Beating an Arbitration Clause

Along with lemon law cases and suing car dealerships for bad used cars, we represent clients who have lost their cars to repossession when they failed to pay their financing contracts. Pennsylvania law provides specific guidelines that banks have to follow when repossessing vehicles.  Sometimes, we are able to sue the bank for an improper repossession.  And sometimes, we find ourselves fighting Binding Arbitration Clauses.

We talked at length about Binding Arbitration Clauses and why you should reject them HERE.  Basically, an Arbitration Clause prohibits you from suing the bank or a car dealership in court and forces you to have a non-judiciary proceeding before some random person who isn’t a judge or a jury.  Arbitration Clauses are really bad for consumers and that’s why we recommend rejecting them.  However, most people end up signing one without even knowing it.  Recently, we were able to beat one of these Arbitration Clauses and a court of law told us we are able to continue our case in a real court and avoid Binding Arbitration.

We received a call from a potential repossession client.  He said the bank tried to take his vehicle, and in the process, the tow truck operator grabbed the wife of our potential client and ripped the keys out of her hand.  This, from our prospective, is a violation of Pennsylvania’s repossession laws.  So, we filed suit.  The bank and the tow truck company quickly filed motions to have our case removed from real court and refiled in unfair Arbitration.  What the bank and truck company didn’t realize was that our client never received a copy of the Binding Arbitration Agreement.  When the dealership put the finance paperwork together, it only put our client’s electronic signature on the Arbitration Agreement and didn’t put a copy of the Agreement in our client’s packet of purchase paperwork.  As such, the bank could not argue that our client was on notice of the Agreement.

Unfortunately, the facts of this case are not typical.  Most of the time, the dealership puts the Agreement in the packet of documents given to the buyer.  However, this case does provide the consumer with some hope and a chance to beat Arbitration Agreements.  In our case, the Court did not like the electronic signatures and took our client at his word that he never saw a copy of the Agreement after buying the vehicle.  We hope to use this case as a stepping stone in a larger campaign to nullify Arbitration Agreements in vehicle cases.  Changing laws like those governing Arbitration Agreements do not happen overnight from one case.  It takes time and little victories.  Today, we won because our client did not receive a copy of the Agreement.  Maybe tomorrow, we can beat an Agreement because our client’s signature does not actually appear on the Agreement.  After that, we will hopefully gain enough steam to fight the actual convoluted language contained in these Agreement.  Even as attorneys who practice in this area of law, we struggle to understand the Agreements.  If we can’t understand the Agreements, how will our clients have any idea what they are signing?  If our clients can’t understand what they are signing, then the contract cannot be valid.

We hope to one day nullify Arbitration Agreements.  However, as courts try to stream line the legal process more and more in the name of reducing a work load, we struggle to visualize this as a reality.  For now, we will continue to fight against the Agreements that strip you of your Constitutional Rights.