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Rick Shapiro
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Unfairness of Binding Arbitration Highlighted in Blackwater Contractors’ Wrongful Death Suit

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The recent settlement of four wrongful death lawsuits brought by family members of military contractors killed in Fallujah, Iraq, during March 2004 for about 2 percent of the $30 million originally sought disappointed but did not surprise me. As a Virginia (VA) personal injury attorney, I generally do not support arbitration in most disputes such as those involving credit card charges. I definitely oppose arbitration for work injury or death resolutions because employees face little chance of receiving fair compensation.

Each of the contract employees for Blackwater, which has subsequently operated under the names Xe and Academi, did agree to such terms, and that seemingly inconsequential decision ended up leaving their survivors with too little money to even pay the fees for the lawyers and arbitrators who worked on their behalf.

The basic unfairness of arbitration for workers and their loved ones is best summed up in a 9-point list published by the People Over Profits Grassroots Action Center, Combining the first five items on that list with details on the arbitration process in the Blackwater wrongful death cases drawn from the Virginian-Pilot highlights why the families pretty much could not win.

  • Costs Are High: Injured parties are required to bear at least half the costs of arbitrators' time, which can be billed at as much as $300 per hour. Blackwater had initially covered the full cost, but the company stopped paying the plaintiffs' share in 2010. Eventually, the arbiters, as they are allowed to do, dropped the case because they weren't getting all the money they charged. This forced the case back into the court of the same federal judge who had ordered the case to arbitration in the first place.
  • Biased Arbitrators: Companies, rather than plaintiffs, choose arbiters. Blackwater named a former CIA and FBI director who also had financial ties to the defense contractor as one of the three arbiters.
  • Limited Discovery: Many of the facts that would have helped the families show that Blackwater put its employees in harm's way by ignoring security restrictions would have been classified. But because arbitration rules already limit plaintiffs' rights to subpoena information and compel testimony, the four contractors' family members went through the process with substantially less information than Blackwater and its lawyers had.
  • Prohibition of Class Actions: It's unclear whether barring arbitration participants from joining a class of injured parties would apply in this case. At the same time, it is undeniable that a successful outcome for the plaintiffs would have been a valuable precedent for the thousands of contractors injured and killed while serving the U.S. military in Iraq and Afghanistan.
  • Inconvenient Locations: Blackwater is based in Moyock, North Carolina (NC), but it can order that arbitration hearings be held anywhere. Even if those hearings are set in North Carolina, travel, time off work and other expenses would be incurred by the plaintiffs and their representatives.

It's worth noting that Halliburton defense contracting subsidiary KBR also succeeded in using arbitration rules as strategy for denying justice for one its employees. I've run out space to detail the physical violence and subsequent mental and financial injuries Jamie Leigh Jones suffered after being raped by fellow KBR employees in Baghdad. I can only point you to her harrowing story here and note with disgust that the court that finally heard her lawsuit ruled against her and ordered her to pay hundreds of thousands of dollars to KBR for legal fees.

Considering all this, it's little wonder that People Over Profits maintains an extensive library of Arbitration Horror Stories.

EJL

About the Editors: The Shapiro, Lewis &i Appleton personal injury law firm, which has offices in Virginia (VA) and North Carolina (NC), edits the injury law blogs Virginia Beach Injuryboard, Norfolk Injuryboard and Northeast North Carolina Injuryboard as pro bono services.