Analysis of New Arbitration Laws - Window may be closing

[admin]

I received the following PM and thought this might be a good idea.

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I share your concern with the misuse and interpretation of the Arbitration theory as an alternative to conventional wisdom and application in litigation. While Arbitration has its place in litigation, I have a growing concern for reviewers of the boards who have the impression it affords a ‘clean’ solution to a debtors lawsuit.

When I first appeared on your board, I too exercised this initiative [with a JDB] and found myself immersed in essentially the same issues that otherwise could have been formally addressed in court. The answers and solutions to address many of these questions are found on your board.

Regardless of the debate of judgment and appeals, the method prescribed lacks conventional applications afforded in civil court and at best ‘freezes’ the claim until court ordered dismissal due to lack of persecution. In the alternative, in the court process debt buyers usually cannot prove their case. Further yet, is the simple fact that the proof required to obtain a judgment in the creditor's favor is lacking, usually as a result of poor record keeping on the part of the creditor. The debtors’ opportunity for a favorable outcome or dismissal is increased in the courts.

The window of opportunity for the Arbitration method may be closing. This is even debated and recognized by those who favor such Arbitration theory.

See: DB mod2830 “Criticisms with consumers using arbitration/ Caution: Arb. Window may be closing”

Many states have adopted civil rules of procedure with the means to address the Arbitration theory – and have written procedures to address the enforcement of Arbitration clauses and AAA and JAMS enforceability. If a defendant uses the Arbitration theories they will in all probability end up in court appointed Arbitration no worse or better then ADR.

I think we can all agree that with a review of ADR rules or Arbitration rules this becomes a daunting task for the newbie with few venues to seek help or review of posted experiences.

As an example …See: ‘bkrptinfl’ post - http://www.debt-consolidation-credit-repair-service.com/forums/showthread.php?p=1078252#post1078252.

While ‘bkrptinfl’ not Arbitration – ‘bkrptinfl’ was forced to contend with a whole new language of rules and procedures in ADR beyond conventional discussion and methods found among peers in the forums.

Too many forum readers are starting with the Arbitration theory as an end to a means, instead of recognizing the simple fact that the proof a JDB is required to obtain a judgment in the creditor's favor is lacking. Now the OC may be a different issue, but I think the argument moot, as most are seeking settlement or negotiation questions and those that will win in Arbitration will more then likely have been won in court.

I do not suggest that the Arbitration theory does not hold water and that it may have a place as another tool to initiate IF the debtor is back up against a wall – and even then expect it at best a tactic to slow the inevitable.

I think you have done all that you can do. I think the discussion and caution to help innocent forum users is up to us. As participants we should renew the responsibility of caution to include trends as a warning to users who would otherwise interpret the method as novel and without risk. I have proposed the idea to some regular posters to assemble a ‘community’ post, with your permission, to refrain and detract ‘newbie’s’ from the idea that Arbitration is a ‘clean’ or ‘free’ get out of law suite concept.

See: DB

Criticism #7.) Court provides better odds of winning than arbitration.

RESPONSE: Again. It depends! There is no rock solid answer. If you can beat it in court or see the path to win in court...by God, do it!

In the above example…If in SJ, then most likely Discovery progressed enough – you waived your rights to Arb.

Criticism #5.) Arbitration is bad no matter what. Court is always better.

RESPONSE: This was true when NAF was in business. That is no longer the case. Local court MAY be better, but usually only if pro se' litigant is smart enough to navigate it.

In the above example the courts now have a solution to AAA and JAMS enforcement and will argue costs and fees in any lose in Arbitration. Judgments are remanded back to the court – the defendant will incur the costs eventually in a Plaintiff motion for judgment.

The window ‘has closed’ and is closing for this Arbitration defense. IMO we still have to many who think it useful – while conventional civil procedure says otherwise.

Do you recommend a new ‘sticky’ that focuses on the ‘new’ laws and the trend today in courts as it applies to this defense> without hyped claims and unsupported theory? Or do we add it to Arbitration Case Law sticky? What are your thoughts?

