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Comment by Animats | Hacker News Reader

Oh, it's even worse than that for companies. The 9th and 10th circuits have both agreed that if the defense refuses to pay for arbitration, plaintiff can go to court. They're no longer barred from suing at that point.

Incidentally, the AAA rules have some useful provisions in consumer disputes. Either party can request to transfer the case to small claims court. At least in California, that's not only cheaper, small claims courts tend to be pro-plaintiff. You get to be heard in person in your own county by a real judge.

[1] https://www.adr.org/sites/default/files/Consumer_Rules_Web_0...

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I took State Farm to small claims court. They paid to upgrade it to general division at the last possible moment, which significantly increases the logistics and complexity of the case. I think they did it as an intimidation tactic. Corporations are horrible.

What was the result?

They settled the morning of the hearing for exactly as much money as I asked for before I took them to court. They admitted that the attorney alone cost much more than the settlement. Not to mention the court fees they had to pay.

Did it increase your expenses or did the court order them to pay costs for wasting the time of both the plaintiff and the court?

They also lost me as a customer, and I found a cheaper rate for better coverage with someone else.

State Farm is a mutual company. That means that the policyholders (i.e. you) actually own it.

https://en.m.wikipedia.org/wiki/State_Farm

That’s like saying we choose the government. It’s true in theory, but in practice the top management uses the “owners” like Soylent Green.

It's a matter of feedback, really. It doesn't matter if a government is selected by the people if the government can control the people more effectively than the people can control the government.

If the company holds very infrequent general meetings and the owners can't schedule extra ones, then the managers are going to rule, irrespective of who "formally" governs the company.

It's like a people's democratic republic: even if the election is fair, the political bureau sets the rules 99% of the time and the congress of deputies only meets once a year - and soon enough the elections end up no longer being fair.

And accordingly, I could give orders to their lawyers and their likelihood of doing what I say is about the same as the percentage of the company that I own.

Why do the policyholders pay for so much TV advertising to get new policyholders? Increase in volume lowers overheads and spreads the risk pool, but surely not to the extent of the TV spending.

The principal agent problem:

https://en.m.wikipedia.org/wiki/Principal%E2%80%93agent_prob...

That seems unfairly stacked in favor of the defense. If they refuse to pay for the arbitration, that should be the same as if they just refuse to show up to court, i.e. default judgement in favor of the plaintiff.

Arbitration isn't a court, it's a mutually agreed upon deal that might help parties stay out of court.

And what company is going to write in a default judgement for the plaintiff in their ToS?

The arbitration vendors (and lets be clear...they are vendors not a system of justice) could and probably should write this into their rules.

They rely on the appearance of fairness to enable corporations to use their services against consumers/employees. If they aren't careful there is a risk of the courts increasingly observing how tipped the scales of arbitration are.

The jurisprudence, to the limited extent I understand it, relies on the assertion that arbitration is fair. Upholding that believe is in the arbitrators interest.

>(and lets be clear...they are vendors not a system of justice)

This is misleading, neither America nor any other country has a justice system. Justice is often a goal of the legal system but it is not a direct attribute of the system.

How would you design a Justice system then?

Most of Europe, at least, isn't bound to the letter of the law, but rather the spirit of it. I'd assume this makes them much more a justice system than the American version.

that is an absolutely fair critique of my word choice. Totally agree, and I'm usually the person making that comment.

To be fair, the "justice system" is a commonly accepted name for the legal system, in the same way that you would call it the "Department of Defense" or the "Department for Health and Social Care."

> mutually agreed upon

So, buried in size 3 font on page 355 of a document included by reference in the 200 page TOS and that can be found at the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying "Beware of the Leopard" -- that one is to have read in full by legal counsel before spending $30/month on internet access?

Right.

I know that courts know about contracts of adhesion, but suggesting that there's anything mutual about them is absolutely grounds for a little prodding.

