The Tortellini

Revolving door for judges?

I guess I'm naive, but it never occurred to me that one factor judges might weigh when making a decision from the bench is their own future employment prospects. But thanks to Paul Bland at the CL&P Blog for an interesting post about the possibility that judges are allowing expanded use of mandatory arbitration because they can leave the bench to make a lot more money as private arbitrators. While it's never all that surprising to hear that some of the luminaries in the Bush administration are, oh, buying condos with lobbyists from companies with business before their agencies, or that many of the regulatory agencies are stocked with people from the companies that they regulate, I guess I still had this misguided sense that judges were above that sort of thing. Hopefully, most really are, but Paul's post does leave you wondering...

Banana Republic's Arbitration Clause Waiver: Enlightened consumer measure or lawsuit defense?

So today, I bought a new winter coat from Banana Republic. To save 15 percent, I agreed to sign up for a "Bananacard." Being a good consumer, I read the fine print before signing. Much to my surprise, the application form noted that the agreement includes an arbitration provision, but that I could decline to accept it by simply following the instructions in the agreement.

Looking for those instructions, I again learned that an arbitration provision would limit my right "to litigate in court or have a jury trial, discovery and appeal rights and the right to participate as a representative or member of a class action." The application and initial disclosure form didn't actually explain how to waive the provision, but I later looked online and learned that I have  60 days to send a written request via certified mail to the company to ask for a waiver.

I thought this was all worth noting because I have never seen a credit card agreement offer an opt-out option for the arbitration provision. I'm wondering why the company is being so magnanimous (to the extent that's possible in a credit card agreement that gives them the right to change the terms at any time without my consent). I suspect it's just in there as defense from future lawsuits and that it has little impact on the company because no one actually takes the offer. I guess I'll find out if they cancel my account after I send in my request!

Anyway, attorneys out there: what do you make of this?

When Arbitration Clauses Really Bug You

Insect infestations have led to some first-rate judicial decisions in this country, so it seems appropriate that our first entry in the "clause celebre" contest should be about bugs. This comes courtesy of Terry Carter at the ABA Journal, who wrote a story a few years back about some savvy Alabama residents who fended off an arbitration clause in an exterminator's contract. Here's an excerpt:

Homeowners Robert and Margo Rebar bought their stately suburban home in 2000....Cook's Pest Control certified that the house once had a termite infestation, but it was termite-free at sale. The couple soon learned the home they purchased from a lawyer had extensive termite damage. Cook's, which had been under contract for many years to inspect the home, added a binding arbitration clause to the agreement when it transferred to the Rebars.

The Rebars apparently went to a Birmingham lawyer [Thomas Campbell] known for tangling with termite companies before sending in their renewal. It was after that consultation that they put the addendum, chock-full of legalese, into the envelope with their check. The addendum stated in part: 'Notwithstanding prior amendments, nothing herein shall limit Customer's right to seek court enforcement (including injunctive or class relief in appropriate cases) nor shall anything herein abrogate Customer's right to trial by jury. Arbitration shall not be required for any prior or future dealings between Cook's and Customer.'

The Alabama supreme court ruled that when the bug company cashed the Rebars' check, it accepted the addendum, and the court allowed them to sue over the termite damage...

Asinine Arbitration Clauses and Loony Liability Waivers

For the past nine years, the Michigan tort reform group, M-Law, has run a contest for the best wacky warning label as way of illustrating the absurd consequences of the nation's litigiousness. Media people like John Stossel love to pick up on these "don't use heat gun as a hair dryer" sorts of labels, which are, I must admit, occasionally very funny.

But there's a corollary to the wacky warnings, which you might call "crazy contracts," or the extremes to which businesses will go to prevent people from suing them. They appear in even the most benign transactions these days, evidence of serious paranoia in the business community. You can't buy a Dell printer cartridge online without first waiving your right to go to court if Dell's cartridges kill your printer. Similarly, liability waivers dot everything from HMO contracts to ski resort lift passes. My father once found an arbitration clause in a Utah hospital admissions' form. (He didn't sign, and no one noticed.) I'm not a lawyer, so I often wonder, can these contracts really be enforced? And how to get around them?

Texas lawyer Joe Longley once told me that he pulled all his firm's money out of a brokerage account that started putting arbitration clauses into its contracts, which would force any disputes to be heard by a mediator rather than a jury. But then he had a hell of a time finding somewhere else to put his cash, because all the other brokerage firms were doing it, too. Lucky for him, he had enough money to get a company to rewrite its contract to get his business.

Most of us, though, don't have millions in the bank to leverage better contracts. So, I thought I'd start a contest of my own. I'm looking for good examples of asinine arbitration clauses and loony liability waivers, and creative (and cheap) ways of getting around them. At the end of the year, I'll tally up the submissions and present the winners with a free copy of my book and a Tortellini coffee mug.

Here's my first nominee, the Deer Valley resort summer adventure camp release form. In order to pay hundreds of dollars to enroll your defenseless toddler in this Utah ski resort program, you first have to sign a form acknowledging that rollerblading, etc. can kill, and then agree that:

I ASSUME ALL RISKS OF INJURY OR DEATH which may be associated with and/or result from my Children’s participating in the Summer Adventure Camp, and I hereby release Deer Valley from any liability, claims, demands, actions and causes of action whatsoever for any loss, damage, injury, illness and harm of any kind and nature to my Children or any other person arising out of or related to my Children’s participation in the Summer Adventure Camp.

So basically, Deer Valley wants to bar parents from suing, even if say, a drunk teacher sends a kid to his death by knocking him off the chairlift. Maybe it's just me, but I want the people watching my kids (and getting paid for it) to worry constantly about getting sued, mostly because I think they'll be a lot more careful. In any event, these sorts of waivers never instill a lot of confidence....

Arbitration Clauses for Journalists?

Thanks to Public Citizen's Law and Policy Blog for bringing this L.A. Times article to my attention. In a beautiful piece of irony, the writer exposes many of the problems with arbitration clauses by publishing the one in the Times' contract she had to sign in order to publish the article on arbitration clause abuses.

In the article, the author claims she had no choice but to sign the contract. Question for all you lawyers out there: Is that true? Isn't there some way to get around this?