Arbitration Examples: Binding Mandatory Arbitration Leaves Consumers Without Remedy
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Binding mandatory arbitration left public health advisor Beth Plowman holding the bag after an identity thief racked up more than $27,000 worth of fraudulent charges on her account. When she contested the charges to the credit card company, the company failed to notify her that her complaint was sent to arbitration. Despite the theft, the arbitration process held her responsible for $27,240 in charges she did not make. She was forced to hire an attorney to convince the collection agency that she was not responsible for the charges. Because of binding mandatory arbitration – that she was not even aware she was subject to – she had to pay $2,200 to the attorney to protect her rights against a thief.  (“Arbitration left ID Theft Victim with $27,000 bill,” Washington Post, 2-24-05)

Binding mandatory arbitration has left Texas homeowners Remigio and Martha Ayala unable to hold a foundation company responsible for damage done to their home. The Ayala’s hired Olshan Foundation Repair Company to stabilize their foundation. The Ayala’s contend this stabilization failed and sought to hold Olshan accountable for the damages caused by this failure. The contract signed by the Ayalas forced them into binding mandatory arbitration. The arbitration firm estimated the Ayalas would be responsible for paying $33,000 in arbitration costs – representing one-half of the total $63,000 in arbitration costs for the complaint. This remedy totaled almost one-half of Mr. Ayala’s annual income. The total arbitration costs would be three times the costs of the foundation repairs. The Ayalas have not been able to have their foundation repaired as they seek judicial relief from this arbitration requirement. (Olshan Foundation Repair Company v. Ayala, No.04-04-00829-CV)
Renee Cecala, a vice president at NationsBank Capital Markets, sought to hold the company accountable for sexual harassment after repeated incidents. Her case was forced into binding mandatory arbitration with a panel of arbitrators who had no employment law background. The hearings lasted for 18 days over a period of two years and cost Cecala almost $25,000. The panel ruled against her, and she had to hire an attorney to overturn the panel’s decision. (“Private Justice,” San Francisco Chronicle, Reynolds Holding, 10-07-01)