Carrie Lavargna: Arbitration has no jury and no appeal
I recently shopped for a new car. The dealer and I agreed upon the model, extras, color and price, and I signed a one-page purchase order. When I arrived to pick up the car with payment in hand, the business manager informed me that I had to consent to resolve any disputes with the dealer through binding arbitration. This automotive equivalent of a pre-nuptial agreement asked that I waive my right to a trial in state court and accept as final the decision of an arbitrator. Being rather peeved that this provision was thrown at me at the last moment and thinking that arbitration is ill suited for consumer transactions, I walked out.  In arbitration, the case is heard by one arbitrator or sometimes a panel of three. Some arbitrators are chosen because they are familiar with particular industries. The person or panel acts as both judge and jury in hearing the dispute. The decision is called an award that is final and binding. There is no appeal. Once you sign a document with a binding arbitration provision, you have no other remedy.

Carrie Lavargna: Arbitration has no jury and no appeal

By Carrie Lavargna
Sunday, August 19, 2007

Corporate America is infatuated with arbitration. Arbitration is suitable for complex, sophisticated transactions such as maritime shipping and international transactions.

But its overuse in consumer and employment matters has quietly eroded the rights of the American people, according to U.S. District Judge William G. Young of Massachusetts, who spoke at The Florida Bar's Annual Convention in June.

"The American jury system is the strongest guarantor of judicial independence that we have," he said.

Yet it is dying, he claims.

In arbitration, the case is heard by one arbitrator or sometimes a panel of three. Some arbitrators are chosen because they are familiar with particular industries. The person or panel acts as both judge and jury in hearing the dispute. The decision is called an award that is final and binding. There is no appeal.

Once you sign a document with a binding arbitration provision, you have no other remedy.

John Cardegna learned the rules after he took out a pay-day loan from Buckeye Cashing and signed a loan document that included an arbitration provision.

Cardegna later sued Buckeye in Palm Beach County court, claiming that the entire transaction, including the arbitration provision, was illegal and could not be enforced.

The case wound its way to the U.S. Supreme Court, which ruled last year for Buckeye. It is now the law of the land that an agreement to arbitrate is valid even if the remainder of the contract is void or illegal.

An arbitration award is not law and not public. If the arbitrator rules for Cardegna, it may not stop Buckeye -- or any other pay-day lender -- from entering into the same transaction again and again.

We can all point out the flaws in our legal system. But is arbitration better?

Our courts are public and jurors decide the facts. Written court decisions that apply principles of law to certain sets of facts are considered legal authority. Those decisions are respected and will be followed by other courts when deciding similar situations. We have a right to appeal if the law was improperly applied.

In a dispute with a car dealer, I'd much rather have a jury of my peers rule on the matter in open court, not a private individual with experience in the auto industry. When you find an arbitration provision in a contract, decide whether it's worth it to give away your rights in court.

This column is an overview of the subject matter and is not intended as legal advice. Carrie Lavargna is an attorney practicing law in Stuart.
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