Of all the recent bylaw changes, the introduction of an arbitration clause into member contracts with DEC is seen by many concerned members as being the most disconcerting and outrageous. Here's why:
Arbitration clauses are often designed to discourage individual consumers from standing up for their rights or taking action against the abusive practices of businesses and financial institutions. Attorneys generally advise clients against signing agreements containing arbitration clauses for this reason.
Forced mediation/arbitration can be prohibitively costly and time consuming for individuals, costing hundreds of dollars an hour and requiring months to resolve.
Arbitration typically favors big businesses. That's a big part of why the Consumer Financial Protection Bureau Banned arbitration clauses in contracts for consumer financial products and services in July, 2017 (a ban that was later overturned under political pressure from big business).
The new clause in our bylaws prohibits co-op member owners from banding together in a class action, which is the only effective legal option members would have in the case of corruption, widespread damages, or other shared concerns. A cooperative that prohibits class action and works against its members' rights and best interests isn't much of a cooperative!
Attorneys consulted on this DEC bylaw change have confirmed the proposed language strips members of important legal rights and options. Some say it may not be legally defensible.
This arbitration clause was reportedly requested by the co-op's insurance vendor (likely as a money-saving move for them). It is not something our co-op was required to adopt, and relative to our significant loss of legal rights, any money savings passed along to members doesn't represent a significant financial benefit. A vendor request is NOT a good enough reason to sacrifice the legal rights we're afforded as citizens by the U.S. Constitution.
Arbitration clauses runs directly counter to member-friendly cooperative principles. Requiring customer to sign an arbitration clause as a condition of getting electricity (when there are often no other options for electric service available) is raises a variety of ethical questions.
Our electric cooperative has no history of significant legal expenses, so why would it consider this change now? If our electric cooperative foresees significant future lawsuits from members on the horizon, or anticipates doing something that might invite such lawsuits, that's something co-op members should be made aware of.
When we raised concerns about the arbitration clause to the DEC management and board, we got this response: “Well, some other co-ops have adopted it.” That doesn’t mean we should adopt it, or that our board of directors ought to have supported it. Remember what you mom told you: Just because your friend jumped of the bridge ... "
It's likely that when those other co-op members voted to adopt the supposedly "minor" bylaws changes being proposed they, like many of us, had no idea what important rights they were signing away.
Want to learn more? Check out this award-winning New York Times series ("Arbitration Everywhere, Stacking the Deck of Justice") about the problematic nature of arbitration clauses and how they work against working people in favor of large, wealthy, powerful corporations.