Amtrak's mandatory arbitration policy would end under legislation

[ThirdRail7]

There doesn't seem to be much discussion on Amtrak's Arbitration policy. What I found was scattered between a thread involving standees/assigned seating and 188's accident thread. At any rate, after this back and forth with Congress (I loved the part where Mr. Anderson said "are you going to let me finish?" and Rep. Lynch said "I'm not sure"), the threat of legislation preventing mandatory arbitration was floated.

A few months later, here it is:

https://www.progressiverailroading.com/ ... ion--59928

Lawmakers in both chambers of Congress yesterday introduced the "Ending Passenger Rail Forced Arbitration Act," which would end Amtrak's practice of forced arbitration agreements with passengers.

In January 2019, Amtrak revised a requirement that legal action against the railroad be resolved through a mandatory arbitration process. Under the change, riders waive their right to sue the national intercity passenger railroad in a U.S. court for any reason with the purchase of an Amtrak ticket.

Here is a link to the act. H.R.6101 - Ending Passenger Rail Forced Arbitration Act


I'll be Mr. Anderson can't wait until he steps down tomorrow.

[Tadman]

I read the first 20 paragraphs of the bill. What's interesting is that they specifically mention personal injury. I have some PI drinking buddies and here's the catch: they almost never go to court. If you've ever seen a good movie like The Rainmaker or Erin Brockovich, you've not seen how it really works. In reality they have a few attorneys and a lot of functionary and paralegals that do all kinds of paperwork and 95% are settled out of court.

So this is puzzling because they don't usually go to court. You file the suit, go through all kinds of motions and procedural stuff, but it's not really a victory if you go to court because it uses a lot of resources. Usually the insurance company for the big bad evil company makes a few offers that are somewhere below the cost to try such a case, and the aggrieved takes a bigger offer. Then the PI lawyer gets 1/3.

[STrRedWolf]

I read the first 20 paragraphs of the bill. What's interesting is that they specifically mention personal injury. I have some PI drinking buddies and here's the catch: they almost never go to court. If you've ever seen a good movie like The Rainmaker or Erin Brockovich, you've not seen how it really works. In reality they have a few attorneys and a lot of functionary and paralegals that do all kinds of paperwork and 95% are settled out of court.

So this is puzzling because they don't usually go to court. You file the suit, go through all kinds of motions and procedural stuff, but it's not really a victory if you go to court because it uses a lot of resources. Usually the insurance company for the big bad evil company makes a few offers that are somewhere below the cost to try such a case, and the aggrieved takes a bigger offer. Then the PI lawyer gets 1/3.

That's basically what I hear from a lawyer I know in my circles. Most of the time, you file paperwork, the hands are shown, you got negotiations on the side between the two lawyers and it's settled out of court. The only time it hits the court is if there's something that can't be negotiated... or one side's client is an idiot and all the lawyers end up legally fleecing the client.

Amtrak just didn't want to pay lawyers.

I'm not sure this bill (once it's put into law) will pass muster in the courts. It's very specific to Amtrak.

[Tadman]

I'm not sure this bill (once it's put into law) will pass muster in the courts. It's very specific to Amtrak.

You make a good point here, but it could be used both for and against Amtrak. Why should Amtrak passengers be required to arbitrate by law? I'm not advocating either way, but that's the question I would ask as a legal mind.

But it goes back to being a moot point. Nobody wants to go to trial, neither side. In any case I've been in, the judge "suggests" mediation, which works roughly 30-50% of the time, then the judge requires arbitration anyway after mediation. That's an important point.

Regardless of the law pertaining to Amtrak, there is probably an arbitration clause in the contract and even if not, the judge will "suggest" or demand it anyway.

That's what has me so curious here. Something else is up. Somebody is making a trade for something and I'm curious what it is.

[mtuandrew]

From my secondhand view of the law,

That's basically what I hear from a lawyer I know in my circles. Most of the time, you file paperwork, the hands are shown, you got negotiations on the side between the two lawyers and it's settled out of court. The only time it hits the court is if there's something that can't be negotiated... or one side's client is an idiot and all the lawyers end up legally fleecing the client.

Amtrak just didn't want to pay lawyers.

I'm not sure this bill (once it's put into law) will pass muster in the courts. It's very specific to Amtrak.

The third time it ends up in court is when one or the other party has some major liability and a lot of unsheltered assets. Kind of a subset of “it can’t be negotiated out” but a very important one. This smells of post-Cascades-accident sniffing around for damages, since both Amtrak and the State of Washington are self-insured.

Also, I’m not sure whether anyone had previously tested the Amtrak arbitration clause. It may not even be enforceable because the National Rail Passenger Corporation is an instrument of the Federal Government (technically not wholly-owned, those freight roads still own common stock even if it’s essentially worthless) and I have never heard of any agency being able to enforce an arbitration clause. The US Postal Service might have a similar clause in terms of damages, I suppose?

[STrRedWolf]

The Supreme Court ruled 5-4 that arbitration clauses needed to have express consent. A different case (i think) involving RedBox says that if the agreement isn't thrown in someone's face (made blatantly explicit), you can't determine express consent.

I think the arbitration clause will be thrown out in court.

[John_Perkowski]

Three Democrats. This is a low priority bill, unless the author has some major debts to call in among his peers.

[Ken W2KB]

The Supreme Court ruled 5-4 that arbitration clauses needed to have express consent. A different case (i think) involving RedBox says that if the agreement isn't thrown in someone's face (made blatantly explicit), you can't determine express consent.

I think the arbitration clause will be thrown out in court.

