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When Roschelle Powers visited her mother Roberta Powers, a nursing home resident with diabetes and dementia in Birmingham, Alabama, she found her vomiting and disoriented, according to a 2015 investigation by The New York Times. Roschelle alerted the nursing home staff and told them that she had found pills in her mother’s hand. A few days later, Roberta’s son, Larry, visited the nursing home and found her alone and unresponsive, and he called 911. Roberta later died in the hospital. An autopsy found that she had 20 times the recommended dose of metformin, a diabetes medicine, in her body. The nursing home denied responsibility for Roberta Powers' overdose despite the pills discovered days earlier.
In a fair and just country, corporations are held accountable in the courts if their irresponsible behavior harms people like Roberta Powers. When the courthouse doors remain open to assist everyone, regardless of gender, age, or social or economic standing, even the wealthiest individuals and the largest and most powerful corporations can be held accountable for their malfeasance. Civil justice, working in conjunction with regulatory programs, has long been the great “equalizer” in our society.
The Powers family, however, did not have the option of filing a lawsuit against the nursing home. The corporation required the family to sign away their rights to go to court to resolve their dispute. Instead, they were forced to arbitrate any case against the nursing home as a condition of receiving care. The forced arbitration language barred them from taking their case to court, and the arbitrator decided the case in favor of the nursing home.
The Powerses are hardly alone. A tidal wave of corporate contract provisions has forced consumers and workers into arbitration. Millions are now subject to such “agreements.” Most are unaware that they have lost the right to file a case in court; even those who are aware likely have no choice but to accept a ban on going to court because so many corporations impose forced arbitration. Roschelle and Larry Powers (and their mother) would likely have been subject to forced arbitration at another nursing home, even if they had a choice of where to place their mother. Like many families facing the difficult decision to place a loved one in a nursing home, they had no such choice.
Forced arbitration became a widespread legal practice in the wake of a series of decisions by the U.S. Supreme Court interpreting the Federal Arbitration Act, a 1925 law that the court has used to give corporations carte blanche to deny workers and consumers the right to sue for violations of state and federal law. Corporations prefer forced arbitration because it prevents people like the Powerses and millions of others from holding corporations publicly accountable for irresponsible and illegal actions.
Corporations and employers have advantages over individuals in forced arbitration by virtue of their status as “repeat players,” which makes them more familiar with arbitrators and the process of arbitration.
The result is that corporations are less likely to be held accountable than they would be in the courts. Specifically, this is because:
- The ban on class actions in consumer contracts immunizes corporations from accountability when they owe a minimal amount of compensation to each of hundreds or even thousands of consumers.
- Few consumers or workers pursue arbitration forced on them.
- Consumers and workers seldom prevail in forced arbitration.
Forced arbitration impacts historically marginalized communities in ways that go beyond these adverse impacts of forced arbitration.
Low-income individuals are less able to:
- Absorb the financial impacts of unaccountable, irresponsible, or illegal corporate behavior. Even a small loss can devastate a family’s financial stability.
- Pay fees required to arbitrate their claims, which results in immunity for corporations.
- Find an attorney to take their claim on a contingent fee basis regardless of the merits of their case, which makes it unlikely that people of limited means will pursue forced arbitration. Moreover, low-income people cannot aggregate their claims in a class action suit to make it more likely a contingent fee attorney will take their case.
Workers who are low-income and people of color are:
- More likely to be subjected to forced arbitration than other workers.
- More likely to be victims of wage theft.
- Less able to afford illegal losses in wages.
Women and people of color:
- Are more likely to be subjected to workplace discrimination than their white and male counterparts.
- Have fewer opportunities in forced arbitration than in a lawsuit to obtain evidence from employers to support discrimination claims.
- Face extreme difficulty proving patterns of sexual harassment because forced arbitration is secretive, barring other victims or people who could force change from seeing systematic problems.
- Are more likely to be victims of implicit bias and subconscious discrimination because almost all arbitrators are white males.
Nursing home residents:
- Are harmed in a way that other people subject to forced arbitration are not because their claims relate to physical injury, and even death, caused by substandard care, neglect, and physical and elder abuse.
Congress must end forced arbitration and restore the capacity of individuals and the courts to hold businesses accountable for illegal and irresponsible actions that disproportionally harm historically marginalized communities. Congress must also restore access to class action lawsuits, which is how historically marginalized communities can effectively hold corporations accountable for widespread discrimination and other harms. And Congress must restore the authority of federal judges to enforce laws protecting women and people of color from discrimination and workers from wage theft, to guarantee these laws provide the protections intended.