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'Scared to Death' by Arbitration: Companies Drowning in Their Own System
Lawyers and a Silicon Valley start-up have found ways to flood the system with claims, so companies are looking to thwart a process they created.
Teel Lidow couldn't quite believe the numbers. Over the past few years, the nation's largest telecom companies, like Comcast and AT&T, have had a combined 330 million customers. Yet annually an average of just 30 people took the companies to arbitration, the forum where millions of Americans are forced to hash out legal disputes with corporations.
Mr. Lidow, a Silicon Valley entrepreneur with a law degree, figured there had to be more people upset with their cable companies. He was right. Within a few months, Mr. Lidow found more than 1,000 people interested in filing arbitration claims against the industry.
About the same time last year, Travis Lenkner and his law partners at the firm Keller Lenkner had a similar realization. Arbitration clauses bar employees at many companies from joining together to mount class-action lawsuits. But what would happen, the lawyers wondered, if those workers started filing tens of thousands of arbitration claims all at once? Many companies, it turns out, can't handle the caseload.
Hit with about 2,250 claims in one day last summer, for example, the delivery company DoorDash was "scared to death" by the onslaught, according to internal documents unsealed in February in federal court in California.
[ . . . . ] But a federal judge in San Francisco wasn't willing to go along with it. The judge, William Alsup, ordered DoorDash in February to proceed with the American Arbitration Association cases and pay the fees.
In a statement, a spokeswoman for DoorDash said the company "believes that arbitration is an efficient and fair way to resolve disputes."
But in a hearing, Judge Alsup questioned whether the company and its lawyers really believed that.
"Your law firm and all the defense law firms have tried for 30 years to keep plaintiffs out of court," the judge told lawyers for Gibson Dunn late last year. "And so finally someone says, 'OK, we'll take you to arbitration,' and suddenly it's not in your interest anymore. Now you're wiggling around, trying to find some way to squirm out of your agreement."
"There is a lot of poetic justice here," the judge added.
Ah! Gotta love judge Alsup. Back in SCO vs Novell, and in Oracle vs Google. Now this.
(Score: 3, Insightful) by progo on Tuesday April 07 2020, @09:16AM (5 children)
Judges are smart and try to aim for serving justice.
Legislators have a bad reputation for being not so smart and guided by lobbyist who work for companies and trade associations but usually not for citizens. You know what will be the next move for companies that force contracts on employees and customers to use arbitration to get what the company wants.
(Score: 5, Informative) by Runaway1956 on Tuesday April 07 2020, @02:12PM
(Score: 4, Informative) by Thexalon on Tuesday April 07 2020, @04:26PM (3 children)
It depends a lot on the judge in question.
Some judges are smart lawyers who are dedicated to fairness and want to make a positive difference in their community. Other judges are corrupt-as-all-get-out officials who routinely take bribes ... errr, campaign contributions ... from the attorneys with cases before them, and/or get kickbacks as a result of their decisionmaking. Even more are simply political hacks who got the job because they're somebody's brother-in-law. And at least in my state there's also a number of right-wing religious nutjobs who are judges because they want to take part in cases to overturn Roe v Wade and also allow Christianity to become the official religion of the United States.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0) by Anonymous Coward on Tuesday April 07 2020, @05:54PM (2 children)
Yes, the problem there is selection bias. Sure, there are some judges that are appointed even though they're completely incompetent. Justices Scalia, Kavenaugh and Thomas on the Supreme Court are good examples. Kavenaugh may be guilty of sexual assault, but definitely lied under oath repeatedly during his confirmation on top of engaging in a disgusting level of partisanship during the proceedings. They are there because they'll skew the court towards conservative viewpoints.
The more common case, is where there's a field of qualified picks and the President, or whomever, selects ones that are the more in line with their choice. In the past, that wasn't a major problem as there was at least some effort to choose candidates that looked qualified.
This is why it's imperative that we get a constitutional amendment that restricts judicial picks to a list compiled by a non-partisan working group to ensure that the picks are at least marginally reasonable and qualified. I shudder to think of what a Supreme Court Justice Judy would be like. And that could well happen.
(Score: 2) by Thexalon on Tuesday April 07 2020, @06:54PM (1 child)
And then whoever controls the non-partisan working group controls SCOTUS. That's not a real solution: The real solution is to vote out of the Senate everyone who puts partisanship above the people's business, which means replacing somewhere between 95 and 100 of them.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0) by Anonymous Coward on Tuesday April 07 2020, @09:56PM
As opposed to the current system where partisan hacks create the list in secret and there's essentially no oversight? At least with a nonpartisan group, there's some safety mechanism built in to keep things from completely leaving the rails.