by Paul Bland, Executive Director, Public Justice.
*This post originally appeared on the blog for Public Justice.
I regularly hear consumer and workers’-rights advocates say this crazy thing to me: “the cases on forced arbitration are so bad, they can’t get any worse.” Um, wrong. A Missouri Court of Appeals recently issued a decision that bears me out on this point, in Johnson v. Rent-A-Center.
In this case,an 88-year-old “neighborhood staple”, Kenny Johnson, rents a refrigerator from Rent-A-Center. A guy from Rent-A-Center comes out to the consumer’s house twice to service the refrigerator. Then, the guy came a third time, the plaintiff alleges, wearing a Rent-A-Center uniform. And, according to the lawsuit and news reports, the Rent-A-Center guy, Eric Patton, seriously beat the man with gashes to his head and robbed him. He wasn’t discovered for three days. The assailant has been criminally charged.
So in the mouse print of the “agreement” the consumer had to sign to rent the refrigerator was a forced arbitration provision. The forced arbitration provision says that the arbitrator, not a court, will decide when the arbitration clause applies to some dispute. But in this case, the consumer makes a pretty strong point: he went to Rent-A-Center to get a refrigerator, he didn’t go there requesting that they send a guy to his house to beat him up and rob him.
Too bad, the court says. Listing some very pro-corporation U.S. Supreme Court decisions, the Missouri court holds that it has to enforce the arbitration clause, and let the arbitrator decide whether the dispute over the guy beating up the consumer is covered by the consumer’s contract about renting the refrigerator. In fairness to the Missouri Court of Appeal, it directly stated that it was bound to follow a U.S. Supreme Court decision, “regardless of whether we agree with the reasoning expressed therein.”
Now, not to be overly cynical, but the arbitrators get paid in these cases by the hour. So if the arbitrator finds that the case can’t be arbitrated after thinking it over for an hour, the arbitrator only gets paid for an hour. (The typical arbitrator charges several hundred dollars an hour, in many big cities it’s more than $500 an hour.) If the arbitrator finds that the case CAN be arbitrated, though, they can bill LOTS of hours. So the arbitrator has a certain financial incentive to go with Rent-A-Center here.
The upshot of all this is a court decision whose reasoning is very defensible under the U.S. Supreme Court’s decisions, but the conclusion it reaches is unbelievably unfair to the consumer who was severely beaten and robbed. When a consumer signs a contract to rent a refrigerator, they think the contract is about renting a refrigerator.
If the consumer did think about the arbitration clause at all – and let’s face it, almost no one does – they would have thought: “well, this probably is talking about disputes like if the refrigerator doesn’t work or I don’t pay the rent.” No one in America would think that this was a contract that was going to decide what would happen if something unthinkable like this happens.
But welcome to 2014 America’s legal system, where the prevailing rule is that forced arbitration provisions are so favored by current law that they’ll be enforced even in situations where 1,000 people out of 1,000 would NEVER have imagined that they would be enforced. The Supreme Court’s jurisprudence of arbitration plays out, once again, as being wildly unfair and counterintuitive. It’s an outrage, but just one of far too many.