National Arbitration Forum’s Wall of Secrecy Begins to Crumble

By: Paul Bland

While very few of them actually know it, courts would say that tens if not hundreds of millions of Americans have “agreed” that if they ever have a dispute against various powerful corporations, that their dispute will be decided by an organization named The National Arbitration Forum (or “NAF”). Who is the NAF? What is its background? Is it really a neutral organization, or is it likely to favor one side or the other in disputes?

Let me put my own “biases” on the table at the outset. Based upon extensive investigation and interviews with literally hundreds of people, my law firm, Trial Lawyers for Public Justice, has argued vociferously in several different court cases around the nation that the NAF is not a truly neutral organization. Instead, we have argued, NAF has conducted itself in ways that suggest that it in disputes between consumers and large corporations (and particularly banks and other lenders), that the NAF as an institution is pre-disposed to favor the corporations and lenders.

A great deal of background about this organization is set forth in a legal brief that we filed in a case in North Carolina called McQuillan v. Check N Go. A copy of this brief is posted on the website of my law firm, www.tlpj.org, along with hundreds of pages of evidence, that anyone can download for free. You can find affidavits from consumers who swear that they had terrible experiences with the NAF, an expert affidavit from a law professor who studied the way NAF conducted arbitrations in a certain category of non-consumer cases and concluded that NAF has a systematic tendency to favor the more powerful party in those disputes, a series of advertisements and solicitations that NAF has used to try to get banks and other large corporations to write it into their standard form agreements where the NAF has made statements that we argue show a pre-disposition to favor the corporations, and other similar evidence. I should make clear that the trial court in the McQuillan case did not agree with our challenge to the NAF as biased, holding in essence that a consumer can’t challenge an arbitration company as biased in advance, but must instead wait until after the arbitration is complete to raise that question, and also holding that some of our evidence was hearsay and not admissible. That ruling is on appeal, and our brief in the appeal is also available on TLPJ’s website.

Until this month! Two major cracks have appeared in the wall of NAF secrecy, that offer disturbing insights into the way that this organization operates. The first comes in the form of an article entitled “Arbitration and the Godless Bloodsuckers” written by Richard Neely, a former justice of the West Virginia Supreme Court in the September/October issue of “The West Virginia Lawyer.” After retiring from the bench, Justice Neely was approached by the NAF to serve as one of their independent-contractor arbitrators, and he agreed to do so. His experience turned out to be very different from what he expected, though. He concludes that “banks have converted apparently neutral arbitration forums into collection agencies to exact the last drop of blood from desperate debtors.” Among other things, he tells that NAF “sends the arbitrator a judgment form already filled out so that all the arbitrator need do is check the appropriate box and sign his or her name. It looks like a collection agency to me!” He also reports that when he did not award a bank the full amount of attorneys’ fees it asked for, that he found himself barred from handling anymore cases involving that bank. He explains that banks, as “professional litigants,” can make use their superior knowledge to help make sure that their cases are heard by NAF arbitrators who will rule on them.

Professor Bartholet's Deposition CLICK HERE

Consumers or consumer advocates who would like to see these documents should contact me at pbland@tlpj.org.

Original Article Found here