Success: Mandatory Arbitration
June 2008 update: Great news! The 2008 farm bill prevents mandatory arbitration clauses in contracts for livestock/poultry. It also allows a 3 day period to cancel contracts and it requires contracts to disclose requirements of large capital investments.
According to Wikipedia, "Mandatory arbitration is a contract policy that prevents a conflict from receiving judicial attention." In other words, after signing a contract that includes mandatory arbitration, you cannot sue the other party who signed the contract until after taking your complaint to an arbitror. The arbitror decides whether you will receive an arbitration award. Then if both parties agree to the decision, the issue is considered resolved; otherwise, you can then take your case to court.
Previously, most livestock contracts included mandatory arbitration. This occurs when, for example, in the chicken industry, a chicken processing company (called an integrator) contracts with small growers. Grist described the arrangement as follows:
The companies provide local growers, who work under contract, with chicks, feed, medicine, and transportation. Growers take care of the rest, investing hundreds of thousands of dollars in construction, maintenance, and labor costs. When the company requires upgrades, the costs fall to the growers. The massive amounts of manure, too, are their responsibility. (In Arkansas alone, chicken farms produce an amount of waste each day equal to that produced by 8 million people.) Payment is results-oriented, based on measures like total weight gain of the flock. It's a system, says the United Food and Commercial Workers, that leaves 71 percent of growers earning below poverty-level wages.Such an arrangement leaves the growers as (pardon the poultry metaphor) sitting ducks. Growers must continue to obtain contracts from integrators that have no problem cutting off growers who have no other means to recoup their massive investments. With mandatory arbitration included in their contracts, the growers faced another roadblock in seeking justice by taking integrators to court. Furthermore, mandatory arbitration provisions used to forbid growers from waging a class action suit (a method that could reduce or eliminate costs to individual growers) against the integrator.
Some say that mandatory arbitration was intended as an option for partners with equal bargaining power who dealt with each other on a high volume basis. As arbitration values speed over fairness, it's best used between parties who expected it to all even out over the long run.
When partners of unequal standing are involved (such as in the cases of chicken growers) it is not reasonable to require the less powerful partner to sign away their rights to go to court. (Note that with mandatory arbitration removed from livestock growers' contacts, there is no restriction against both parties voluntarily committing to an arbitration process.)
Recipe for America supports forbidding livestock contracts from including mandatory arbitration provisions.
More information
DailyKos: House Ag Committee Blocks Courts to Small Livestock Growers (blog entry) This diary details a House Ag committee debate over including a provision in the 2007 farm bill forbidding mandatory arbitration from livestock contracts.Grist: Finger Lickin' Bad - How Poultry Producers are Ravaging the Rural South (article)
