Rape, broker, customer lawsuits hushed in big fight

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Coming next month to a movie screen near you is a tear-jerker of a story about little Scott Swimm.

Swimm, 7, was skiing down a trail at Colorado’s Beaver Creek Ski Resort in 2007 when he ran into 60-year-old David Pfahler, who wound up tearing a shoulder tendon in the accident. Pfahler sued Scott and his dad, Robb Swimm, and, in a two-minute video that will run as a pre-movie short in theaters around the country, viewers will see the little legs of a 7-year-old dangling from an adult-size chair, unable to even reach the floor while the mean old lawyers took his deposition.

The outfit dishing out the millions to run this and similar videos, the U.S. Chamber of Commerce, is hoping that the public will see the light that even “the average person” can get the shaft in over-the-top lawsuits, says spokesman Bryan Quigley.

The Chamber’s “Faces of Lawsuit Abuse” ad campaign is but a piece of a larger publicity war that’s heating up as legislators begin considering the merits of the Arbitration Fairness Act of 2009, introduced Feb. 12 by Georgia Congressman Henry Johnson. The act would invalidate so-called “mandatory arbitration” contracts that say the courts can’t be used in the event of a dispute.

Swimm and Pfahler, of course, signed no such agreements with each other or with the ski resort because, if they had, any paperwork over their dispute would be under the lock and key of private arbitration and thus unavailable for Chamber propaganda. If the Chamber gets its way, fewer such public records will exist.

Giving up rights

Consumer groups have long decried the practice of forcing consumers, investors and employees to forgo their rights to court before they can even purchase a cell phone, open a securities account or get a job. On Monday, the 5th U.S. Circuit Court of Appeals heard arguments about Jamie Leigh Jones, a former clerk who had to agree in writing to arbitration before she got a job with KBR Inc., a former Halliburton unit operating in Baghdad.

Jones alleged in a May 16, 2007, lawsuit that she was fed a date-rape drug and then gang raped by fellow employees in the company compound on July 28, 2005. KBR said she had no right to take the case to court. The alleged attack occurred at Jones’ barracks, a KBR work site, so it “is inextricably linked to her employment at that site,” KBR said in its brief.

Even rape can be job-related in the weird world of mandatory arbitration.

Fight over fairness

A coalition of 67 consumer groups, including Public Citizen and Consumers Union, planned to escort dozens of victims of the high costs and low awards rate of arbitrations to visit with their congressmen Wednesday during “Arbitration Fairness Day.” The all-day activities will include the unveiling of a survey of Americans who don’t like the idea of giving up their rights to court.

Arbitration advocates will no doubt come back with their own examples to show the opposite. The Chamber’s Institute for Legal Reform underwrote a 2005 poll of 609 adults who used arbitration and liked it. Two-thirds said they would be likely to use it again. But it tells little about the suckers who have the choice made for them. Only 19 percent of the people in the poll were required by contract to use arbitration, and those are the cases under fire.

Forced arbitration

That notion seems to be lost even on members of the Supreme Court, which earlier this month ruled that a group of building-services workers who had been demoted couldn’t override mandatory arbitration to take their age-discrimination case to court. Among the arguments by Justice Clarence Thomas was that the streamlined procedures of arbitration are not a basis to consider the forum inadequate and that arbitration’s informality “is one of the chief reasons that parties select arbitration.”

Wrong, Mr. Justice. “The parties” don’t select arbitration in these disputed cases. Only one party does.

On Jan. 6, U.S. District Judge T.S. Ellis III told an unemployed woman whose husband took home $2,000 a month toward $3,325 in expenses that she couldn’t opt out of arbitration just because her hearing fees would be as much as $9,000. Anna V. Koridze sued Fannie Mae for sexual harassment and sex discrimination. She had a child, was pregnant, had no medical insurance and sought a court proceeding because it’s less expensive.

The judge’s take: She had a “clear ability” to be employed because she’d had jobs in the past. So, hey, maybe she’d get a job in the future.

‘Repeat player bias’

If Koridze gets that job, here’s what she can look forward to. Alexander Colvin, a labor professor at Cornell University, published a study in January that examined employment dispute statistics from the American Arbitration Association. Employees won 31.6 percent of the time if the employer had no other case with AAA; 16.9 percent of the time if the employer had more than one case with AAA; and 12 percent of cases where an employer and a particular arbitrator were involved in cases more than once.

Colvin worries that “repeat player bias” is at work, with arbitrators favoring employers in hopes of being selected for future hearings.

Remember that mean old Pfahler who sued the kid? Before that lawsuit settled, the child’s dad hired a lawyer about possibly suing Pfahler because he “assaulted my son,” according to a deposition of Robb Swimm on Feb. 1, 2008.

Even Swimm, who cooperated with the Chamber of Commerce on the lawsuit abuse commercial, sounds like a guy who wants his day in court.

Susan Antilla is a Bloomberg News columnist.