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If a company requires arbitration in the event of dispute, does that mean you can't sue them?

Carlsbad, CA |

The arbitration company definitely has the company's money in their pockets. Is there a way to circumvent arbitration/mediation? What kind of power does the company have in forcing arbitration and how can you get a fair fight from a court?

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Attorney answers 7


Depending on the wording of the arbitration clause, but assuming a typical clause, it generally means that you have to have your dispute decided by an arbitrator, who is to be a neutral unbiased third person . Most such clauses also include language prohibiting you from having a jury trial and other rights which the court system otherwise affords a litigant. In some situations arbitration clauses have been declared void as against public policy. You should consult with an experienced litigation attorney who can help you about these matters and in deciding whether to move forward. If you found this helpful and/or the best answer, please let the attorney know and check the boxes below indicating so. Thank you and best of luck.

Please note that this answer does not constitute legal advice, and should not be relied on, as each situation is fact specific, and it is not possible to evaluate a legal problem without a comprehensive consultation and review of all the facts and court pleadings filed in the case. This answer does not create an attorney-client relationship.


The contract provisions control. Generally companies want arbitration because so called experts in the field hear the case and respond accordingly. There is binding and non-binding arbitration with the first being a final decision and the latter being one that is still able to be sued upon. Arbitration is a time consuming and expensive alternative dispute resolution program and can work for one side and against the other. If you are interested in having a case decided by a jury of your "peers" never agree to arbitration. The big companies don't want juries who have had the same thing done to them judging them and determining the damages, so they want educated experts who rule solely on the issues and don't consider the emotional trama that the party may have suffered. I represent a school district and our policy is that we never agree to binding arbitration as when we get sued we want the taxpayers of our district to know that a verdict against us is only going to increase their taxes and that is the way all parties should look at arbitration. It is great for corporations, but it dehumanizes the litigation and fails to take into account the realities of life and the emotional injury that can be inflicted upon people. A 55 chevy may be just a car to NADA, but to the man who built it and kept it and had his first date in it, it is truly priceless.


This is a complicated question. Generally speaking? Unfortunately, the intent of the arbitration agreement is that you are agreeing not to file a lawsuit in a court of law. Of course, there are ways to challenge the arbitration agreement, which is a form of contract. At the onset, most of the challenges relate to the formation of the agreement. These challenges do not always succeed, in part because there are strong public policies (both state and federal) favoring arbitration over filing a law suit in court. Recent United States Supreme Court decisions have further limited the manner and form of challeges to the arbitration agreements even in state courts, especially as they relate to class actions. Typically, the company will enforce its rights to arbitration in a Motion to Dismiss/Motion to Stay a proceeding filed in Court or by making a demand for arbitration before you file suit. In Florida, a denial of motion to arbitrate is appealable, so there are a number of procedural devices a company can use to forestall moving your case forward in Court. The bottom line is that you are generally bound by an agrement you sign--even one that limits your right to sue in a court of law--even if you have not read it. This is true, even in Florida, where the Florida Constitution gives you a right to a jury trial even in a civil case.

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This is a complex question and the answer depends on the fact surrounding how the arbitration agreement was executed. In California, a court will look at two things. First, whether the procedure by which the parties entered the agreement was oppressive. For instance, was it a form agreement? Inserted in fine print into a long agreement of multiple pages? Second, the Court will look at the actual terms of the agreement to see whether it favors one side so much that the agreement should not be enforced. These are the basic principles of what is known legally as "unconscionability."

Enforceability will also depend on what types of claims are at issue. Courts are enforcing arbitration agreements in most contexts after recent Supreme Court decisions. That said, in California it is an open question whether certain employment claims can be arbitrated, such as claims under the Private Attorney General Act.

If you like, I would be interested to hear more about the types of claims you think you have, the substance of the arbitration agreement, and the context in which it was presented to you.



I recommend that you consult with a local (California) employment attorney such as Mr. Sokowloski. Please do not accept the advice of attorneys who do not practice employment law, and especially attorneys who are not licensed to practice in California.

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Please let us know the nature of the dispute. Is this an employment law issue? Buy-sell agreement? Services? Real estate? It makes a difference. *** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your claim, you will lose the opportunity to pursue your case. Please consult with an experienced employment attorney as soon as possible to better preserve your rights. *** Marilynn Mika Spencer provides information on Avvo as a service to the public, primarily when general information may be of assistance. Avvo is not an appropriate forum for an in-depth response or a detailed analysis. These comments are for information only and should not be considered legal advice. Legal advice must pertain to specific, detailed facts. No attorney-client relationship is created based on this information exchange. *** Marilynn Mika Spencer is licensed to practice law before all state and federal courts in California, and can appear before administrative agencies throughout the country. She is eligible to represent clients in other states on a pro hac vice basis. ***


Assuming you have signed an agreement that has an "alternative dispute resolution" clause, the first inquiry is to look at the specific language of that provision. There is no single "arbitration company" specified and often there is a device for agreeing to a specified arbitrator.

Many attorneys find that arbitration is a much more cost effective avenue than traditional litigation. It is sometimes called a "mini-trial" and as such it can generally be concluded in much less time (and less attorney fee time and cost) than typical civil litigation. I personally have had good results and my clients have agreed when we have used skilled arbitrators (many of whom are retired judges) and have also pusued attorneys fees and costs after a successful arbitration.

Alternative dispute resolution (mediation and arbitration) are not big bad wolves and in fact can be an effective tool for streamling resolution of disputes. Many attorneys offer a free consultation and you may want to review the particular clause and discuss more of the specifics of your case in a confidential setting. You may find you could indeed get a very fair fight for a lot less outlay if you are able to pick a well reputed arbitration firm. You can also discuss challenges to a particular arbitrator as well.

I hope this answer was helpful and I wish you much success.

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