Differences Between Court, Mediation, and Arbitration, or Why I opt out of Arbitration Agreements

On Behalf of | July 20, 2018 | Civil Litigation

In the landmark civil rights decision Brown v. Board of Education, the court ruled that racial segregation in the public schools was unconstitutional. But if the Plaintiffs in Brown had been subject to an arbitration agreement with their schools, public schools might still be segregated today. Today women do not have to tolerate hostile conduct motivated by sex or gender. But if the Plaintiff in Meritor Savings Bank v. Vinson had been subject to an arbitration agreement with her employer, hostile work environment claims, as a form of sexual harassment, might not be actionable today. Today workers can challenge policies that have a discriminatory impact, even if those policies seem neutral on their face. But if the Plaintiffs in Griggs v. Duke Power Co. had been subject to an arbitration agreement with their employers, workers today might have to tolerate policies that are “facially neutral” but discriminatory in practice.

The simple truth is that civil rights are often advanced by settling disputes in court. While legislatures write law, courts interpret that law and give it effect. Courts are public and court documents are available to all of us. Court decisions can be appealed, which helps ensure that mistakes are corrected. When legislatures don’t like final court rulings, they can change the law—as Congress did, for example by passing the Lilly Ledbetter Fair Pay Act to correct the decision in Ledbetter v. Goodyear Tire and Rubber Co.

That being said, some Plaintiffs don’t have the time, resources, or interest in turning their case into the next Brown v. Board of Education. Some people need relief fast. Others, perhaps, aren’t interested in the spotlight of a landmark court case. For these reasons, there are alternative fora for settling disputes, outside of the courtroom.

Many of our Plaintiffs, for example, choose to take advantage of private mediation. In private mediation, the parties to a dispute agree to engage in a confidential process whereby a mutually agreed-upon third-party neutral helps facilitate a settlement discussion. The mediator cannot bind the parties or force anyone to accept any particular outcome. Rather a mediator is an expert in helping parties understand the strengths and weaknesses of their case in the spirit of finding a mutually acceptable negotiated resolution of a dispute.

Arbitration, on the other hand, is a different beast. Like mediation, arbitration is also private. But an arbitrator does have power. An arbitrator’s decision does bind the parties. The decision of an arbitrator, generally, cannot be appealed. Behind closed doors, an arbitrator can decide what they want, for reasons they want, leaving parties with no further recourse in the dispute.

The good news is that we can only be forced to arbitrate our claims if we have contractually agreed to do so. For example, when sophisticated parties negotiate, in advance, to arbitrate any disputes that arise between them, arbitration can be a legitimate and efficient means of resolving disputes. We all sign contracts all the time, however, and many of those contracts contain arbitration agreements. For example, we might sign a user agreement for a new app, or a lease agreement with a landlord, or an employment contract with a new employer. Many times, as in the previous examples, we may not be in a position to meaningfully negotiate the terms of contracts we sign: either we sign or we don’t use the app; either we sign or we don’t live in the apartment; either we sign or we don’t work for the company. Often, even if we can’t meaningfully negotiate a contract’s terms, if the contract has an arbitration clause, courts will generally force us to arbitrate our claims.

Personally, I want to be in control of any case I might have. I want to be able to decide to go to New York state court, federal court, or to private mediation. For that matter, I want to be able to decide to go to arbitration for my claim, if I think that is best. That is why, whenever I can, I “opt-out” of arbitration agreements. Some (but not all) arbitration agreements allow a party take steps to inform the other party they do not consent to arbitration of any disputes. By opting out, one retains the right to settle a dispute in court, or in mediation, or even to choose to settle a dispute through arbitration! Importantly, opting-out lets an individual choose, in consultation with their attorney, the best path for themselves. For example, by opting-out, a client and their employment attorney may decide together how to best pursue their pay discrimination case. Or, by opting-out, a client and their consumer fraud attorney can decide together how best to pursue their predatory lending case.

I choose to opt out of arbitration agreements, where possible, because if the day ever comes that I am the plaintiff, I want to be able to choose to go to court or to mediation if I think that is best. Not everyone needs to (or even can) manage their case so that it becomes a civil rights landmark. But the risk with ubiquitous arbitration agreements is that no one will be able to publicly demand justice.