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A U.S. Appeals Court has upheld an arbitrator's decision to make EMC Mortgage Corp. pay $6 million in punitive damages for subjecting a family to "outrageous" debt collection practices.
The Irving, Texas, mortgage company insisted on arbitration and EMC "got exactly what it bargained for," the 8th Circuit of Appeals said in the Aug. 26 opinion.
EMC argued that the $6 million is excessive and violated the company's constitutional right to due process.
However, the Circuit judges pointed out that companies and consumers give up most of their rights to due process and judicial review when they enter arbitration.
"In the arbitration setting, we have almost none of the protections that fundamental fairness and due process require for the imposition of this form of punishment." In addition, the courts have to a...