Arbitration Fairness Act would reopen courthouse doors for millions of Americans

AFJ released this statement today on the reintroduction of the Arbitration Fairness Act:

Coast Guard delivers supplies to the
"cruise from hell"

Federal legislation introduced on May 7 to ban the increasingly common practice of forced arbitration “is urgently needed to reopen the courthouse doors to millions of Americans,” according to Alliance for Justice President Nan Aron.

Aron commended Sen. Al Franken (D-Minn.) and Rep. Hank Johnson (D-Ga.) for reintroducing the Arbitration Fairness Act, which restores Americans’ rights to have their day in court. Those rights have been undermined by the increasing use of forced arbitration and a series of recent Supreme Court decisions, most notably AT&T Mobility v. Concepcion.

“From cell phone purchases to nursing home agreements, to gaining employment, consumers and employees are being forced to accept arbitration clauses – and to potentially cede their civil and labor rights – in every aspect of their lives.

Sen. Al Franken

Rep. Hank Johnson

“For example, anyone who saw the pictures of conditions aboard the Carnival Cruise ship Triumph after it was disabled by a fire knows why it was dubbed ‘the cruise from hell,’” Aron said.  “But those passengers may have a hard time suing.  When they bought their tickets, there was a forced arbitration clause in the fine print.”

Under forced arbitration, consumers who buy defective products or are overcharged for a service are barred from taking their cases to court.  Instead, they must use a private arbitration firm chosen and paid for by the business itself.  Forced arbitration clauses also often ban class-action suits, which allow individuals to band together to bring their common claims.

In addition to Carnival, the photo sharing service Instagram uses forced arbitration – and some fear Instagram’s parent company, Facebook, may be next.  The practice is also spreading to employment contracts, threatening to make it nearly impossible for workers to sue over race, sex or age discrimination.

“Having a dispute settled by arbitration is like playing a baseball game in which the other team hires, fires – and pays – the umpires,” Aron said.  She noted that a study of top arbitrators for one major arbitration firm found that they rule for the corporations that hire them 93.8 percent of the time.

“The forced arbitration system gives corporations a free pass to break the law,” Aron said.  “The Arbitration Fairness Act would revoke that free pass.”

Read more about forced arbitration

● An overview of forced arbitration 
● AFJ’s report Arbitration Activism
● AFJ reports on AT&T Mobility v. Concepcion
● Press release from Rep. Johnson
● Press release from Sen. Franken
● Letter of support from AFJ and more than 40 other organizations

Will cruise passengers be victimized again – by forced arbitration

As they suffered in sweltering heat, walked through sewage and defecated in plastic bags, some of the passengers aboard the Carnival Cruise Lines ship Triumph probably were thinking “At least when we finally get home we can sue the b-----ds.”

The Carnival Triumph in happier times
(including working toilets)

Well, they can try – and some already have.  But the U.S. Supreme Court has made it a lot harder than it should be. 

It appears that Carnival is far better prepared to prevent lawsuits than it was to contain the damage aboard the Triumph.  In the fine print that comes with every ticket, there is a clause that bars most lawsuits.  Instead, passengers must go into forced arbitration.  In addition, when passengers buy a ticket for a Carnival Cruise they give up their right to be part of a class-action suit – though again, one law firm is going to try anyway.

As we explained in a previous post to this blog, and in our 2011 report, Arbitration Activism, this means the deck is stacked against the passengers at every turn.  And in keeping with its role as “The 1% Court” the Supreme Court majority has upheld forced arbitration, and the ban on class actions, in one outrageous case after another.

The Carnival Cruise fine print makes exceptions for individual suits in cases of “personal injury, illness or death.”  In one of the suits brought so far, a passenger cites severe dehydration and bruises suffered while on “aggressive food lines.”    

But passengers whose suffering extended only to enduring heat, stench, limited food and no toilets may be out of luck.  As for the validity of any class action, presumably Carnival could appeal all the way to the Supreme Court – and we know what that is likely to mean.

IT’S EVEN WORSE FOR THE CREW

There is another group that endured worse suffering than the passengers.  As Josh Eidelson points out in Salon, even when nothing goes wrong, conditions on cruise ships can be hell for the crew.  And there is almost nothing they can do about it.

Citing the work of Prof. Ross Klein, the author of Paradise Lost at Sea: Rethinking Cruise Vacations, Eidelson writes: 

Carnival is technically registered in Panama, a country whose laws Klein charges “have been changed to satisfy Carnival’s needs and interests. Because Carnival means a fair amount of money to their national treasury.” Effectively, for cruise workers, says Klein, “there aren’t any real labor regulations.” (He noted that one lawsuit that was brought against Carnival in the U.S. ended with a settlement requiring future such disputes be pursued through an arbitration system, effectively requiring potential worker plaintiffs to shell out tens of thousands of dollars in transportation and legal fees.)[Emphasis added.]