Thank you for your time,.

Signed,

Concerned, over those racing to Arb theory.

[FL4answer58]

For example on how the laws are changing.

Many states have applied similar procedural rules.

Look at Florida civil procedure and case law:

See: PREMIER REAL ESTATE HOLDINGS LLC v. BUTCH LLC. Dec 2009.

http://caselaw.findlaw.com/fl-district-court-of-appeal/1504667.html

Chapter 682, Florida Statutes, sets forth the rules and procedures for arbitration in the event an arbitration clause is silent on such matters. See generally Ch. 682, Fla. Stat. For example, section 682.04 provides:

If an agreement or provision for arbitration subject to this law provides a method for the appointment of arbitrators or an umpire, this method shall be followed. In the absence thereof, or if the agreed method fails or for any reason cannot be followed ․ the court, on application of a party to such agreement or provision shall appoint one or more arbitrators or an umpire. An arbitrator or umpire so appointed shall have like powers as if named or provided for in the agreement or provision. (Emphasis added.)

Brown v. ITT Consumer Financial Corp., 211 F.3d 1217 (11th Cir.2000), cited by Buyer, is instructive. In Brown, the parties had agreed that “any dispute between them ․ shall be resolved by binding arbitration under the Code of Procedure of the National Arbitration Forum [NAF]”. Id. at 1220. Brown argued that the arbitration clause was void because the specified forum, the NAF, had dissolved. Id. at 1220-21. The court rejected that argument, stating: “Section 5 of the [Federal Arbitration Act] provides a mechanism for appointment of an arbitrator where ‘for any [ ] reason there shall be a lapse in the naming of an arbitrator․’ 9 U.S.C. § 5 (West 2000). The unavailability of the NAF does not destroy the arbitration clause.” Id. at 1222.

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See: New Port Richey Medical Investors, LLC et al. v. Dorothy Stern, No. 2D09-214, 2009 WL 1563424 (Fla. Ct. App. 2d Dist. June 5, 2009).

New Port Richey Medical Investors, LLC d/b/a Life Care Center of New Port Richey; Forrest L. Preston Developers; Life Care Centers of American d/b/a Life Care Centers of Tennessee d/b/a; Life Care Center of New Port Richey et al. v. Stern (Wallace, Davis and Silberman).

The court held that the Florida Administrative Code, section 682.04, holds that "...if the agreed method fails or for any reason cannot be followed, the court, on application of party to such agreement or provision shall appoint one or more arbitrators." In short, according to this Panel, if the intended forum is unavailable, the court will appoint a replacement.

http://www.debt-consolidation-credit-repair-service.com/forums/showthread.php?t=304154

Edited October 6, 2010 by FL4answer58

[FL4answer58]

Analysis … of an end.

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What is Forced Arbitration?

http://www.fairarbitrationnow.org/content/what-arbitration

http://www.fairarbitrationnow.org/content/if-contract-says-it-shall-be-naf-then-there-shall-be-no-forced-arbitration

http://www.fairarbitrationnow.org/content/reporter-forced-arbitration-might-be-coming-end

http://www.fairarbitrationnow.org/content/forced-arbitration-denies-consumers-fair-hearing

http://www.fairarbitrationnow.org/content/hopeful-st-louis

“Mandatory Consumer Arbitration Dying”, Thursday, August 19, 2010

http://pubcit.typepad.com/clpblog/2010/08/is-mandatory-consumer-arbitration-dying.html

“Ready, Set… Sue! Forced Arbitration Fading” Aug 18, 2010

http://www.moneytalksnews.com/2010/08/18/ready-set-sue-forced-arbitration-fading/

“The days of forced consumer arbitration could be numbered“, August 7, 2010

http://www.stltoday.com/business/columns/savvy-consumer/article_d9a9a6a7-e85d-5fd4-a453-8921b9cd6011.html

“Saying goodbye to forced consumer arbitration” October 1, 2010

http://www.illinoisinjurylawyerblog.com/2010/10/saying_goodbye_to_forced_consu.html

