Judge rules no discovery needed in arbitration case
A special Superior Court Judge in North Carolina granted a motion to compel arbitration despite the arbitration agreement not allowing for discovery.
According to the National Law Review, the arbitration provision in the matter of Taggart v. Physicians Pharmacy Alliance stated, “it is the desire and intent of the Parties that such arbitration be held without any discovery, deposition or motion practice, that the arbitrator receive evidence solely through the written submissions and not hold an evidentiary hearing, and that the arbitrator has no ability to extend dates or apply rules that conflict with these provisions.
Judge Gregory P. McGuire ruled, “although arbitration procedures might not be as extensive as [those available in courts], by agreeing to arbitrate, a party “trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.”
While discovery is allowed in court cases, many who are forced to arbitrate are denied this important step in proving or disproving their case. Proponents of arbitration agreements cite the lack of discovery as one of the reasons it is bad for the consumer.
The rules of the American Arbitration Association, one of the largest organizations of its kind, do permit discovery, however, the arbitrator does have the authority to order and control the exchange of information.
The case is one of dozens that challenge some aspect of arbitration. Among the others are challenges as to whether to compel arbitration, the legality of the clauses, and arbiter conflict.
The Consumer Financial Protection Bureau (CFPB) has been tackling the issue, much to the objection of the US Chamber of Commerce and others who support arbitration as opposed to lawsuits and class actions.
The issue of arbitration is expected to be heavily addressed this year, and changes in could be in the near future.