Our most recent article on the hazards of electing arbitration as a method of dispute resolution has resulted in a flood of questions. While we have been beating the drum against arbitration for many years, myths die hard on those rare occasions when they in fact, do perish. Here is a sample of some of the better questions -which we have edited for clarity – received over the last few days..
1. Can you shorten the Statute of Limitations to bring a copyright infringement action via an agreement with an arbitration clause?
Yes indeed. While the time within which to bring an action is (essentially) three years, you can by contract, shorten the period to say 90 days (or some other time period less than 3 years). If you agree by contract to shorten the period the Courts will generally uphold your agreement to bring suit within that shortened period. Result: you are far more likely to be time barred from bringing a claim typically because you, as the creator, didn’t discover it (for whatever reason) within that shortened period, hired a lawyer and filed a claim. Advantage – stock agencies, publishers and clients.
2. Can there be motion practice in arbitration like there is in Federal Court?
Yes indeed. You will pay some or all of the arbitrator(s)’ fees to read the papers, hold a hearing (if there is one) and make a decision. There are no separate court fees to have a Federal judge or Magistrate read the motion papers, conduct a hearing or make a decision. Your $350 filing fee covers everything. Judges try to convince and sometimes in practice effectively prohibit lawyers to avoid making unnecessary motions. To those attorneys who don’t litigate, you read the forgoing correctly. Technically a judge can’t prohibit the making of a motion. In real life they effectively do so by telling the lawyer how it will be decided – in advance. Arbitrators deterring motion practice? Not so much. Multiple motions lead to exorbitant arbitration fees often making cases (even good ones) cost prohibitive to bring.
3. But I heard that resolution via arbitration is much faster than filing a lawsuit.
Sometimes this is true…sometimes. Remember a speedy decision is not necessarily in your interest nor does it mean you save any money in attorneys fees while you will almost always pay an arbitrator. Again, judges and Magistrates try to settle cases with much more fervor than arbitrators. Settlement is the fastest method of dispute resolution. Most Federal Courts have non-binding mediation. It’s free and often results in settlements.
4. My arbitration agreement says that if I win I get my attorneys fees and arbitration fees awarded to me – how can that be bad?
If your work is timely and properly registered you are entitled to get your attorneys and court fees awarded to you by the Court. If you initiate arbitration you must lay out the fees, which can easily go into the many thousands of dollars, if you win you might get some or all of it back. Do you have the financial resources to lay out thousands of dollars above and beyond your legal fees? Most creatives do not have the funds to advance both attorneys fees and arbitration fees. If you are very rich you may not care.
5. Why do some attorneys advocate arbitration?
Because they represent stock agencies, entertainment companies, publishers and so on. Arbitration is in their clients’ interest. Simple economics and attorneys looking out for the best interests of their clients explain this point of view. They are simply doing what they should be doing for the companies that pay their fees. Ask some of these attorneys whether they have willingly agreed to arbitration clauses in contracts where they are the party and not the lawyer.
6. Your article says that an arbitrator can basically ignore the law in deciding a case. That can’t be right.
It is. You give away a bundle of Constitutional rights by agreeing to arbitration. An arbitrator’s decision is very, very rarely subject to appeal. Misinterpreting the law or not applying it in making a decision are rarely, very rarely grounds to toss out an arbitrator’s decision by going to Court.
The indoctrination process by large companies with superior negotiating skills has been very successful. So much so that creatives have adopted the language of their enemies – and such companies *will be your enemies* in arbitration or court. They are not your buddies nor should they be looking out for your best interests. Not their job.