National Arbitration Forum 'tainted with illegality'

nospam@example.com (Steve) — Sun, 20 Jun 2010 06:26:23 -0700

This California case is Bailey v Processing Solutions. It's a very interesting angle regarding the so-called rules at the NAF

The arbitration agreement at issue here, like the one in Armendariz, is tainted with illegality. As we have already discussed, the class action waiver provision is unconscionable as contrary to public policy. (Discover Bank, supra, 36 Cal.4th at p. 162-163.) Also troubling is the provision in the arbitration agreement stating that disputes shall be governed by "the Code of Procedure of the National Arbitration Forum ("NAF") in effect at the time the claim is filed." However, the arbitration agreement did not include the NAF rules, it merely listed a web address (but did not provide a link to that address) and a physical address where plaintiff could obtain a copy of the NAF rules. However, even if plaintiff obtained a copy of the NAF rules in that way, the rules could have changed by the time any dispute arose. Thus, this provision, as drafted, provided plaintiff with no real notice at the time it was executed of what rules were actually being incorporated into the agreement. Rather, the provision merely specified that whatever NAF rules were current when the dispute arose would be enforced. The court in in Harper v. Ultimo, supra, found a similar provision oppressive because it "pegs both the scope and procedure of the arbitration to rules which might change". (Harper v. Ultimo, supra, 113 Cal.App.4th at p. 1407.)
Read the whole slip opinion here

http://www.leagle.com/unsecure/page.htm?shortname=incaco20100527025

Wrongful Arbitration - NAF National Arbitration Forum

National Arbitration Forum 'tainted with illegality'