Arbitration is extremely disruptive. If someone takes you to arbitration, you pay $1k non-refundable, simply because they want to take you to court.

If you do end up in court, it's another $20k just for JAMS fees. Again, non-refundable, doesn't matter if you win or lose.

So if someone is trying to take you to arbitration over less than $20k, it really doesn't matter AT ALL if they are right or not, it makes sense to settle for whatever amount you can convince them to agree to.

You can kill a company with frivolous arbitrations, just by having enough people willing to file one. Doesn't matter if those people have been wronged.

If so, why not just remove the arbitration clause?

Should have thought of that before you added a mandatory arbitration clause to your contracts.

Either way, they end up having to fight on a thousand little battlefields all over the place and likely do not have the interest or ability to fight each and every one. This is the sort of thing that can tie up legal teams for years and drain reserves in no time.

I was involved in a mass-arbitration last year. The NDA bars any details from being released for 2 years but in the meantime, we can say we reached "a resolution, not a settlement" in the dispute.

In your opinion, will mass-arbitration become more and more common?

Generally speaking, what does "a resolution, not a settlement" mean? Or is that not a general legal term?

No idea if there's a legal distinction but a settlement usually makes it sound like one side admitted fault even if that isn't the case

Settlement is one type of resolution. A settlement is just an agreement for one party to drop claims against the other in exchange for something of value (usually money). Usually there is no admission of anything by any of the parties and the exact terms are confidential.

When are the 2 years up? i'd be interested in hearing the details

How is that any worse of a position for the companies than if they had never attempted these nonsensical arbitration clauses in the first place? A reasonable outcome would be summary judgements for the plaintiffs due to the defendants not appearing per their own process.

This is interesting. Are they only allowed to sue to force going to arbitration, or is the situation opened to allow a lawsuit for whatever the original dispute was?

Lawsuit over the original issue. The non-paying party has effectively declined arbitration.[1]

[1] https://library.nclc.org/where-defendant-requires-arbitratio...

It would be WILD if you could (as the company) not pay to go to arbitration, forcing the plaintiff to take you to court (at their expense?) to force you to pay to go to arbitration.

A company could simply stick its fingers in its ears and yell "I can't hear your legal complaints!" and essentially get out of all responsibility. Thankfully, it sounds like this is not the case.

Typically arbitration clauses have wording that also prohibit class-action cases. It looks like this hasn't been tested, but I guess that would be void too?

Once the company breaches the arbitration clause by refusing to pay for arbitration, it would open the door to class-actions.

However, you would probably need to file your case separately in court and get it combined with other cases to form a new class action, or join or an existing class action, as the breach would only apply on a case-by-case basis.

I'm sure corporations will fight tooth and nail to equate mass-arbitration with class-action. Very interesting how this might play out.

I don't see how there could be any viable argument toward that equivalence. Class action lawsuits are special in that most of the plaintiffs don't have to lift a finger while a small number of plaintiffs and their lawyers prosecute the case on behalf of everyone who doesn't opt out. Mass arbitration still requires each plaintiff to individually prove their case. Companies cannot write contracts that say you can only sue us if you're one of the lucky few; each and every customer/employee must individually have some avenue of recourse or the contract is going to be ruled unconscionable because the contract is only effectively binding on one party.

When a company says "you can't come after us because we're already facing too many other similar claims", that's called bankruptcy proceedings.

I always wondered about the possibility of a legal automation company that would opt people out of a given class action, wait for the class action outcome, and then file individual claims for everyone who opted out. Much better than receiving a gift card for $2.83 or whatever.

I suppose the court fees would be prohibitive, unless you had a strong case and could make the defendant pay them. The math could work out for the right cases though. Back in the day, I remember a class action lawsuit over Philips CD burners that just resulted in something like a $200 coupon off a new Philips CD burner. Basically a useless piece of paper unless you wanted to give the company another $300, but if that could have been made into cash...

I'm thinking new laws would be manufactured to make that equivalence. You know, to help poor old corporations.

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