Articles Posted in Arbitration

Delivery drivers for an online food delivery service sued the platform alleging violations of the Fair Labor Standard Act for failing to pay overtime. The delivery service sought to compel arbitration, which the drivers had agreed to in their employment agreements. The workers attempted to argue that they were engaged in foreign or interstate commerce and therefore were exempt from the Federal Arbitration Act, though the district court disagreed. The appellate panel found that the plaintiffs had completely ignored the governing framework and that being “engaged in commerce” and “involved in commerce” were two completely different concepts. The panel found that the § 1 exemption of the FAA was therefore narrowly tailored and that it was not unusual that the employment agreement failed to meet § 1’s more stringent requirement while still meeting the far broader requirements of § 2. The panel determined that the plaintiffs were not entitled to the exemption and it affirmed the decision of the district court

Grubhub is an online and mobile food-ordering and delivery marketplace. Grubhub provides a platform for diners to order takeout from local restaurants, either online or via its mobile app. When a diner places an order through Grubhub’s app, Grubhub transmits the order to the restaurant, which then prepares the diner’s meal. Once the food is ready, the diner can either pick it up themselves or request that Grubhub dispatch a driver to deliver it to her.

Grubhub considers its drivers to be independent contractors rather than employees. Several drivers who worked in cities including Chicago, Portland, and New York filed two suits against Grubhub, alleging violations of the Fair Labor Standards Act for failing to pay overtime. The suits hit a roadblock, however, as the drivers had signed agreements compelling arbitration. The workers attempted to argue that they were engaged in foreign or interstate commerce and therefore were exempt from the Federal Arbitration Act. The district courts disagreed and compelled arbitration. The plaintiffs then appealed, and the 7th Circuit consolidated the appeals. Continue reading ›

There are so many changes that are made in accounting, auditing, tax and consulting standards that the overlooking of how disputes are solved is a very real possibility.  This is why users and providers of these services should be familiar with the benefits and disadvantages of the various different Alternative Dispute Resolution (ADR) Services.  We will, therefore, suggest that ADR clauses be used in the engagement of services contracts.

CPAs have to consider the wording of any ADR clause approved by a professional liability insurer and legal counsel. These days, most professional liability insurers advocate for the use of non-binding forms of dispute resolution and some may even require this in order to reap the benefits of insurance.

The most common ADR methods available are mediation and arbitration. These are also governed by the AAA’s Accounting and Related Services Arbitration Rules and Mediation Procedures. The process is fair and impartial. To ensure that the ADR clause does not affect a CPA’s independence, the wording must be drafted carefully and in line with the   AICPA Code of Professional Conduct  Rule in Section 1.228.  This gives a generic guide on the use of dispute resolution forums and liability limitation clauses. The inclusion of such clauses does not absolve liability of being unable to meet professional standards.  CPA’s may also need to be required to report a judgment in excess of $25,000 whether granted in court or arbitration.  This amount varies from jurisdiction to jurisdiction.  For that reason, knowledge of the rules is important.

Negotiation

The first step in the settlement of a dispute must always include negotiation.  Parties must make an effort to resolve in the best and least expensive way possible.  Sometimes, ego can come into play and undermine the process.  However, if parties are able to manage their emotions, it will be the most economic outcome, utilizing less time and money.  Negotiations can never take place in bad faith.  If so, involve an attorney that can carefully oversee and draft the proper terms.  They can also intervene on your behalf.  Continue reading ›

Despite plenty of evidence to the contrary, certain business advocates continue to insist that arbitration bans hurt individual consumers and employees more than they help them. They are not bothered by the facts, such as:

  1. Arbitration does not allow multiple plaintiffs to combine their claims into a class action or collective action. This effectively blocks consumer lawsuits from ever seeing the light of day because an individual’s claims are often smaller than the cost of filing a lawsuit or pursuing the dispute in arbitration.
  2. There is no explanation for why an arbitrator ruled the way they did and no opportunity to appeal the decision.
  3. The arbitration process is kept private, which means the results, and even a customer filing for relief for a complaint, are never made public. The transparent nature of the courts is an inherent ingredient to justice and accountability. By keeping all the proceedings private, other consumers with identical or similar complaints will not even know that they have a valid complaint.
  4. Arbitration is not always neutral. While some arbitrators have a good reputation for neutrality, others are less trustworthy, and many arbitration clauses give the company the power to choose the arbitrator. Because arbitration is a business, many arbitrators tend to be tempted to rule in favor of the side that brings them a lot of business.

