By Janet Elliott
Staff Writer for The Texas Lawbook
HOUSTON – Arbitration, once touted as a less expensive and easier way to resolve disputes, has failed to live up to its billing, U.S. District Judge Xavier Rodriguez said Thursday.
In the 1990s, when venue was wide open in Texas and damages were not capped, corporate defendants viewed arbitration as an attractive alternative to litigation. But in the current post-tort reform climate, “is arbitration still necessary?” asked Rodriguez during a speech on “Vanishing Trials.”
Speaking to a packed room of litigators and arbitrators at the State Bar of Texas Annual Meeting, the San Antonio jurist said anecdotal evidence shows that arbitration is no longer less expensive, particularly when three-person panels are involved.
Discovery costs have crept up in the arbitration process, and then there is the “hidden cost of not having the right to appeal,” Rodriguez said.
Jury waivers may be a better alternative than the hidden arbitration clauses routinely included in everything from mobile phone contracts to home purchases, he added.
Another significant problem for consumers and plaintiffs is the lack of transparency in the arbitration process, Rodriguez said.
There should be some mechanism to post complaints so consumers can learn about dangerous products or find out about similar complaints of sexual harassment, he said.
Rodriguez also criticized judges who order parties to settle their case before trial.
“There is nothing wrong with reaching a voluntary settlement but forcing it is not our task,” he said.
Only 1.2 percent of federal cases go to a jury trial, Rodriquez said, compared to 11 percent in the 1960s. The decline is most evident in tort, contract and labor cases.
The Texas Lawbook reported earlier this year that the number of jury trials in Texas state District Courts has fallen from more than 3,500 a year in 1996 to less than 1,200 in 2011.
The decline is not necessarily a bad development, Rodriquez said, as long as parties are allowed to “reach settlement on reasonable terms.”
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