Arbitration and Car Dealership Fraud
At the end of the buyer's order and if we signed the contract, we would waive our rights to sue the dealership in court, before a jury, should any dispute arise after the sale. Instead, as a condition of buying the car, we had to agree to submit to mandatory pre-dispute binding arbitration, handled by the dealership's pre-selected company, the National Arbitration Forum (NAF).
There is nothing fair about mandatory arbitration.
Mandatory arbitration clauses are designed to take fraud cases into a world of private justice, where big corporations hire the arbitrators that hear their cases and there's no right to appeal. Most importantly, unlike court proceedings, arbitration is secret, with no transcripts or written decisions, so that nosy reporters or other potential plaintiffs can't learn what's going on behind closed doors.
Arbitration Companies like the NAF, which our Volkswagen dealership used, market themselves to businesses as an alternative to the "million-dollar lawsuit." NAF rules eliminate many of the protections given to both sides of a dispute in court, things like meaningful discovery. The NAF also permits arbitrators to order losing parties to pay the other side's legal fees, which they do regularly, raising the stakes considerably for anyone trying to find relief from fraudulent and deceptive practices*. And arbitration is extremely expensive. Consumers have to pay the arbitrators just to hear their claims, unlike the public courts, where the taxpayers pay the judges. Arbitrators often charge hundreds of dollars an hour for their services.
Public Citizen found that in 94 percent of 19,000 cases, NAF arbitrators ruled in favor of the businesses that hired them. One arbitrator handled 68 cases in a single day, awarding every penny that the big companies were seeking. In one case Public Citizen looked at, the NAF also charged $1500 for a three-page document explaining the arbitrator's decision, something unheard of in regular courts.
The NAF is one of the biggest players in the arbitration world, but it is far from alone. The American Arbitration Association (AAA) handles disputes with big firms like Halliburton, which places arbitration clauses in its employment contracts, and the drug company Pfizer. Halliburton won 32 out of 39 cases arbitrated against it by an employee over a four-year period, according to Cathy Ventrell-Monsees, an employment lawyer who testified at a House committee hearing last month on arbitration. Pfizer did even better, winning 97 percent of its cases over a four-year period, according to Ventrell-Monsees.
One reason businesses often come out on top in arbitration is that arbitrators who rule for consumers have a tendency to find themselves out of work. A 2000 study of forced arbitration in HMO contracts found that on the rare occasion that an arbitrator made a significant award for a patient, the HMO never hired that person to arbitrate a case again.
Consumer arbitration horror stories abound. Last month, a Maryland woman named Deborah Williams testified at a hearing in the House about her dispute over a Coffee Beanery franchise. Despite the fact that Maryland's attorney general determined that the Coffee Beanery had defrauded her, she was forced into arbitration in Michigan, where the company is headquartered. the arbitrator ruled against Williams, assessed her $100,000 for the cost of the arbitration, a $150,000 judgment to be paid to Coffee Beanery, and ordered her to pay the company's legal fees as well. Williams is now bankrupt and nearly homeless as a result and can't appeal the decision. She will be paying off the award for the rest of her life.
Back to the car dealership, find out the names of the owners and you can run a
criminal record background search on them. California has an official state website at
www.california.gov . From this site, you can find links to the California Department of Public Health. This government holds vital records you will need for your California background check. If you do not have authorization to certified records, the state of California will send an “informational copy” of the vital record of your request. The information is the same but it is not a legal document.
The Attorney General’s office is another great resource for obtaining information for your California background check. They are located on the web at
www.ag.ca.gov .
