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Opinion Columns

Opinion: Forced arbitration helps big companies but hurts Coloradans. Let’s even the playing field.

Individual Coloradans are at a serious disadvantage when trying to persuade corporations to address problems with products, services or hostile workplaces – especially when forced arbitration was hidden in the small print of purchase agreements or contracts.

Why? Because arbitration is designed to favor corporations. 

I know this first-hand because I spent 12 years of my legal career as an in-house attorney with US WEST here in Colorado during the 1990s. I was in senior management roles in the US WEST law department and had direct supervisory responsibilities for its litigation.

Bob Connelly

Based on what I know and observed, US WEST deployed forced arbitration provisions primarily to discourage judicial claims by employees and consumers – not to ensure the fair and efficient administration of justice. 

At US WEST, two major areas of litigation were employment claims and consumer claims. Beginning in 1992, the corporation launched a major effort to resolve existing litigation and reduce litigation going forward, with arbitration being a key strategy. 

The mandate from the company was that every contract or agreement, where it was feasible, should have a mandatory arbitration provision that precluded access to the courts. The two factors driving this decision were to avoid: 

  • “David v. Goliath” scenarios in jury trials where an individual is suing a behemoth corporation and where jury sympathy often is with the individual; and
  • Class actions where individual claims are small but can be aggregated through class certification

Forced arbitration often results in the legal disenfranchisement of everyday Coloradans by much larger and more powerful entities. Problems with the practice include:

  • Few ethical standards for arbitrators like judges, making it possible for arbitrator bias and conflicts of interest, even though there are a few firms that have adopted their own rules
  • No public records of arbitration, so it’s impossible for consumers to research patterns of wrongdoing that could help hold corporations responsible for wrongdoing
  • Terms that dissuade people from bringing their claim forward, such as forcing out-of-state arbitration and waiving rights under other areas of law

READ: Colorado Sun opinion columnists.

We need to level the playing field – which is why passing Senate Bill 93 is essential. The bill would establish:

Ethical Standards. Establish ethics and conflicts-of-interest standards for arbitrator to prevent bias and discrimination.

Transparency. Create basic public transparency requirements of arbitrators so consumers and employees can locate wrongdoing and bad behavior.

Fairness. Make unenforceable terms that dissuade people from bringing their claim forward.

If arbitration provisions are going to be imposed on individuals by disparately large organizations, it is imperative that these arbitrations be free of conflicts of interest, unethical arrangements and opaque relationships.

Moreover, it is important that courts be able to examine forced arbitration provisions to ensure there is a minimum level of fairness baked into their terms.

When everyday Coloradans need to hold corporations responsible for products or services that fail or cause harm, they should have an ethical and transparent process to make it right. Senate Bill 93 would protect our right to do so.

Bob Connelly is a retired corporate attorney who practiced for 45 years and worked in Atlanta, Denver and over a dozen countries in western, central and eastern Europe and Asia.