Drum Major Institute for Public Poilicy - Cyrus Dugger
Corporate America: Get Behind Your Product!

The story of yet another victim of a mandatory arbitration agreement:

When I bought my new home from the Centex Corporation about ten years ago, the exterior siding started flaking off just two years after we moved in. Unknown to me, there was a binding mandatory arbitration clause hidden in the fine print of my sales contract. As it turned out, the Centex Corporation replaced the siding on my home without having to resort to arbitration (although I had to fight them for nearly two years). But if they had not agreed to replace the siding on my home, I would have been forced to enter into binding arbitration. If that had happened, I have no doubt that I would have lost. How can ordinary citizens win an arbitration case when the deck is stacked against them by “judges” who are nothing more than direct representatives for the construction industry?

When I purchased a new Jeep from Red McCombs three years ago, there was a binding mandatory arbitration clause in the sales contract. When I protested, the sales agent told me that the dealership would not sell the vehicle to me unless I signed the arbitration agreement. Before I signed the agreement, I wrote a note in the margin of the paper that I was signing it under duress. There probably isn’t a car dealer in San Antonio, Texas, that doesn’t slip a binding arbitration clause into the sales contract.

Two months ago, I got a new cell phone from Cingular Wireless. Last week, I received a notice in the mail entitled” “Notice of Improved Arbitration Clause. Dispute Resolution by Binding Arbitration.” The brochure is six pages long. Among other things, it says the following: “In the unlikely event that Cingular’s Customer Service Department is unable to resolve a complaint…we each agree to resolve those disputes through binding arbitration or small claims court instead of in courts of general jurisdiction.”

The problem with Cingular Wireless is that I definitely do not recall reading (or signing) a binding arbitration agreement when I selected their phone service. Moreover, where in the hell does Cingular Wireless get the authority to tell American citizens that they must surrender their right to solve disputes in courts of general jurisdiction? Isn’t that one of our fundamental rights as citizens? It’s funny that criminals like murderers and robbers have full access to courts of general jurisdiction, but ordinary law-abiding taxpayers do not.

What I don’t understand is why so many companies have resorted to binding mandatory arbitration. Don’t they stand behind their products any more? Why do they find it necessary to sneak BMA clauses into the fine print of sales contracts? BMA has truly reached epidemic proportions in the United States, and it needs to be stopped. Businesses need to be held accountable for the goods and services they sell instead of blaming their customers, or forcing them to surrender access to the courts.

Sincerely,

Donald A. Smith
San Antonio, Texas

Posted by Cyrus Dugger at December 19, 2006 12:52 PM