Arbitration Clauses Go On Trial Today in the USSC

Discussion in 'Law and Justice System' started by George Costanza, Apr 26, 2010.

  1. George Costanza
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    George Costanza A Friendly Liberal

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    Today, the Supremes hear argument on an interesting and important issue: arbitration clauses that are forced upon consumers, usually without their knowledge or consent. Here's the issue:

    You know the contract you sign with your cell phone company every two years or so? Ever read it? It contains a clause in it that says that, in the event a legal dispute arises between you and the company, it must be litigated by way of arbitration - you cannot take it to a court of law, before a jury. Arbitration clauses are very popular with the medical profession as well as many large corporations. Why? Because, typically, arbitrators will award much, much less in damages against the provider than a civil jury would.

    Throughout legal history, agreements such as these, when made part of the original contract between the consumer and provider, are called "contracts of adhesion." A contract of adhesion is a contract that you MUST agree to or there weill be no overall contract, i.e., the service you are requesting will not be provided. It is a clear, "take it or leave it" proposition. You won't agree to arbitration? Then take your business elsewhere.

    Contracts of adhesion are traditionally viewed in favor of the consumer and against the provider, because of the coercive nature of their inception.

    The case before the Supremes this day tests the legality of such contracts that require arbitration as a condition of entering into the contract to begin with. It's an interesting issue, and I will be anxious to see the outcome.

    How do you think it will come out? How would you prefer that it comes out, and why?
     
    Last edited: Apr 26, 2010
  2. slackjawed
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    slackjawed Self deported

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    I seem to be unable to predict USSC decisions. I refrain from making a prediction on those grounds.
    I am also a lazy slob, so rather than go search the internet and find out for myself, and because you seem to have presented valid information before, I will just ask;

    Do you know what the legal arguments are? What is the constitutional issue being decided in this case?
     
  3. George Costanza
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    George Costanza A Friendly Liberal

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    Here ya go, me bucko:

    Courthouse News Service

    To be honest, I'm not sure what the constitutional issue is. The particular dispute in this case was a claim for racial discrimination made by an employee against an employer. The claim wound up in Federal Court, but the Federal Court rejected it, saying the arbitration clause in the original employment contract was valid and binding and so, the case had to be heard by an arbitrator.

    That's the narrow issue (whether the arbitration clause is binding or not). I suspect it is before the Supremes because of the federally based origin of the controversy and/or the fact that the dispute involves employee-employer relations. I am not sure of what the constitutional issue is yet. Not too clear from the linked article.

    Of course, a decision such as this has HUGE political ramifications. Big Business would dearly love to be able to continue to enforce these unfair clauses against the individual, thereby avoiding having to pay just compensation for their wrongs.

    Edit Note: What makes you think that there has to be a constitutional issue in order for the USSC to hear a case? I may be sticking my (leagl) fanny way out in the wind here, but I am not sure that this is a requirement. Checking on that now. Stand by.
     
    Last edited: Apr 26, 2010
  4. slackjawed
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    slackjawed Self deported

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    Yeah, I did a search too and couldn't quite get what the constitutional issue was, even though I claimed laziness.:razz:
    I guess we will probobly hear all about it after it happens, along with any repercussions the decision may entail.
     
  5. George Costanza
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    George Costanza A Friendly Liberal

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    OK - now we can BOTH learn something. Article III, Section 2 of the U.S. Constitution sets forth the jurisdiction of the U.S. Supreme Court:

    So, yes - cases which have constitutional issues ("cases arising under the Constitution") are within the jurisdiction of the Court, but so are "cases arising under the laws of the United States" (which may or may not involve a constitutional issue).

    Ha!
     
  6. slackjawed
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    slackjawed Self deported

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    :eek:
    I have been "ha'd".
    I don't feel bad though, it was in the best of spirits.

    Thank you, I did learn something.
     
  7. George Costanza
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    George Costanza A Friendly Liberal

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    I wasn't directing the "ha" at YOU. Rather, I was uttering the "ha" in a kind of self-congratulatory way. I always feel good whenever I learn something new. As an attorney, I should have known that, and I suppose I did a long time ago, when I was sitting in a con law class in law school.

    Anyway, I will be anxious to see how the decision comes out. If the conservative structure of the court holds true, Big Business will win out once again.
     
  8. slackjawed
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    I am always interested in reading the USSC decisions. I too think that big business will prevail, especially if it is about arbitration.


    I am inconsolable that you have withdrawn your "ha". i thought I was special.
     
  9. jillian
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    its with the federal court under the banking regulations. i suspect the constitutional interest is in the right to access to the courts and whether someone can be fored to waive that.

    there are many bases for cases to get to the USSC, but in all of them there has to be an issue involving federal law. it may or may not be constitutional as it may require that a federal statute be construed... or varying results from different circuit courts of appeal which need to be reconciled.

    it's been a while since that issue came up for me, but that's my recollection.
     
  10. George Costanza
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    George Costanza A Friendly Liberal

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    I think you are correct - it comes back to me now. There has to be a "federal question" involved but it does not necessarily have to be a constitutional one. That would make sense, since Article III, Section 2 mentions the laws "of the United States" (i.e., federal, as opposed to state law) as one of the bases for jurisdiction.
     

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