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Escaping from a Mandatory Arbitration Clause


Businesses like arbitration clauses. Whenever a business contracts with a customer (and especially when the business’s legal exposure is potentially high), chances are the business’s contract includes a provision requiring the customer to submit any claims or disputes it may have with the business to arbitration. In some cases, this arbitration is characterized as “mandatory.”

While arbitration clauses commonly appear in contract disputes between individual consumers and financial institutions, they may also appear in personal injury lawsuits. A sporting or outfitting company may require injured customers to arbitrate their claims, or a product may come with a notice indicating that claims related to the quality or performance of the product (including claims that the product is defective) are to be submitted to an arbitrator.

Arbitration Usually Disadvantages the Consumer

The reason why so many businesses in California and throughout the United States like arbitration clauses is because arbitration often benefits the business, not the individual. Some studies, such as a 2015 study by the Consumer Financial Protection Bureau, suggest that as many as nine out of every 10 disputes submitted to arbitration are resolved in favor of the business. This should not come as a surprise given that, in the vast majority of cases, the business is permitted to choose the arbitrator.

When the individual is forced into mandatory and binding arbitration, the results for the individual can be even worse. Not only is it highly likely that the individual will not receive a favorable decision from the arbitrator, but when this occurs, the individual will be left without further recourse. In other words, when the arbitration is binding, the parties agree that whatever decision the arbitrator renders cannot be appealed to a court.

Is Your Binding Arbitration Agreement Enforceable?

California has a history of disfavoring binding mandatory arbitration clauses; therefore, courts will generally only enforce such clauses when it appears that the individual actually knew the contents of the binding arbitration provision or had a more-than-adequate opportunity to familiarize him- or herself with the contents of the binding arbitration clause and had an opportunity to reject the agreement. In some cases, even when the individual was aware of the binding arbitration clause, a court might still refuse to enforce the clause and instead allow the individual to nonetheless bring a claim before the court because the court believes to do otherwise would simply be unfair.

Heiting & Irwin can Assist You in and out of Arbitration

You need experienced and dedicated legal representation, whether you are preparing for arbitration or trial. Our legal team works hard to recover the maximum amount of compensation possible, as promptly as possible. Contact Heiting & Irwin if you or a loved one have been injured by a defective product, careless driver, or other person or entity who failed to exercise reasonable care. Call us at (951) 682-6440 or contact our firm through our website.

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