Arbitration is a lot like whiskey – it can be a good thing or a bad thing. My friend Phil Thomas wrote a blog post several weeks ago pointing out the alleged evils of arbitration http://www.mslitigationreview.com/2015/06/articles/general-1/arbitration-jurisprudence-bad-for-legal-profession/.
The CFPB has written a recent report outlining the purported evils of consumer arbitration. http://www.consumerfinance.gov/newsroom/cfpb-study-finds-that-arbitration-agreements-limit-relief-for-consumers/
Two Scholars recently have criticized the CFPB study:http://mercatus.org/sites/default/files/Johnston-CFPB-Arbitration.pdf
This back-and-forth reminds me of the famous Soggy Sweat speech about whiskey.
It is a fairly long speech so I will paraphrase a few of the points that demonstrate the parallels between whiskey and arbitration -arbitration and whiskey have a lot in common.
Judge Soggy Sweat said this in 1952 during prohibition(more or less):
If when you say whiskey you mean the devil’s brew, the poison scourge, the bloody monster that the defiles innocence, dethrones reason, destroys the home, creates misery and poverty, if you mean the drink that topples the Christian man and woman from the pinnacle of righteous living into the bottomless pit of degradation and despair shame and hopelessness than certainly I’m against it.
But if when you say whiskey you mean the oil of conversation, the philosophic wine, if you mean the stimulating drink that puts the spring in the step of an old man on a frosty morning, the drink which enables man to magnify his joy and happiness and forget life’s great sorrows, if you mean that drink which pours into our state coffers untold millions of dollars which provide tender care for our little children, build highways, hospitals and schools I am certainly for it. This is my stand, I will not retreat I will not compromise.
This is a link to John Grisham reading the speech. http://www.youtube.com/watch?v=qPzUcJcgXUA:
With apologies to Soggy Sweat I think the same points can be made about arbitration. Here is my take on arbitration:
If when you say arbitration you mean, a quick, inexpensive forum for claim resolution, a way for defendants to avoid getting railroaded in a bad venue, a way for sophisticated parties to avoid the vagaries of uneducated jurors, a way to truncate the expensive drawn out litigation process yet still have a right of appeal, a way to insure come predictability of claim resolution, then I am for it.
But, if when you say arbitration, you mean that drawn out, expensive, three member panel process without a right of appeal, with expensive administrative fees, where parties can drag out the arbitrator appointment process and the administrators are toothless tigers that have no real remedies to bend the will of a recalcitrant litigant, that baby splitting process where hard calls are not made and clear cut dispositive motions are not granted, the process where industry prevails against consumers at impossibly high levels, then I am against it.