Posted in Business Start Ups
There are some people you don’t want to anger. One of those people is a judge, especially if a legal dispute is bouncing back and forth between litigation and arbitration. If you commit to something in a contract, unless there are compelling reasons not to do so, you need to live up to your commitment. If you fail to do so one of those angered by your acts may be dressed in a judicial robe with a gavel in his or her hand.
Arbitration is an alternative dispute method. It’s essentially a private trial of sorts where an arbitrator, or panel of arbitrators, make decisions of fact and law, instead of a judge. Both parties need to agree to arbitrate the issue. In such agreements either one party commits to paying the cost, the cost will be split or the unsuccessful party needs to pay the costs. As consumers it’s difficult to avoid arbitration agreements, whether that’s when you’re buying a vehicle from a car dealer, have accounts with a bank or purchase cell phone or internet service.
One case in U.S. District Court for the Northern District of California involves a company that stated in a user’s agreement that disputes needed to go to arbitration but the company didn’t always act like it wanted arbitration. Fitbit, Inc. is the defendant in a legal action filed by Kate McLellan who states her Fitbit personal fitness device isn’t as accurate as advertised.
She originally sued in court. Fitbit successfully blocked her lawsuit and, in accordance with its agreement with customers, had the dispute go to arbitration. But the company then failed to pay its arbitration fees in a timely manner and informed the plaintiff it had no intention of going forward with arbitration. McLellan then went back to court to litigate the matter, but Fitbit changed its mind again and got the arbitration back on track.
This is not how to handle legal claims, as the Hon. James Donato stated in a decision concerning the case’s arbitration decision.
“Fitbit’s conduct has multiplied the proceedings in this case for no good reason and at the expense of plaintiffs’ and the Court’s resources. It has also bolstered the perception that arbitration is where consumer lawsuits go to die. While the merits of that view can be debated, it’s no surprise that many people, including judges, are skeptical about arbitration agreements in light of situations like this one. Fitbit’s conduct undermines the public’s confidence in getting a fair shake when arbitration is compelled.”
Despite these findings, the judge ordered the dispute back to arbitration and didn’t agree with plaintiff’s claim the arbitration agreement should be void for all consumers. But Fitbit and its attorneys didn’t escape without taking some lumps.
“Fitbit and its lawyers at Morrison & Foerster must be held to account for their bad – faith litigation tactics. The conduct that necessitated this order amounts to an abuse of the judicial process and a needless waste of the parties’ and the Court’s resources. To make matters worse, Fitbit has been evasive and misleading in its explanations to the Court.”
Fitbit was ordered to pay the plaintiff attorney’s fees and costs incurred because of its actions. In order to prevent this from happening again the company’s been ordered to file this order with the verbal spanking in all cases where it seeks to enforce an arbitration agreement with a consumer for the next year.
If you think it would be a good idea just to file motions to give a hard time to the opposing party and act in bad faith, you’ll have to find yourself another attorney. That’s not something I tolerate from opposing parties and it’s not something I’ll agree to do.
Depending on the facts and law of the dispute, you may be able to defend yourself in any number of legitimate ways. Acting in bad faith should never be an option. If you have any questions about arbitration, contact our office so we can talk about it, I can answer your questions and we can discuss how we can help.
