In the 1920’s the American Arbitration Association (“AAA”) was created.  It was, and is, considered an alternative dispute resolution process.  In other words, in stead of going through the long litigation process of filing a complaint, conducting discovery, and conducting an intrusive trial, you can have your case heard in the AAA through a quick process that takes maybe half the time.  There are no judges, no juries, just a few individuals who hear your case and make a quick decision.

In theory, this sounds like an awesome idea.  From an attorney’s point of view, this would help to process open cases faster.  From the client’s point of view, this would help move his/her case through the system and bring resolution faster.  However, in reality, it is not a good idea to have your case heard in any alternative arbitration process.  Here are 3 reasons why:

  1.  Arbitration limits discovery.  Discovery is part of the litigation process dedicated to fact finding.  It is our chance to ask the Defendant for information.  This may in the form of questions, written statements, looking for documents, etc.  It is our #1 way to prepare your case for trial.  The Pennsylvania Auto Fraud Laws are very specific about what has to be proven in court.  Sometimes, we cannot prove our case without discovery.
  2. Corporate Influence.  Our auto fraud cases are considered consumer cases in which the consumer (you) is suing the corporate or industry (the dealership or manufacturer).  Think of it as the little guy going after the big company.  We need every advantage we can get to beat the big company with all of the resources.  Unfortunately, big corporations have discovered ways to manipulate the AAA and other arbitration associations by donating lots of money.  As such, you are already at a disadvantage if you have to file your case in the AAA.
  3. Arbitration is binding.  In court, you almost always have a right to appeal.  If you file a case at your local Magistrate’s Office and think he or she makes the wrong decision, then you have the right to appear your case to the next level.  In some cases, there are 3 or 4 stages of appeal if you think a court or jury gets it wrong and you lose.  When you file in the AAA, that decision is binding.  That means you have no right to appeal.  Whatever the AAA decides, you are stuck with.

So, what do we recommend you do with Arbitration Agreements?  Easy, don’t agree to sign them.  In 2013, the Supreme Court of Pennsylvania said that these Arbitration Agreements are not allowed unless they are contained in the contract that you sign.  For most of us, that means the finance contract, or Retail Installment Sales Contract.  As such, most dealerships are now adding Arbitration Clauses to their contracts.  However, this is good because you will know it is there as long as you review the contract before signing.

If you do sign the Arbitration Agreement, it isn’t the end of the world.  There are ways around it.  One “nice” thing about the AAA is that it is expensive for the Corporation to have a case move through the AAA.  At times, we will file your case in the regular court system and make the Corporation request that it be removed to the AAA.  If the court moves the case to the AAA, then the Corporation has to pay a hefty fee to continue.  Sometimes, the Corporation does not want to pay this and we are then successful at having your case moved back to the regular court system.

If your contract gives you the option to reject the Arbitration Agreement, do it.  If enough people reject the agreements it will send a message that we will not stand here and give up our Constitutional Right to a trial by a Judge or Jury.