Later On

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Today, Jamie Leigh Jones will appear before the House Judiciary Committee and tell how she was gang raped by her co-workers in Iraq while working for a Halliburton subsidiary called KBR. Afterwards, her assaulters confined her to a shipping container and warned that if she left Iraq for medical treatment, she’d be fired. That’s where she was found by agents sent by the U.S. embassy to rescue her — after her father called their congressman, Representative Ted Poe (R-Texas).

Now, Jamie Leigh Jones has been victimized twice over. Because KBR/Halliburton requires employees to sign contracts containing a binding mandatory arbitration (BMA) in the fine print, Jones is being denied her constitutional right to bring her perpetrators before a jury and be heard.

But Jamie Leigh Jones will be heard by Congress today — and then, lawmakers should waste no time in re-opening the doors of justice for Jones and the rest of us. It’s time to ban binding mandatory arbitration in employment and consumer contracts once and for all. There may be no other device being used today by Halliburton and other corporate giants that does more to systematically deny rights to workers and consumers.

Congress is beginning to focus.

Last Wednesday, the Senate Judiciary Subcommittee on the Constitution held a hearing on the Arbitration Fairness Act — a bill that would ban most forms of binding mandatory arbitration introduced in the House by Rep. Hank Johnson (D-Ga.) and in the Senate by Sen. Russ Feingold (D-Wis.).

Senator Brownback called it a “where the rubber meets the road hearing.”  He could not have been more right.  While witnesses for the bill showed real-world harms from the system of biased, privatized justice that many companies force on their customers and employees, opponents offered scarecrow arguments crafted with cherry-picked data from out-dated studies.  Still, it was impossible to ignore at least one hard fact: binding mandatory arbitration ruins lives.

Senator Feingold, chair of the subcommittee and original sponsor of the bill in question, noted the grievous case of Jamie Leigh Jones. Also, there is Fonza Luke, a grandmother from Alabama, who made the trip to tell Congress about how her employer surprisingly fired her after thirty years of exemplary service, how the United States Equal Employment Opportunity Commission (EEOC) concluded that the decision resulted from race and age discrimination, and how she was then barred from taking her employer to court. Instead, Mrs. Luke was forced into arbitration, where the arbitrator refused to let her present evidence of discrimination — or even evidence of the EEOC decision.

Mrs. Luke lost in arbitration — after she lost her job, her civil rights, and access to the civil justice system.

Unbelievably, she was forced into arbitration because her employer unilaterally added a binding mandatory arbitration clause to her employment contract. Mrs. Luke refused to sign the binding mandatory arbitration clause twice, thinking it seemed unfair. But a court ruled that she had agreed to the new contract because she didn’t quit her job. As a result, an arbitrator decided her fate with no accountability.

Now that people who have been victimized by binding mandatory arbitration like Ms. Jones and Mrs. Luke are coming forward, it’s becoming increasingly difficult for big business to assert that binding mandatory arbitration is good for consumers. If you read the live blogging of the hearing done by the Consumerist, you’ll see that the more BMA proponents are asked to explain it, the more laughable their defense becomes.

Take one of the corporate flacks on the panel, Mr. de Barnardo, who argued that we should force people to “agree” to arbitration well before they even have a problem — because most lawyers will advise against mandatory (read: forced) arbitration. Huh? Even Senator Brownback was puzzled. He asked why so few lawyers would recommend arbitration over a public trial. Mr. de Barnardo did not answer that question, but instead made a shocking admission: he would not recommend mandatory arbitration to his clients either.

Witness Paul Bland, a Public Justice staff attorney, provided a succinct retort:  “It is a grim idea that the only way to have arbitration is to make it mandatory.”

Indeed. No one in an unequal bargaining position – neither a business nor a consumer – would choose the secret system of arbitration, in front of an arbitrator chosen by the other side, where there is no accountability.

