At Bizarro-Overlawyered, Justinian Lane states:
Ted Frank at Overlawyered falsely claims that “In civil court, a default judgment can be obtained merely on a plaintiff’s say so. In contrast, most arbitration agreements require the arbitrator to scrutinize the evidence before granting an award, even when the debtor does not contest the arbitration claim…” A default judgment against a debtor will be based upon the same evidence in civil court or in arbitration: an affidavit or affidavits from the creditor alleging that the debtor owes a specific sum. Both the judge and the arbitrator will “scrutinize” the affidavit in the same way; they’ll check to make sure names and sums are correct.
It will be no surprise to long-time readers of Overlawyered that Justinian Lane is 100% incorrect.
A defendant who fails to appear in court defaults. As FRCP 55(b)(1) states (emphasis added):
If the plaintiff’s claim is for a sum certain or a sum that can be made certain by computation, the clerk — on the plaintiff’s request, with an affidavit showing the amount due — must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing and who is neither a minor nor an incompetent person.
The allegations in the complaint are assumed to be true, and judgment is granted for the plaintiff-creditor without further ado so long as the boilerplate is legally sufficient, regardless of the merits of the defendant’s case or the meritlessness of the plaintiff’s case. In contrast, here is Rule 36 of the National Arbitration Forum Code of Procedure, which is typical of arbitration procedure:
RULE 36. Arbitration Proceedings in Absence of a Party.
A. An Arbitrator may issue an Award or Order when any Party has failed to respond, appear, or proceed at a Hearing, or otherwise defend as provided in this Code.
B. If a Party does not respond to a Claim, an Arbitrator will timely review the merits of the Claim for purposes of issuing an Award or Order. The Claimant need not submit an additional Request for an Award.
C. An Arbitrator may require an Affidavit, information or Documents from Parties who have appeared or conduct a Hearing to Receive evidence necessary to issue an Award or Order. Documents submitted in Response to an Arbitrator’s Request shall be filed with the Forum no later than thirty (30) days after the date of the Request. A Party may obtain forty-five (45) additional days to respond to an Arbitrator’s Request by filing with the Forum and Delivering to all other Parties an extension notice before the initial thirty (30) day time period expires. Only one (1) extension by notice is available.
D. Each Party making an Appearance shall be provided notices relating to a Hearing.
E. No Award or Order shall be issued against a Party solely because that Party failed to respond, appear or defend.
Creditors in arbitration have no default rights. If they can’t prove their case, they get nothing. Arbitration gives debtors rights that they would not have in court. Justinian’s claim that defaults in arbitration are just like defaults in court is simply wrong. My claim is true, and it is Justinian’s claim that is false.
Little surprise that the litigation lobby’s arguments for depriving consumers of the choice to pre-commit to arbitrating disputes are so thin that they have to make up facts.
(Justinian’s post also repeats the canard that because the anti-arbitration bills only ban mandatory arbitration, consumers haven’t lost any choice because they can still arbitrate if they like. Of course, we’ve repeatedly demonstrated why pre-commitments to arbitration are necessary for honest consumers to realize the maximum benefits from arbitration, and Justinian’s failure to acknowledge that argument, as well as his failure to account for the refutation of the Business Week story, further demonstrate the bad faith of the litigation lobby’s campaign against consumer choice.)