It is my understanding that the US Supreme Court upheld the application of an arbitration clause to require not only individual arbitration, but also that despite no express mention of a requirement of a class of complainants being required to arbitrate, a class as such also was required to arbitrate. This Opinion supports the validity of Amtrak's arbitration clause, even more so since Amtrak expressly includes a requirement for both individuals and classes to arbitrate. See: https://www.supremecourt.gov/opinions/1 ... 8_n6io.pdf

With respect to Redbox, that dispute was recently decided at only the trial court level, in the US District Court for the Northern District Illinois, and may or may not be upheld by higher courts if appealed. The specific decision is also highly fact dependent upon Redbox's specific online transaction process. One substantial distinction is that unlike Redbox, Amtrak is a highly regulated entity, and highly regulated entity tariffs have routinely been upheld by the courts, despite their length and lack of any specific notice as to substantive content provided to customers. For example, my career-long former employer's electric service tariff consists of approximately 178 pages of fine print. The provisions of that tariff have been consistently been upheld with respect to matters concerning small residential through large commercial customers.

[exvalley]

Arbitration is not as evil as people make it out to be. The case is ultimately determined by an arbitrator, who is often a former judge. They are trained in the law and are fully vetted before they get on an approved list of arbitrators. Both sides have an opportunity to fully present their case.

The major advantages are:
1) The cases resolve in months rather than the several years that it can take in court.
2) There is less formality to an arbitration proceeding which leads to greater efficiency.
3) You don't get the wild judgments that the jury system can sometimes give you.
4) Appellate rights are much more limited. (This is both good and bad.)
5) It's often cheaper for both parties.

The major disadvantages for the consumer are:
1) You don't get the wild judgments that the jury system can sometimes give you.
2) The arbitrator knows that Amtrak will need a steady stream of arbitrators. The customer will not. They can be tempted to err on the side of Amtrak just to get future work.

Arbitration has sprung up because the court system is a horrible place to resolve disputes. The rules are antiquated and justice is always extremely delayed.

In a perfect world, the consumer would have the choice of arbitration or court. But I also recognize that Amtrak's financial health is important to our country. If arbitration avoids a crazy verdict with no basis in reality, there is a lot to be said for that. (And, yes, judges can overrule verdicts - but that is a possibility and not a probability.)

[Tadman]

Exxvalley is 100% right. Arbitration is a good thing. Arb and mediation are where a fair amount of b-to-b disagreements are settled. And while it doesn't allow for the big jury verdicts, those are 1% cases. Most b-to-c disputes are settled out of court.

If you ever come to NOLA and watch the endless parade of ambulance chaser commercials, you'll notice they often advertise the settlements. "Fred got $50k for a car accident"; "Nancy got $120k for a sideswipe". etc... They're really not that big, and the lawyer often gets 1/3 anyway.

I think we'd all love to have a spare $120k (or even $80k) but it's not the same as winning $10m.

[STrRedWolf]

The major disadvantages for the consumer are:
...
2) The arbitrator knows that Amtrak will need a steady stream of arbitrators. The customer will not. They can be tempted to err on the side of Amtrak just to get future work.

That's the other thing. I remember a case where the arbitration clause in the agreement to the online MMO game Second Life was struck down because it was written to heavily favor Second Life's creator Linden Labs, even with the choice of arbitrator. I'd rather agree to have the courts pick an arbitrator than have any side pick it.

I still think an arbitration ruling should be allowed a full appeal to the courts.

[Ken W2KB]

The major disadvantages for the consumer are:
...
2) The arbitrator knows that Amtrak will need a steady stream of arbitrators. The customer will not. They can be tempted to err on the side of Amtrak just to get future work.

That's the other thing. I remember a case where the arbitration clause in the agreement to the online MMO game Second Life was struck down because it was written to heavily favor Second Life's creator Linden Labs, even with the choice of arbitrator. I'd rather agree to have the courts pick an arbitrator than have any side pick it.

I still think an arbitration ruling should be allowed a full appeal to the courts.

The usual American Arbitration Association practice incorporated into most arbitration clauses is that each side chooses one arbitrator, and then those two arbitrators pick a third arbitrator. The arbitration then proceeds before all three arbitrators, thus far better ensuring a fair outcome. Arbitration by its fundamental nature replaces litigation in court and only failure of the arbitrators to properly administer the proceeding can be appealed to the courts. There is a similar process that can be appealed to the courts, mediation. By the usual practice, the decision of the mediator(s) is not binding and can be appealed to the courts.

[exvalley]

The usual American Arbitration Association practice incorporated into most arbitration clauses is that each side chooses one arbitrator, and then those two arbitrators pick a third arbitrator. The arbitration then proceeds before all three arbitrators, thus far better ensuring a fair outcome. Arbitration by its fundamental nature replaces litigation in court and only failure of the arbitrators to properly administer the proceeding can be appealed to the courts. There is a similar process that can be appealed to the courts, mediation. By the usual practice, the decision of the mediator(s) is not binding and can be appealed to the courts.

Some clarifications are in order:

Arbitration under the AAA rules often involves only one arbitrator. Amtrak's arbitration clause says that the arbitration "will be conducted before a single arbitrator under the Consumer Arbitration Rules of the American Arbitration Association." Paying three arbitrators can add up very quickly.

Also, it isn't really accurate to say that mediation "can be appealed to the courts." Unlike an arbitrator, a mediator is not a fact finder. There is no "decision of a mediator" as you reference. The mediator can only help the parties themselves make a decision.

A better way of saying it is that you are under no obligation to enter into a mediated settlement agreement and you can always choose to litigate rather than settle. If you litigate, you go to the trial level and not the appellate level. If you settle, any remotely competent mediator will include provisions in the settlement agreement that make it virtually impossible to appeal. Even if they don't, courts generally treat a mediation settlement agreement as a contractual agreement in and of itself. The whole point of a mediation agreement is to have the dispute end. If the parties felt that it was not final, they would be dissuaded from entering into a settlement agreement.