Despite all these facts, and extensive research conducted by the Consumer Financial Protection Bureau (CFPB) showing how arbitration clauses harmed consumers, the U.S. House of Representatives and Senate both voted to overturn a CFPB rule that would prohibit banks from putting arbitration clauses in their consumer contracts. Continue reading ›

Despite claiming it’s ready to make amends to its customers after multiple scandals involving things like opening bank accounts and lines of credit for its customers without their notice or consent, overdraft fees, and fraudulent car loans, Wells Fargo’s CEO, Timothy Sloan, recently testified before the Senate Banking Committee to defend the bank’s use of arbitration agreements.

This is in spite of the fact that the bank has said it will not enforce its arbitration agreements with the class of consumers seeking compensation for the money lost and damage done to their credit ratings as a result of the false accounts the bank opened on their behalf. Without the option to file a class action lawsuit against the bank, each customer would have been forced into individual arbitration, the cost of which would likely have caused many to abandon the case if the costs of filing were more than their claims were worth.

Most cases never make it through arbitration because of the cost, the inability to file as a class or collective action, and the private nature of arbitration that prevents people from becoming aware of legal actions with claims similar to theirs. And yet banks and Big Business advocates continue to insist that arbitration benefits consumers more than class action or collective action lawsuits.

Sloan even cited a study conducted by the Consumer Financial Protection Bureau (CFPB) that Sloan claimed proved consumers received more redress from arbitration than collective actions or class actions. Continue reading ›

Alternative Dispute Resolution (ADR)  processes such as Arbitration an alternative to turning to courts to resolve potentially costly commercial disputes. A preference for ADR lies within attempts to focus on the solution, ADR allows us to bypass a number of costly things.

Most Litigation teams, including this firms’,  has noticed that courts are struggling with budget cuts; an increase in fees and a decreased level of service.  However, this has not decreased the use of litigation.  Litigation is normally the last resort and costs much more than many parties anticipate.

This is one reason, for which, businesses look to arbitration, a private form of dispute resolution which can be used to resolve commercial disputes, instead. Most businesses would also agree that business is about avoiding friction, getting to the right result with less friction. That’s what ADR provides.

Astute attorneys will make the correct recommendations for their clients and will make all attempts to ensure that effective measures are in place in order to service their clients most effectively.  Hence, an approach requires the balancing of a preference for alternative dispute resolution with judgment on when a dispute simply needs to be fought out in court. One truly must be skilled enough to know the implementation of the strategy and of when to fight. That is why the incorporation of arbitration agreement clauses in contracts, leans towards ensuring that a dispute resolution process is ‘in-built’ into contracts, allowing both parties to continue to do business while an issue is resolved. What’s more, is that these clauses are easy to draw for those who have working knowledge and experience.  Arbitration simply isn’t used as often as it should be and sometimes attorneys are unfamiliar with the process, so it may not be considered.

Mediation is an area many are familiar with, but with arbitration, there is no need to offer a concession to those with whom the business is in dispute. A party may wish to negotiate, but can’t be compelled and a binding decision can be reached without the consent of the opponent.  Other advantages it has to offer include it being private, far more flexible, with a certain outcome reached by utilizing an expert in the sector the parties operate in.  The judgment is also not public, nor is the trial.  Courts only become involved if the losing party fails to comply with the arbitrator’s decision.  Continue reading ›

The Federal Arbitration Act was created in 1925 to provide a faster, more efficient method for businesses of equal bargaining power to settle disputes between themselves without crowding the courts. The part about the parties needing to be of equal bargaining power is vital, especially since arbitration is private and was not designed to handle class-action lawsuits.

Unfortunately for consumers, arbitration clauses have started appearing in the fine print of their contracts with almost every provider: banks, websites, merchants, car dealers, credit card companies, even their employers. This means that every dispute someone has with a company has to be settled by arbitration, which is private, offers no written opinion on the matter (i.e. no explanation for the ruling), and is often biased in favor of the large companies that bring in lots of business for the arbitrator (although there are a few arbitration companies that are known for their fairness).

