Arbitration clauses. They trap you in the mouse print of your credit card agreements, your checking account fees, your employment contract, your online purchases, in a hundred other ways when you transact your everyday life. Yet few know they’ve signed away their rights until they have a grievance.
These “gotcha clauses” ban you from seeking redress through class action lawsuits from America’s biggest and most ubiquitous companies and employers, because you’ve already agreed to “resolve” any disagreements you have with the company through an arbitration process where the company picks the arbitrator, the meeting place. You have no witnesses or recourse to the courts. The Consumer Financial Protection Bureau has found that 75 percent of consumers are unaware that such clauses apply to them.
This shunting of consumers out of sight of the civil courts is largely unnoticed because arbitration clauses are buried in contracts people almost never read until they’ve been treated unfairly.
“Corporations are allowed to strip people of their constitutional right to go to court,” wrote F. Paul Bland Jr. executive director of national consumer advocacy group Public Justice, in a 2015 New York Times report. In addition, handling consumer and employee grievances outside the courts helps conceal large-scale patterns of behavior that harm private citizens.
Santa Clara’s State Senator, and member of the Senate Judiciary Committee, Bob Wieckowski (D-Fremont) has taken on the fight against arbitration clauses in consumer contracts, seeing through the successful passage of two bills and a resolution.
“The deck is stacked against employees and consumers who are increasingly forced to sign arbitration agreements that limit or deny their day in court, just to get a job, obtain a credit card, cell phone or other products and services,” said Wieckowski in a recent news release.
“SB 1241 targets two of the worst clauses that can appear in contracts to make sure that Californians who are forced to resolve disputes in private binding arbitration don’t have to travel out of state or have another state’s laws govern their dispute. If they work in California or buy the goods and services in California, the dispute should be handled under California law.”
During last month’s Senate Judiciary Committee hearing of SB 1241, Tara Zoumer testified how her California employer fired her for refusing a binding arbitration agreement. When she filed a wrongful termination suit, she was informed the arbitration would take place in New York.
“This bill will prevent out-of-state employers from trying to exempt themselves from the laws of this state by using oppressive contract terms that force California workers to accept the less protective laws of other states and to travel to other states to resolve employment disputes that arose in California,” said Mariko Yoshihara, policy director of the California Employment Lawyers Association.
The Senate also passed SB 1007 granting consumers or employees the right to a certified court reporter in private arbitration. “This bill also makes sure that an indigent consumer or worker seeking a court reporter will have one provided at the expense of the other party,” Wieckowski said. A transcript by a third party gives employees and consumers a “better chance of obtaining justice if there is misconduct or fraud in the arbitration process.”
Further, Wieckowski’s Senate Joint Resolution 25 urges the federal Consumer Financial Protection Bureau (CFPB) to issue final rules protecting the rights of consumers to file class actions related to financial products and services, including credit cards, bank accounts, auto loans, consumer mortgages, prepaid cards, credit reporting and debt collection services.
Senator Bob Wieckowski represents the 10th District, which includes southern Alameda County and northeast Santa Clara County. His office holds local office hours at the Santa Clara City Library on Homestead from 3 p.m. to 5 p.m., the second Wednesday of each month.