Why you don’t want to use the American Arbitration Association

Arbitration seems like an excellent idea, and it MAY be a good idea as long as it is separated from the American Arbitration Association, which, like any institution, has become too big and stupid to be useful.

Here’s the story of my interaction with the AAA, which I present as much to help other people as to explain to my associates why I will not sign any contract that includes a AAA clause.

Years ago, I helped negotiate a contract with a man who called his company Photocrazy. That should have been a tip-off. The contract was signed by the CEO of our company (not me.) I subsequently left the company, but eventually bought that part of the company that used the Photocrazy patent. In late 2008 — when the wheels came off the economy — I could not arrange the final purchase payment, and the company reverted to the original owners, which immediately sold the assets to a new company.

In the summer of 2009, Photocrazy decided to sue me through the AAA. I explained that I did not sign the original contract, that the original owners had reacquired the assets and sold the assets to a new company that I did not control. I had no connection to this contract. Never mind, the AAA can “arbitrate” whatever they whimsically decide. You must hire lawyers, fly to Chicago and defend yourself whether there is merit or not.

I sued Photocrazy in our state and looked forward to the court date when I would have also received payment for my legal fees. However, knowing that their suit had no merit, Photocrazy withdrew and I could not recover my legal defenses, which should not have been necessary in the first place.

So let that be a warning for anyone who thinks that the American Arbitration Association might save time and money. Because they operate in a gray and whimsical world, they are just as bad — and more arbitrary — than the legal system.

For the search engines, let me add that AAA sucks and that the American Arbitration Association sucks big time.

Published in: on June 23, 2010 at 5:38 pm  Comments (1)  

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