Arbitration Under Fire by Billionaire

Lawyers, including myself, have long complained of the unfairness of the mandatory arbitration process. Touted by many businesses as a better alternative to be jury trial process, those who oppose the mandatory arbitration system generally have a long list of inequities to parade as exhibits to support their arguments. Now, Microsoft co-founder Paul Allen and his investment company, Vulcan Capital, are jumping on the bandwagon to criticize the mandatory arbitration process. The little guys — usually a credit card consumer or the mammoth sized company employee — are ready to applaud the billionaire’s decision to remove mandatory arbitration agreements from his Vulcan employee contracts.

It is reported that in legal filings made in King County Superior Court in Seattle, Washington, Vulcan is requesting the trial court to set aside an arbitration ruling in favor of two former Vulcan employees. The Allen company and the two employees were compelled to arbitration in their employment dispute. Vulcan alleges one of the three arbitrators improperly met with the two employees and their lawyer for five hours prior to hearing and deciding the arbitration. They further alleged the meetings, or as they call them “consultations”, were not disclosed by the arbitrator before the proceedings or at any time before the evidence was presented and the award was issued. Vulcan argues this fact alone independently justifies the invalidation of the arbitration award. Whether this fact indeed justifies the invalidation of the arbitration award, one thing is clear — the United States system of justice would not tolerate these type of “closed-door” meetings prior to important dispute being resolved.

This case represents another example of why the often secretive mandatory arbitration approach is substantially inferior to the open courts system fought for by our founding fathers. Our democracy will be better served by an open courts system, and our legislators should re-examine the role of mandatory arbitration in our country.