Arbitration Clauses

Businesses are increasingly including language in their contracts with consumers that requires the consumers to resolve any disputes they have with the business in private arbitration rather than in a court of law. These are called “arbitration clauses.”

An arbitrator is an individual who need not be a judge, but nonetheless has the power to determine the rights of the consumer. An arbitrator can award damages (much like a court), but holds a hearing that is usually less formal. An arbitrator’s decision is subject to minimal review by courts. Unfortunately, in the last ten years many businesses have begun to use arbitration clauses as a way to deny consumers their rights, even where the business practices are flagrantly in violation of the law. Some businesses include a “class action and class arbitration waiver” in the arbitration clause. These types of clauses make the consumer promise that no matter how small their damages are, or how many others have the same problem, they cannot file a class action or class arbitration.

If such arbitration clauses were enforced, a consumer with small damages could never get his or her money back because, to do so, he or she would have to hire an attorney, miss work, and pay all the fees to arbitrate a case, all for a relatively small amount of money the business illegally charged them. Businesses know that people won’t go to such lengths.  Therefore, some arbitration clauses have worked as “get-out-of-jail-free” cards for unscrupulous businesses.

The Simon Law Firm is proud to announce that after years of hard work, businesses can no longer take away a consumer’s right to bring small damage claims as a class. In a December, 2008 case decided by the Missouri Court of Appeals, Woods v. Q.C. Financial,attorneys at The Simon Law Firm won an appeal that will make it very difficult for companies to ever again prevent consumers from joining together in small damage claims through the use of unfair arbitration clauses.

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