Arbitration Clauses Suppress Class Action Suits

By inserting an arbitration clause into all kinds of contracts, corporations have found a way to “circumvent the courts and bar people from joining together in class-action lawsuits,” the only way private citizens can feasibly take on major corporations in the legal system.

The arbitration clause American Express uses in its contracts says that “the company ‘may elect to resolve any claim by individual arbitration.’” In other words, arbitration clauses force citizens to waive their rights to challenge corporations on any terms except those set by the corporation itself.

As these clauses show up in applications for cell phones and jobs, and in contracts for Internet, cable service, online shopping, or putting a relative in a nursing home, corporations have made themselves immune to suits – not only are class action suits in violation of contract, “it is nearly impossible for one individual to take on a corporation with vast resources.”

Consumers, and even employees have lost the ability to challenge companies on practices including “predatory lending, wage theft and discrimination.” As courts reject class action suits, corporations reap the profits of exorbitant fees and manipulative business practices.

Image Credit: The New York Times, from New York Times review of federal court docket