“Dodd-Frank – Restoring American Financial Stability Act 2010 Impacts Arbitration “

http://appropriatedisputesolutions.com/blog/?tag=consumer-arbitration

“Dodd-Frank Act Gives SEC and New Consumer Agency Power to Invalidate Arbitration Agreements” August 1st, 2010

http://www.venable.com/files/Publication/4e664f50-268b-44b7-8d59-c2669678e352/Presentation/PublicationAttachment/e6505394-0977-4d0a-ba99-c88d5762a604/Federal_Arbitration_Act_Alert_8-9-10.pdf

*Financial reform creates new consumer protection agency - “Bureau of Consumer Financial Protection”. July 19, 2010 .

And the CFPA “Consumer Financial Protection Act”

Edited October 7, 2010 by FL4answer58

[RebelLady]

I will post this under my own name and as my own opinions since that's what they are, my own opinions and if I'm big enough to state them, I should be big enough to sign them.

I am not only concerned about 'newbies' who think that arbitration is a way out of their debt problems, I am equally concerned about 'newbies' who are told over and over again that JDBs cannot prove their cases in court. The reasoning here being, if the JDB cannot prove their case in court, they probably cannot prove their case in arbitration either. If you can win in arbitration, you could have also won in court.

Here's a prime example of what I am trying to say and of my concern for 'newbies'...

"The judge flipped to the next page which was simply a blank sheet of typing paper with ONE SINGLE TYPED LINE consisting of the alleged account number, my name, the last 4 digits of my social security number, and an alleged amount. NOTHING more. Just plain text typed on a piece of paper. It is obviously just that, or a printout of a one line summary from a spreadsheet. I could see the judge changing his tune so I commented that my third grader could type that in 3 minutes on a word processor. The judge didn't appear amused.

The judge asked the attorney if he could provide me with what I wanted...something stating this specific debt was sold. The plaintiff stated they could not because that type of documentation doesn't exist. He then said if he provided documentation showing the accounts sold it would contain private info about other debtors and be a violation of the FDCPA.

The judge then told the plaintiff that it looks like an assignment to him and the numbers appear to match! WTF? If this BS affidavit with a one liner stapled on after the fact is going to be considered evidence I'm totally screwed! The judge never got to flip through the rest of the file and see all of their other compelling evidence. Didn't even see the photocopy of the bill of sale with things whited out, other impressive hings like "cycle statements" which are even more typed words on blank paper featuring numbers and ......MY ADDRESS .... Let alone their affidavit of debt. He's going to be totally blown away by those at those at this rate!

How the hell can an alleged affidavit from the OC with a separate page stapled on be considered proof of assignment?"

The main reason JDBs don't go out of their way to garner 'real' evidence, is because they don't have to. Why should they go out of their way to 'prove' anything when, if they show up in court with a piece of paper with your name, an account number and an amount, they're going to win anyway. It doesn't matter whether or not they've proven their case. What matters is they have a piece of paper with your name and an account number and an amount on it and the judge agrees with them (see above example).

This is NOT theory...this is fact...or the poster lied!

A couple of months ago I lost in court after I tried to have an affidavit striken as hearsay. It cost me $2500.00. Lucky for me (some people aren't as lucky) I was able to pay this off in full.

The other day (last week in fact) I received a letter stating that I had been included in a class action suit filed against this very same JDB and that the affidavits included in our cases had contained lies and falsehoods. Wow...I will now...at some point in the future, receive $94.00 back! Lets see...that fraud upon the court cost me quite a bit!

This is NOT theory either...this is fact...and I can assure you I'm not a liar.

I have another case that last year was decided in arbitration. Not with JAMS or AAA, but in the NAF so I've seen this from both sides. It lasted from April, 2009 until March, 2010 when it was finally dismissed without prejudice. When I was first informed via UPS of this claim, I went into panic mode. I had no idea what arbitration even was much less how I came to be involved in it. Of course, I immediately started reading the NAF's Rules of Procedure and started objecting to everything that was sent to me and to some things that weren't sent to me but should have been. It must have been successful because the claim was dismissed.

