Why an Ultra-Conservative Texas Grandmother Hates the GOP.

[depakid]

Like most Republicans, it takes something traumatic happening to them personally before they'll see the light of reason.
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What could make Jordan Fogal, a 61-year-old ultra-conservative Republican grandmother from Texas, refuse to vote for a single Republican in the last election? Two innocent sounding words: mandatory arbitration.

In 2002, Jordan was a happily married senior citizen living in a brand new house and making plans for retirement. She believed in "the system," she believed in the law, and she believed in America. Jordan had the American dream, and then she lost it. Or, more accurately, she signed it away.

When the Fogals reviewed the contract to purchase a new home, they saw a mandatory arbitration clause. The clause said that, if they had any dispute with the builder, they would be required to submit to binding arbitration -- where disputes are decided by an arbitrator -- and could not take them to court. But since they had a warranty on the house, homeowners' insurance, positive results from a complete inspection, and had dealt with a reputable licensed realtor, they weren't worried. In any case, arbitration sounded like a civilized way to handle conflict. Who needs the courts?

<snip>

The Fogals lost their home because they could not afford to pay for alternative housing, moving expenses, lawyers' fees, arbitration fees, and their mortgage at the same time and because they were also not willing to try and dump the house on another family. Sure that government would intervene to protect her, Jordan went to every representative in her state to notify them of the injustice she and her husband had endured. All of the Republicans ignored her. Indeed, support for mandatory arbitration agreements, tort "reform," and other means of keeping Americans out of the courts have been a Republican staple for years.

Finally, two Democratic state representatives wrote letters on her behalf, but even they told her that there was little they could do because of an old federal law favoring arbitration agreements passed when they were primarily only made between corporations. But at least they tried.

More: http://www.alternet.org/rights/51885/

[Justitia]

1. Doncha love how they finally look to the Dems for help? What does that say?

And a tip to all our readers: NEVER agree to mandatory arbitration on ANY purchase.

[iamjoy]

2. May Not Have A Choice

it sounds like so many companies are requiring it, you may not have a choice.

Oh, and trial lawyers are evil, right? I wonder what John Edwards has to say about this.

Then there's the case in Florida where a Home Builder sued one of their customers because she complained about hurricane damage to her house. I'm at work now, so I can't hunt for the link, but maybe I'll find that story and post it.

[Justitia]

3. I've been confronted w/it twice, once on a house, the other on a car.

I refused it, very nicely. I telegraphed that I would find another house / car to buy if necessary.

The car dealer didn't bat an eyelash.
The house builder had an overnight ulcer, but no real resistance.

I will say, I was negotiating from a strong financial position and was willing to close both deals quickly, so not everyone would have those advantages in negotiation. It's worth making a stand, I guess.

I think most people agree to it because they have no idea how awful it is for the purchaser.

[iamjoy]

8. It Was Mercedes Homes

they sued one of their home owners for complaining about water intrusion. Apparently, there's something in the home buyer's contract that you won't complain if the home turns out to be crap.

http://www.wesh.com/news/3931117/detail.html

[treestar]

4. Arbitration could be cheaper than the courts though

I'm not understanding that part - it could only have been worse. The courts are too expensive for middle class people any more - the rules get stricter and stricter and the clerical demands bigger and bigger as the judge's answer is always to dump more of that onto the public when it gets heavy. Also takes so long to get to trial.

[Justitia]

7. Did you read the story? Their home is basically destroyed. Court costs = $350

An attorney most likely would have cost them a contingency fee.

This is a rampant problem here in TX (shoddy bldg by shady builders, no recourse).
Many, many cases.

They would have been enormously better off w/out arbitration. Now, they are permanently screwed with this house.