The reality is that individuals very rarely, if ever, have the same bargaining power as giant corporations with a team of attorneys at their disposal. In particular, arbitration agreements cripple individuals by preventing them from combining their claims into class actions. Since most individuals have small claims against corporations, class actions are the only method they have for justifying the costs of the lawsuit. If your bank charged you $100 dollars in illegal fees and filing a lawsuit costs $2,000 to hire an attorney and pay for court costs, no reasonable person is going to pursue the matter. They’d rather let it drop, which lets the bank continue to illegally collect thousands of dollars from hundreds of customers who don’t have any way to redress the wrong. Continue reading ›

Death is a part of life and that’s even more true in certain places of our communities, such as hospitals and nursing homes. It’s expected that most people will die there or shortly after their stay, but there are still plenty of deaths happening in these places that are preventable.

Liability insurance for the medical industry is much higher than other industries because they need to protect themselves from angry family members looking for someone to blame for their loss. Sometimes they’re just lashing out, but all too frequently, the families have a legitimate complaint and now many of them are claiming that nursing homes have been working to keep allegations against them out of the public eye.

Over the past decade or so, an increasing number of businesses, including nursing homes, have been including arbitration agreements in both their employment and service contracts. The result is that it has become nearly impossible for consumers to do anything without signing away their right to take the company to court in the event of a legal dispute.

Arbitration was created as a way for businesses to settle disputes between themselves without cluttering the courts with their lawsuits. It is a private process that is much less formal, and often less neutral, than our current legal system. For example, is common for negotiations to take place in the offices of an attorney representing one of the parties. Continue reading ›

In this online shopping age, when consumers click “place your order” on Amazon.com or any retail website, do they really know what they are agreeing to? The U.S. Court of Appeals for the Second Circuit recently considered the question in Nicosia v. Amazon.com, Inc., No. 15‐423‐cv (2nd Cir. 2016).

In 2013, Dean N. bought a weight loss pill on Amazon called “One Day Diet,” which unbeknownst to him, contained sibutramine, a controlled, prescription-only substance that had been pulled from the market by the FDA in 2010 because of health risks. Sibutramine was not listed on the site as one of the product’s ingredients, nor did Amazon require a prescription for purchase. The FDA revealed in November 2013 that One Day Diet contained sibutramine.

Dean brought a putative class action against Amazon, alleging the online retailing giant had sold and was continuing to sell weight loss products containing sibutramine in violation of federal law and state consumer protection laws. He alleged breach of implied warranty and unjust enrichment, seeking both damages and an injunction prohibiting Amazon from further sale of products containing sibutramine. Continue reading ›

Most of us are familiar with that little box that pops up every time we visit almost any website. It usually says something about agreeing to the terms of service, which are sometimes listed in the box, while other times there’s a link to a full web page devoted to a long list of legal terminology that few people bother to read. More often than not, users check the box without bothering to read all or any of the terms of service so we can go about our business. Reading all the terms of every service we ever use could very well take up most or all our time so we tend to skip over them.

Recently, U.S. District Judge Jed Rakoff recognized this fact when denying Uber’s motion to compel arbitration that was filed in Manhattan federal court.

Spencer Meyer, an Uber customer from Connecticut, sued the ride share company’s CEO, Travis Kalanick, for allegedly participating in a price-fixing scheme with drivers that allegedly raised Uber prices during periods of high demand. Because Uber takes a certain percentage of every driver’s earnings, the lawsuit alleged both Uber and its drivers benefited from the allegedly calculated rise in prices. Although the consumer lawsuit was initially filed only against Kalanick, the complaint was later amended to include Uber as a defendant and that’s when the company asked the court to compel arbitration. Continue reading ›

It’s wonderful that the legislation in our country has made so many strides to recognize women’s rights to live and work alongside men without fear of harassment or intimidation. Unfortunately, as has happened with so many other progressive civil rights, what the law says, and what actually happens don’t always coincide.

Companies are not legally allowed to fire employees or refuse to hire candidates based on their gender or as the result of a discrimination lawsuit, but there are other ways employers can (and do) retaliate. Most women who speak out against male colleagues who have harassed them suffer from both personal and professional estrangement. It’s easy enough for employers to find seemingly unrelated reasons for firing their workers and almost impossible for those workers to prove the root cause of their dismissal really stemmed from the fact they dared to defend their own civil rights.

Even companies that publicly claim to support their female employees and condemn sexual harassment are rarely doing more than paying lip service to the law. For example, 21st Century Fox recently released a statement claiming they do not tolerate any behavior that is disrespectful or creates an uncomfortable environment for its employees, but the company has allegedly been failing to live up to that promise for decades. Continue reading ›

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