Recently, many companies are sending me long emails with their new “Terms and Conditions”. These are harder to read than hieroglyphics on a pyramid wall, but some parts seem more important because THEY ARE PRINTED IN ALL CAPS. So what is “arbitration” and why do companies want me to consent to it? Can I do anything about this?
Dazed and Confused
Arbitration is a method of “alternative dispute resolution” meaning that you can’t go to court if you disagree – you have your case heard by private professionals (usually lawyers or retired judges), not judges and juries. These arbitrations do not have to follow all the rules of court cases (discovery, evidence, etc.) and the decisions usually are not subject to any right of appeal, meaning that they are resolved more quickly and at lower cost than a court case. Arbitrations are permitted under federal and most state laws, IF you freely agree to them knowing that you’re giving up certain legal rights, such as the right to join a class action with others who have the same legal issues. (9 U.S.C. §1, et seq.)
In recent years, with court dockets getting longer, and costs of litigation rising, many businesses have imposed arbitration terms on customers as a way of saving time and money. There are even businesses that operate arbitrations like private courts!
Amazon.com had, until recently, used arbitration terms in its dealings with customers. This meant that no class actions could be filed against the company, which the Doc is sure sounded pretty good to Mr. Bezos and his pals.
Amazon’s Echo devices (you know, the gizmo that you talk to when you’re just too lonely and nobody’s around?), seem to have recorded some things that users did not appreciate being sent to Amazon and stored on its servers. Things like…well, the Doc will let you use your own imagination. These users were prevented from bringing lawsuits against Amazon for this invasion of privacy because of the arbitration terms in the agreement that they entered into by using the Echo device in the first place. So what did they do? Over 75,000 of them filed arbitration demands! This seems to have surprised Amazon mightily.
So how did Amazon respond? It now says, “Sue me!” Or more precisely:
Any dispute or claim relating in any way to your use of any Amazon Service will be adjudicated in the state or Federal courts in King County, Washington, and you consent to exclusive jurisdiction and venue in these courts. We each waive any right to a jury trial.
So there you have it. Without a class action lawsuit, even mighty Amazon can’t handle 75,000 arbitration claims and it folds like a cheap lawn chair. Will arbitrations go away now? The Doc says “no way”. Arbitration is still appropriate for many types of disputes, particularly those between businesses having more equal size and bargaining power. They are a useful part of a lawyer’s tool kit in representing her clients.
Have a contract that needs writing? Want to know if arbitration is right for you? Give the attorneys at LW&H a Zoom. They not only write such clauses, but they have even served as arbitrators in complex technology disputes.
Until next month,
— Lawrence A. Husick, Esq.