This is NOT theory either...this is fact...and again, I can assure you I'm not a liar.

So, while we're busy trying to save newbies from themselves by utilizing arbitration, let's also get busy saving them from the false and misleading thinking that a JDB can't prove their case in court. The fact is, a JDB doesn't have to prove their case in court. When the judge and the clerk of the court show up and call the plaintiffs by first name and ask them about their children, you immediately know your goose is all but cooked!

While we're busy trying explaining to 'newbies' all about arbitration, let's also be honest with them about what they'll be facing in court. And all of the reading, researching, studying and trying to understand won't change it. They will still be faced with a judge who has already decided their case long before they ever get to court.

Signed in my own name and with concern for all posters who, like me and many others, live in Mayberry, USA...

RebelLady

Edited October 6, 2010 by RebelLady

[FL4answer58]

If mandatory binding arbitration is nixed by law, as they recently have done with mortgages and home equity loans the complete argument is dead.

If…SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.….as they indicate, a mere mater of time.

Reported August 2010. "All around the country, newspapers’ consumer journalists are taking notice and reporting on the injustice of forced arbitration. Findings show clearly that Americans strongly oppose forced arbitration, and they see the Arbitration Fairness Act as a remedy. The poll shows that: Six in 10 likely voters support the Arbitration Fairness Act – including majorities of Democrats, Republicans and Independents."

"The new Consumer Financial Protection Bureau created by the recently passed financial reform law will be authorized to ban or restrict forced arbitration. So will the Securities and Exchange Commission. But ...what [it] leaves out: millions of other consumer contracts exist that fall outside of these agencies’ jurisdictions. The CFPB and SEC can restrict investor-broker contracts and contracts for other financial products as designated under the new law. But they have no authority to restrict or ban forced arbitration in numerous consumer contracts, such as those for [credit cards], employment, nursing homes, cell phones, and home building.'

Other consumer financial agreements [like those mentioned above] will most likely follow soon – no mandatory binding arbitration – no Arbitration theory.

No Arbitration period, unless mutually agreed upon Arbitration.

It is exactly for the reason(s) you express why court litigation is less of a risk over Arbitration.

Civil Justice Safeguards. "Forced arbitration strips consumers of their basic constitutional rights, such as a jury trial by their peers, an impartial and qualified judge, to discover evidence for their case, to appeal or to bring a class action lawsuit. In fact, arbitrators’ decisions must be upheld even if they disregard the law. Americans (and you) deserve judges who believe that the constitution provides for fair and equal justice for everyone."

http://www.fairarbitrationnow.org/content/hr-1020-arbitration-fairness-act-2009-protect-consumers-abusive-mandatory-arbitration-clause

Edited October 7, 2010 by FL4answer58

[admin]

Rebel Lady,

I know you've had bad experiences. I'm sorry about that.

No one ever said that JDBs can't ever prove their case in court. That's a big generalization. We just say that's it can be really tough for a JDB to do it. Even with an OC suing, it get's tough when the OC hired a bunch of dial-a-lawyers to just send out mass paperwork.

The post your referenced didn't officially have his motion to strike officially ruled on yet, so we don't know if it will be struck. And he certainly hasn't lost his case yet.

Edited October 8, 2010 by admin

[RebelLady]

admin,

hehehehe...those bad experiences don't mean I won't continue to fight...in court...lol!

In fact, I have another shot coming up in the first part of November. I hope my 'bad experiences' weren't really bad experiences but 'learning experiences'...opportunities to get better for the next time. My goal this time is a dismissal with prejudice due to a complete lack of evidence on the part of the Plaintiff. Will I succeed? I dunno...

And I haven't given up on the court system. I don't advocate either court or arbitration. But I have seen cases (not in theory, but in fact...my own cases) from both sides. A person accepts the personal responsibility for making the choice between litigation and arbitration and for suffering the consequences that come with whichever one they choose.