Bloomberg commentator Susan Antilla also honed in on businesses’ double standard, pointing out that although businesses say they favor mandatory arbitration because it is simple and inexpensive, they choose courts, not arbitration, when they are up against other businesses. Apparently, arbitration is simple and inexpensive only when they know they are going to win — against, say, an employee.

Professor Alderman, an experienced and respected consumer law expert from the University of Houston, reminded the panel that auto dealers recently won legislation to prevent car manufacturers from locking them into arbitration. They argued that they were being taken advantage of and wanted more accountability. Well, then, why don’t the dealers’ customers deserve the same protection?

Clearly failing to make the case for forced arbitration, Mr. de Barnardo began crying wolf that banning pre-dispute arbitration would be a “death sentence” for the whole alternative dispute resolution system in America. Bland called this ludicrous. The Arbitration Fairness Act does nothing to prevent voluntary alternative dispute resolution, which has been around for decades. But forced arbitration is a fairly new phenomenon, having spread like kudzu in the past dozen years, choking off centuries of common law and the constitutional right to the civil courts. Bland noted that in 1995, very few credit card companies used mandatory arbitration and, in 2000, the clauses were rare among car dealers, but now nearly all use it.

Even Senator Brownback seemed sympathetic in the hearing. A self-proclaimed “fence law expert” from Kansas, Brownback was particularly intrigued by Professor Alderman’s point about how the law is frozen by mandatory arbitration. Alderman pointed out that judges adapt the law over time in response to changes in the world and observations about how the law functions. By taking thousands of cases out of the courts, arbitration stymies this process, freezing the law at an arbitrary point in time regardless of whether the courts might be inclined to improve it.

Struggling to find a sound justification for opposing the bill, Senator Brownback said he supports binding mandatory arbitration because it provides increased access to justice. Feingold succinctly responded that “access” implies choice, and providing “access” to binding mandatory arbitration is like giving criminals “access” to prison.

So now that we’ve had a slam-dunk hearing and even the oftentimes business-friendly publications like Bloomberg and Condé Nast are calling foul on the predatory practice of privatizing justice, how close are we to banning it?

Not close enough.

It is going to take more than a few damning hearings and articles to win this one. Big business will not give up its immunity from accountability without a tough fight. The Chamber of Commerce and their buddies, the National Manufacturer’s Association, American Banker’s Association and others like AT&T, have put together a “Coalition to Preserve Arbitration.”

These groups are already attempting to label this effort a “trial lawyer” campaign, but they won’t get very far with that ruse. Certainly the plaintiffs’ bar has always advocated for Americans to have access to courts. But this legislation is not a boon for trial attorneys, as the big corporations would have you think. This is a real distraction from the undeniable truth that ALL employees and consumers will benefit when they no longer are forced into a rigged system and are freed to pursue their constitutional rights.

An entirely different sort of groups have come together to fight this secret system of lopsided justice – groups known for defending consumer and civil rights. More than 36 concerned organizations from the Leadership Conference on Civil Rights to Consumers Union and the Center for Responsible Lending recently called on members of Congress to pass the Arbitration Fairness Act.

This may be a battle of people over outrageous profits and power, but it is not a left/right, partisan fight. Binding mandatory arbitration can hurt virtually anyone, regardless of personal politics. A large number of goods and services are becoming increasingly difficult to obtain without “agreeing” to arbitration in advance — bank accounts, credit cards, cell phones, and the like. The Arbitration Fairness Act has several Republican cosponsors — including Jamie Leigh Jones’ Congressman, Representative Poe.

Make no mistake, this is a real struggle and big business is not likely to lie down and roll over. The sub-prime mortgage industry, Wall Street, and huge employers have been very successful in mandatory arbitration to stop consumers and employees from holding them accountable in court. Recent scandals, including that surrounding Jaime Leigh Jones and Halliburton, could supply the momentum for lawmakers to act quickly and decisively to protect the public as they have in the past after Watergate and Enron. But it will take all of us standing up for ourselves and others, and refusing to be bullied any longer.