Released: May 17, 2004

CA is plaintiff in suit to force private arbitration firm to comply with disclosure law

National Arbitration Forum must let public know about how it handles cases when consumer rights are at stake

Corbett and Consumer Action v. National Arbitration Forum, a representative lawsuit on behalf of all California consumers, was filed today by Trial Lawyers for Public Justice in San Francisco Superior Court in Oakland, CA. The plaintiffs seek a court order declaring that National Arbitration Forum's refusal to disclose information about the arbitrations it handles violates California law, and requiring the company to disclose this information on its website immediately.

(Click here for a PDF file of the complaint.)

Consumer Action's co-plaintiff in the case is California Assemblymember Ellen M. Corbett (Democrat-San Leandro), who chairs the Assembly Judiciary Committee. In the past, Consumer Action has successfully challenged abuses of mandatory, pre-dispute arbitration clauses.

The suit charges that National Arbitration Forum, a private arbitration company, violated a California consumer protection law by refusing to disclose information about how it handles cases when consumer rights are at stake.

The California Code of Civil Procedure requires private arbitration companies to disclose data about how many consumer cases they handle, which corporate defendants are involved, who wins and how much consumers had to pay the arbitration company. On its website, National Arbitration Forum states that it has had no arbitrations in the period between January and December of 2003. However, the lawsuit alleges that National Arbitration Forum has presided over many California arbitrations in this period, and simply refuses to post information about them on its website.

Assemblymember Corbett, author of California’s arbitration disclosure law, pointed out that "California consumers may be surprised to know that if they drive a car, own a phone or use a credit card, they’re almost certainly subject to binding arbitration. They need to know basic information about who is deciding their cases and how much they have to pay an arbitrator. NAF, and every other private arbitration firm that does business in California, must give consumers the basic information required by California law."

National Arbitration Forum is one of the three largest arbitration companies in the U.S. Consumer contracts often specify which one of these companies will hear disputes between the consumer and the corporation. The company then provides an arbitrator or panel of arbitrators to hear the dispute and sets out the rules that will govern that dispute. The other two major arbitration companies, the American Arbitration Association and J*A*M*S, are complying with California’s disclosure law. 

The plaintiffs’ legal team includes Paul Bland of Trial Lawyers for Public Justice (TLPJ), co-counsel Cliff Palefsky of McGuinn, Hillsman & Palefsky in San Francisco, TLPJ’s Executive Director Arthur Bryant and TLPJ Baron-Brayton Fellow Kate Gordon.