This is the second story in our three-part series that looks at the extraordinary growth in mandatory arbitration clauses in contracts for everything from jobs to cell phones to medical care. Check out Part One and Part Three.
A decade ago, California lawmakers decided to act in response to a startling trend in consumer law.
Corporations across the country had increasingly been inserting clauses into their contracts that barred consumers from taking them to court. Instead, consumers who signed the contracts were limited to challenging the companies in arbitration, a privatized form of justice that some experts and attorneys say is often heavily biased in favor of companies.
Mandatory arbitration clauses were becoming a part of almost every consumer contract from cell phones to car rental to medical care. Employers were inserting mandatory arbitration clauses into their workers’ contracts, barring employees who challenged their dismissal from taking their hearings to court.