But I do feel like, in order to make an informed decision, people need to hear both sides. Courts and judges are not always fair and don't always abide by the rules. Good guys don't always wear white hats or black robes and they don't always ride white horses or sit on cherrywood seats behind benches.

Newbies need to be informed that whichever option they choose will be a long and difficult process. They need to know going in that our court system has become a giant country club where your dues are paid with a law degree. Judges admit into evidence things which, if the Defendant had an attorney, the attorney would find laughable. When a name and address, an account number and an amount are typed on a sheet of typing paper and are admitted into evidence and when judges can sign motions without giving the opposition an opportunity to object, something is dreadfully wrong.

Newbies also need to know that JDBs can and oftentimes do present enough evidence to convince a judge. Especially when, realizing the Defendant is frightened and alone, facing even a rent-a-mouthpiece, they are at a disadvantage. The judge and the rent-a-mouthpiece are at home in court as well as familiar with one another. They like to finish up early so they can go have drinks together then go shoot 9 holes at the local course.

And that is what they'll be facing. Along with pages and pages of civil procedures and rules of court to be learned, understood and applied. All in about 30 days (from service of process to court date). Oh...and they'd better learn how to properly format all motions and objections or they could be found in default for failing to sign the certificate of service.

I'm just saying...

RL

[admin]

Rebel - point taken. And keep fighting. The only thing I would disagree with is your statement "JDBs can and oftentimes do" present enough evidence. I would say "sometimes" not "oftentimes". From what people have told me, is that JDBs don't get paperwork along with the debts they buy. Difficult to submit hard evidence in these cases.

Navigating arbitration and learning all the rules ain't no picnic either. And with court you have to follow the rules set by the legislature.

[nobk4me]

A JDB sued me, and I was surprised to see they attached a statement from the OC to their complaint. At the pre-trial hearing, the JDB lawyer handed me a packet of papers, which included over a year's worth of statements from the OC. He also had a affidavit, allegedly from a bank officer of the OC. Probably a forgery, but maybe not???

This JDB had everything an OC would have.

The arb strategy shut the case down.

[FL4answer58]

A JDB sued me, and I was surprised to see they attached a statement from the OC to their complaint. At the pre-trial hearing, the JDB lawyer handed me a packet of papers, which included over a year's worth of statements from the OC. He also had a affidavit, allegedly from a bank officer of the OC. Probably a forgery, but maybe not???

This JDB had everything an OC would have.

The arb strategy shut the case down.

I think your case exceptional.

Most JDB's do not have the multitude of evidence displayed in your case.

As you say…Arbitration was instrumental and helpful in your case.

There is no doubt that Arbitration can be and has been instrumental and helpful in many cases discussed on the boards.

The post and facts presented here - indicates this door may be closing and in some States, may have already closed.

Edited October 13, 2010 by FL4answer58

[admin]

And you still could have objected to the statements and affidavit and won. What makes you think these documents won't be presented at arbitration hearings?

There is nothing forcing an arbiter to make sure the docs are legit.

[nobk4me]

And you still could have objected to the statements and affidavit and won. What makes you think these documents won't be presented at arbitration hearings?

There is nothing forcing an arbiter to make sure the docs are legit.

I doubt that I would win in the court where I am - after the experience in a hearing where the magistrate was extremely rude and abusive, and threatened me with financial ruin. He was doing the debt collection attorney's dirty work for him, while the attorney was silent like a potted plant. I wonder if this was done to shield him from potential FDCPA violations.

Yes, the documents could be presented at an arb hearing - if it ever goes that far. I have more faith than an arbitrator will follow the rules of evidence than this court would.

But, I don't think it will get that far. The JDB hasn't initiated arbitration. I doubt that they will, given the high cost of arb.

The arb strategy is all about changing the cost-benefit analysis of debt collection, and getting out of a railroad court.

[Baggins]

In my experience and it's all just "my experience", I'm not an attorney but I can tell everyone factually I have gone the arbitration route, with an OC, and it was dismissed with prejudice. Of course it's different with every case and what may have worked for me may not or will not for others.