Careful When You Sign That Contract; Consumers Could Be Agreeing to Arbitration, Unbeknownst to Them

By Bauerlein, David | The Florida Times Union, February 9, 2008 | Go to article overview

Careful When You Sign That Contract; Consumers Could Be Agreeing to Arbitration, Unbeknownst to Them


Bauerlein, David, The Florida Times Union


Byline: DAVID BAUERLEIN

Whether they realize it or not, consumers signing contracts frequently agree they will go to arbitration - not the courthouse - to settle disputes, whether it's to buy a new home or rent a trailer for an hour.

Businesses favor arbitration because it's faster and less expensive than the court system.

But two recent rulings involving Jacksonville lawsuits highlight how judges sometimes side with businesses, and other times with consumers, when arbitration provisions are challenged. Comcast prevailed in requiring arbitration for complaints about its video-on-demand service. But Brumos Motor Cars and Lexus of Jacksonville couldn't thwart a class-action lawsuit about car-leasing fees.

The different rulings highlight the complexity of court rulings on arbitration provisions, said Darren Latham, an assistant professor at Florida Coastal School of Law in Jacksonville.

"It's a hot issue," he said. "The [court] precedents have been all over the place if you were to look at it nationally."

At issue in the Jacksonville court rulings was whether consumers gave up their ability to seek class-action status if they agreed to arbitration as a condition of subscribing to cable TV service or leasing a car.

Comcast successfully argued it sent notices to all customers in July that it was instituting a policy of arbitration to settle disputes. Comcast customers were given a chance to "opt out" of agreeing to use arbitration by responding in writing in 30 days. After that deadline, Comcast considered customers covered by arbitration if they continued using Comcast service. The arbitration provision bars customers from filing class-action cases.

U.S. District Judge Virginia Hernandez Covington ruled Jan. 14 that Jacksonville customers complaining about the reliability of video-on-demand service had not opted out of the arbitration contract. She tossed the lawsuit and said they must go to an arbitrator.

In a separate case, a state appeals court went the other way and sided with consumers in lawsuits filed against Brumos Motor Cars and SDS Autos Inc., which does business as Lexus of Jacksonville. Customers contended the dealers deceptively charged a $379 fee on leasing contracts, according to court documents.

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Careful When You Sign That Contract; Consumers Could Be Agreeing to Arbitration, Unbeknownst to Them
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