[KittyWampus]

5. I love this story on many levels.

[Arugula Latte]

6. Ah, reality bites another one on the ass. nt

[Maven]

9. This article is ridiculous.

It totally gets the issue wrong. Signing a contract with an arbitration clause in it is only that--it isn't "signing away the American Dream." Arbitration clauses are common nowadays, and most specify a certain set of rules that allow both parties to pick their own arbitrator and to challenge arbitrators for being partial to one party. Plus, under the big, bad federal law that this article refers to, you can STILL have the decision vacated by a court if the arbitrators exceed their authority.

If this woman didn't READ the contract she signed, or have an attorney read it, that's her problem. The process of arbitration itself isn't "inherently" biased toward the wealthier party, though it can certainly be tailored to benefit one party or another--that's why you have to READ what you SIGN. It's also absolutely ridiculous to suggest that she would have spent a total of $350 to litigate this in court.

That's not to mention the fact that it wouldn't be within the power of any elected official to simply undo a valid contract between two private parties because one of those parties was unhappy with the result.

The big issue here is the inconsistency of this woman's stated political philosophy with her actions. Conservatives are so fond of keeping government out of private business, and yet, at the first sign of trouble, this woman expected her government to bail her out. "Ironic" is putting it kindly.

[depakid]

10. There's a difference between mandatory arbitration and binding arbitration

which does not include a right to trial de novo.

Also, these clauses are often buried in a contract- like other clauses that lay people either don't understand or know about, which is why we need to have consumer protection laws- particularly with big ticket items like real estate or title chattels.

I agree- it is ironic- but I disagree that a senator or representative has no power to act on a constituent's behalf. They certainly do- and when they do, they can impact a fair and reasonable resolution to the issue- or (as is too often the case) an unfair or inequitable one.

[Maven]

11. What?

No there isn't. What are you talking about?

Every arbitration clause is "mandatory" in that the parties agree to submit a dispute to arbitration; the result is "binding" by virtue of the same contractual agreement to arbitrate and by court confirmation of the award under the Federal Arbitration Act. Certain issues may be reviewed by a court de novo (for example, scope of submission) in a set-aside proceeding or in a challenge to confirmation of the award, but no arbitration clause I've ever read (and I've read quite a few) explicitly gives either party a right to litigate the entire dispute from scratch. Doing so would thwart the entire purpose of arbitration to begin with.

As I've already said, an individual Senator or Representative has no power to undo a valid contract between two parties. Congress would have to pass a bill invalidating an entire class of contracts, which a) would never happen, and b) probably wouldn't hold up in the inevitable court battle that would ensue. There are other remedies at law that a party to arbitration can pursue in court, but calling one's Congressperson isn't one of them.

You're correct that consumer protection laws are necessary, but upon rereading the article it seems that this woman knew about the arbitration clause and signed anyway. If she didn't want to submit to arbitration, or didn't understand what it meant, she might have renegotiated with the builder or chosen a builder that didn't require the clause.

[depakid]

12. Clarification

In general terms, some claims are subject to mandatory arbitration via various court rules (that vary from state to state). That's not the same as "binding arbitration," which the parties can "choose" to agree to.

However, you're correct- most contract claims whereby "mandatory arbitration" is part of an integrated contract, the parties are subject to the whims of the AAA.

You're also correct that no senator or representative has the "right" to interfere with the law as such. However, there are many ways to bring pressure on particular issues and/or parties that are extra-judicial. A well placed letter or a simple phone call can do interesting things- depending on who's involved.

I've seen it happen many times. Haven't you?

[Maven]

13. A "well-placed letter" from an elected official could also be a violation of the ethical rules

If I were opposing counsel in those circumstances I might pull an 8.3 with the bar.

As for "mandatory" vs. "binding," I understand the distinction you're making but it's largely a semantic one. I figured you might be referring to court-mandated arbitration (which can still be "binding" by the way). In any case, it's not relevant to the parties described in the article, whose submission to arbitration was contractual anyway.

A lot of the arbitrations I deal with are international--so thankfully I deal with the ICC, not the AAA. ;)