lawyer). The fabric of mine and many other peoples' lives, dreams is now being unraveled by greed, made manifest as the out of control monster known as the CONSUMER finance industry whose 'win at all costs' standard op is CONSUMING everything in its path. The scales of justice are in need of serious adjustment- balanced by the virtues of fairness,ethical buisness practices.
If there is someone out there who would care to be of service by offering their assistance in dealing with my version of this injustice nightmare (my case), I would recieve that help most appreciatively. Whatever help I do recieve, I will gladly pass it foward. Whoever you are I know you are out there and welcome an opportunity to make a real difference. ( It is OK for anyone who's sincerely interested, to contact me via email at: [email protected])

AAA arbitration makes it clear even boast Rules, Oath, ethic, and fair. During arbitration Home owner is not only totally deceived but insulated, falsity accused, slandered and disrespected. Arbitration and contractor literally laughing, Any attempt to rebuttal you are stopped by the arbitrator and told only answer with yes or no. My evidence was as good as one could get.Even if one did not believe a word my Witness and I said the contractor never even called let alone start job. AAA award so malicious that it would be hard to make up.
. AAA MALICIOUSLY used award to give perception that father breached contract and benefited [Yes Benefited] Using date Sept. 15 not even in contract and months after work was to be complete, to award AAA/client $5,000.00 nominal Damages Both AAA and client profit. Talking to AAA Home owner asked about perjury charges for contractor lie under oath. AAA said they do nothing and never have Stating " everyone lies". At the time my son was 3 years old and did not even know what a lie was, but AAA has already condemned him. AAA also denied all complaints even explanation of date not in contract.. AAA boldly said No Attorney dare fight against AAA. AAA will not even resound to any matter to this case. Case Closed.

AAA Client plead GUILTY to HOME REPAIR FRAUD AAA Client plead GUILTY to HOME REPAIR FRAUD AAA maliciously slanders Victims/Single Father, 4 and 9 year old then making victims pay AAA client/Contractor Guilty of Home Repair Fraud $5,000.00 plus AAA arbitration fees. Yes AAA makes the victims pay $5,000.00 to AAA/client the criminal plus arbitration fees. AAA false statement also used against THE STATE OF ILLINOIS Winnebago County States Attorneys Office to get AAA/clients indictment charges dropped. Even with AAA fraud statement maliciously slandering single father ,4 and 9 year old was not enough Father has overwhelming amount of evidence also full investigation by one of the top 20 in the fortune 500 which will back father 100% on fraud charges. All based on facts. AAA/client PLEAD GUILTY TO HOME REPAIR FRAUD. FACT PROVE from victim. Full story more malicious then one would make up. AAA award 5/12/2006 AAA denied all father request and complaints telling father NO ATTORNEY DARE FIGHT AGAINST AAA. Father has been fighting alone since 5/12/2006 and has been able to get Full Investigation ,Warrant issued, charges, 2nd investigation indictment and on 5/5/2008 A plea of Guilty by Indictment from AAA/client for Home Repair Fraud.. [Winnebago County Illinois Court Case 2007 CF 01469] Overwhelming facts. NO BUT ANDS OR IF ABOUT IT. Family lost over $37,000.00, B Better living conditions, been Falsely Accused, Family Name Slandered and had to Pay AAA fees and AAA client Guilty of Criminal/fraud $5,000.00 Father will now fight against Goliath

Should Father File $40,000,000.00 Law Suit against AAA?
Please Comment Yes Or No
Father fears AAA like David feared Goliath

AAA uses perception but it time to let the cat out of the bag. I asked AAA about arbitrator violating the Rules Oath and ethic during my case. AAA they are only guidelines and not enforceable. Asked about filing perjury charges AAA never have never will. aaa and I quote " EVERYONE LIES" At that time my son was 3 years old and did not even know what a lie was. but AAA condemned him already. The Email that AAA sent me states " The AAA has no authority to change an arbitrator's order or decision, and after the award is rendered any such authority rests with the courts." AUTHORITY REST WITH THE COURT not AAA or AAA arbitrator so AAA has forced me to file in COURT. Thank You AAA Lawmakers take oath to protect the Constitution. Like Martha Stewart. Any Law that weakens ones protection of the Constitution should be charged with perjury. AAA can help investigate by showing the laws stopping ones protection of The Constitution. Since early 1990's AAA has taken a great loss. They lost HONOR AND RESPECT. AAA perception of size is like an overinflated balloon. Honor and Respect is the tip of a pin.

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