In 2006, former West Virginia judge and justice Richard Neely wrote an article called “Arbitration and the Godless Bloodsuckers” (reprinted at the anti-consumer Consumerist) making a sensational claim: he had served as an arbitrator for the National Arbitration Forum, but because of his rulings denying attorneys’ fees, had been blacklisted from further arbitration proceedings because the “godless bloodsucker” banks (no, really, those are his words) had decided he was an “unacceptable” arbitrator. As part of the litigation lobby’s war on consumer choice in seeking legislation to force consumers to litigate even if they wish the opportunity for lower prices through agreeing to mandatory binding arbitration (see the Overlawyered section on arbitration), the claims have been repeated on multiple occasions, in Congressional testimony, in newspaper and magazine articles, in blogs, and even in the Overlawyered comments. Turns out, according to a response made by the National Arbitration Forum, that Judge Neely has made some claims that weren’t true:
- Contrary to Neely’s claims, he was never “struck” from any case by any party.
- At least under NAF rules, a party cannot unilaterally select an arbitrator: the two sides must agree, or, in the alternative, each select an arbitrator who will in turn mutually agree upon a third arbitrator. (Code of Procedure Rule 21.) Parties can strike an arbitrator for bias—for example, perhaps one of the arbitrators has announced that a class of parties are “godless bloodsuckers.” But this right applies equally to consumers and merchants.
- Neely claimed incorrectly that a party defaulting could be liable for more than they would under the civil justice system. But arbitration participants have more procedural protections in the case of default than those operating in the civil justice system–there is no “default” in arbitration. Rather, the arbitrator has to decide the case on the merits, even without the participation of the customer. Given the fact that the vast majority of debt collections in court are resolved by default, the typical consumer comes out far ahead in arbitration.
- Neely proposed a reform that arbitrators be required to disclose conflicts of interest. But arbitrators are already required to disclose such conflicts.
Read the whole thing. Neely (who ruled on the merits 100% of the time for banks against their customers in the two debt collection cases he decided) was apparently so upset by his experience that he signed a new agreement with NAF after the events he claims to describe transpired. One wonders: has the plaintiffs’ bar retained Neely as a consultant on the issue, and he decided he could make more money bad-mouthing arbitration than as an arbitrator? One will never know—unless Neely discloses his conflicts of interest.
Richard Neely’s previous claim to fame was stating, while Chief Justice of the West Virginia Supreme Court, “As long as I am allowed to redistribute wealth from out-of-state companies to in-state plaintiffs, I shall continue to do so.” He’s had somewhat less success doing so as a plaintiffs’ attorney (June 2002).