How can a large corporation which defrauds, cheats, and steals from people avoid getting sued in court? It sticks a clause into the “agreement” that any dispute has to be arbitrated. The 5 foot long tape at the cell phone store has that clause. You sign for the purchase at the electronic terminal then the tape prints out for 5 minutes and is handed to you. You are stuck.

Newland v.Brown Mackie, (Stark County) 2016-Ohio-675 is an example. A former student sued Brown Mackie, a private college having some courses accredited by The Accrediting Council for Independent Colleges and Schools.

Private Colleges in many cases ride the honey wagon. They do not like government regulation, taxes, and so forth, but they love the honey pot – government and private student loan money. They send their students out to get the money and bring it back. For the student the honey bucket is carried for years, since at the end of the ride, he or she has a large debt which cannot be discharged in bankruptcy and a degree that may be worthless.

So back to Newland v. Brown Mackie. Newland sued Brown Mackie.

“On October 7, 2011, appellee, Angela Newland, entered into an enrollment agreement with appellant, AEC Southern Ohio College LLC dba Brown Mackie College – North Canton, to participate in its paralegal program.
On April 10, 2015, appellee filed a complaint against appellant, claiming fraudulent and negligent misrepresentation regarding the program’s accreditation, fraud, and civil conspiracy.”

Brown Mackie’s defense was that Newland was precluded from suing, because she had signed an arbitration agreement when she enrolled. Newland claimed and the trial judge agreed that the arbitration clause was unconscionable and therefore not enforceable. Let’s face it when she signed up, she probably signed a stack of papers, trusting that they were fair. What college student reads all the admissions papers.

Having lost in the trial court, Brown Mackie appealed and the Court of Appeals reversed. The reasoning is hard to follow. The Court quoted a 9th District case that arbitration is a favored solution to resolve disputes. That reasoning escapes me. Let us just do away with courts, because lawsuits are bad. Arbitration is good because it is less work for judges. Courts have centuries of experience in dealing with disputes in an open and above board manner. Arbitration is private and expensive and lacks the safeguards found in courts.

But I find this reasoning to be over the top.

“If all adhesion contracts were procedurally unconscionable, none of us would be bound by car lease/rental agreements, standard credit card agreements, standard cell phone agreements, or airplane tickets (to mention a few). As consumers, on a daily basis we accept and agree to terms included in agreements in which we are not the drafters, we are not on equal footing, and the agreements are on a ‘take-it-or-leave-it’ basis.”

Yes, we take the agreements, but we take them because judges have buried their heads in the sand and not given them serious thought. Just because we take them, does not make them fair, nor a reason for a court to enforce them. In other words, the more that we are screwed, the more it is okay. That is, of course, the Wall Street business model. You can’t sue your brokerage, because you have to arbitrate. Other businesses have caught on.

The net result is that a student was allegedly sold a bill of goods, and the seller of the product fixed the outcome and the Court of Appeals stamped it “approved.” Brown Mackie can keep its practices out of the public eye, and continue to feed on federal student loans. Education and students are the losers.

Arbitration clauses should be strictly construed when the parties have unequal bargaining power. If Brown Mackie sold the student a bill of goods, Brown Mackie should make it right. If it delivered what it promised, then it should prevail. Courts should get their heads out of the sand. Remember one of the claims was fraud. One can defraud someone and be forced to arbitrate?