ChristineBB

Using an Arbitration Clause as a Defense

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This forum walked me through the steps of handling a Midland lawsuit a few years ago.  Because everyone was such a great help, I thought this would be the right place to obtain some more advise.

I hired an attorney a few weeks ago to respond to a complaint I was served with from a law office representing a JDB.   I've known my attorney for years, so I'm not being taken to the cleaners.  I just don't have the time I knew I'd need to manage this on my own.  A small part of me also thought a response coming from my attorney would send a message that I'm prepared to fight.

Just so you know, the amount they claim I owe is around $6.500.

My attorney and I met today and went over the response he prepared.  Although I asked him to add an arbitration clause as a defense, he left this out because he felt I should avoid arbitration because the agreement stated the party they ruled against would be responsible for all arbitration and attorney's costs.  In his opinion, if this turns into anything, it's better to keep it in civil court.

What are the arguments for and against using an arbitration clause as a defense?   Do JDBs typically want to avoid going to arbitration?

Thanks in advance for your input.

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Yes, JDBs do avoid arbitration like the plague, because of the costs.  In JAMS, under their consumer standards, the consumer is only responsible for their fee of $250 (and a fee waiver is available for low-income persons in California).  All other costs are borne by the business (meaning, the JDB).

My position is, I would always use arb if there is an arb clause.  Especially if JAMS is named as an arb forum in the clause.  And especially when dealing with a JDB.

But, if you are using a lawyer you trust, and he thinks he can win in court, maybe you are better off going with his plan.

 

 

 

 

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Attorneys know nothing about consumer arbitration.  They don't care to know because it does not benefit them. The consumer arbitration rules state that you can ONLY be assessed costs and attorney fees if you file a frivolous case.   Just losing does not mean you pay the other sides fees.  Your attorney could easily find this information out if he bothered actually reading the rules of consumer arbitration on AAA and JAMS' websites.  It's all there for anyone to read.

However, arbitration with an attorney is something I recommend against.  Not only is arbitration more time-consuming (making it potentially more costly for you paying for an attorney's time) but also attorneys (as already demonstrated with this "paying costs" nonsense) don't understand the proper arbitration strategies or rules.  The attorney will try to get to a hearing quickly and win on the merits of the case and that is bad in arbitration and not how consumers end up winning.

EDIT to add that I didn't even see you are in California.  That is even more telling of how unaware and uneducated your attorney is.  In California, state law does not allow a consumer to be billed a single dime for arbitration.  Period.

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4 hours ago, fisthardcheese said:

Attorneys know nothing about consumer arbitration.  They don't care to know because it does not benefit them. The consumer arbitration rules state that you can ONLY be assessed costs and attorney fees if you file a frivolous case.   Just losing does not mean you pay the other sides fees.  Your attorney could easily find this information out if he bothered actually reading the rules of consumer arbitration on AAA and JAMS' websites.  It's all there for anyone to read.

 

The OP said that the AGREEMENT provided that the losing party must pay all arbitration costs and fees.    That would be a valid reason, in my opinion, not to elect arbitration if I believed that the arbitration forum would uphold it under Civil Code section 1717 (although this section makes any such obligation reciprocal so that should be considered if you have a good case).   JAMS is not the only arbitration forum and all have their own rules which should be checked. 

While it may be true that some attorneys are not experienced in arbitration, most CONSUMER  attorneys (i.e. NACA members) are.  They have to be in a post Concepcion world where most consumer contracts are presented on a "take it or leave it" basis and contain arbitration clauses and class action waivers.

You should ask any attorney you are considering whether he or she has experience in arbitration.

 

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31 minutes ago, calawyer said:

The OP said that the AGREEMENT provided that the losing party must pay all arbitration costs and fees.    That would be a valid reason, in my opinion, not to elect arbitration if I believed that the arbitration forum would uphold it under Civil Code section 1717 (although this section makes any such obligation reciprocal so that should be considered if you have a good case).   JAMS is not the only arbitration forum and all have their own rules which should be checked. 

While it may be true that some attorneys are not experienced in arbitration, most CONSUMER  attorneys (i.e. NACA members) are.  They have to be in a post Concepcion world where most consumer contracts are presented on a "take it or leave it" basis and contain arbitration clauses and class action waivers.

You should ask any attorney you are considering whether he or she has experience in arbitration.

 

What I meant by not experienced in arbitration is not familiar with the distinct consumer rules of JAMS.  JAMS has not to date (that I can find) forced a consumer to pay the other side's fees in a loss.  JAMS provides quarterly reports on their website that shows every consumer case and what awards or costs were assessed in each case, if any.  JAMS has said on a number of occasions that I have been a party or privy to that JAMS consumer rules trump the language of the agreement once they agree to take an arbitration case and, therefore, have not charged a consumer more than the $250 consumer fee.

Obviously this is always subject to change, but when so many assert otherwise when all the evidence points to the contrary, gives me the opinion that most attorneys are not educated in the consumer aspect of JAMS and the JAMS consumer protocols.

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2 hours ago, fisthardcheese said:

 JAMS provides quarterly reports on their website that shows every consumer case and what awards or costs were assessed in each case, if any.  JAMS has said on a number of occasions that I have been a party or privy to that JAMS consumer rules trump the language of the agreement once they agree to take an arbitration case and, therefore, have not charged a consumer more than the $250 consumer fee.

 

The reports are very useful and I applaud JAMS for being so transparent.  Something everyone should check when evaluating an arbitrator.  I have them saved on my system.

I have also seen rulings that agreeing to the JAMS rules, trumps the language in the contract and also California law.  I have also seen rulings the other way.  Just an issue that one should consider especially if there is no right to appeal.

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All the agreements say that, but if you look up JAMS' case history you'll find that in all consumer cases they assign 100% of the costs to the non-consumer party.  It's just not something they're going to touch, presumably after the NAF fiasco.  There's further protection provided by California Code, specifically  CCP 1284.3, which states, among other things:

Quote

(a) No neutral arbitrator or private arbitration company shall administer a consumer arbitration under any agreement or rule requiring that a consumer who is a party to the arbitration pay the fees and costs incurred by an opposing party if the consumer does not prevail in the arbitration, including, but not limited to, the fees and costs of the arbitrator, provider organization, attorney, or witnesses.

Limiting our possible liability from 'extra' fees if things went poorly for us was one of the reasons I went with arbitration.

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