One of the most abusive corporate practices embraced by the Supreme Court in recent decades is the use of “forced arbitration” clauses to kick injured parties out of court. As the Wonk Room previously explained:
The scam works like this: beginning in the 1980s, the Supreme Court rewrote federal law to endorse a practice known as “forced arbitration.” Under this practice, companies ranging from nursing homes to cell phone companies to employers can refuse to do business with anyone who doesn’t give up their right to sue or be sued in a regular court presided over by a neutral judge. Instead, consumers and employees are shunted into a privatized, corporate-run judicial system, which overwhelming favors corporate parties.
Until today, however, ordinary Americans had one safety valve they could invoke to escape from some of the most abusive arbitration clauses–they could challenge the arbitration agreement itself under various legal grounds sufficient to void any contract. They might claim, for example, that they were defrauded into signing the arbiration agreement, or that the agreement is so one-sided in favor of the corporate party that it should be invalidated. Such claims rarely worked, but they at least provided a small check on this abusive practice, and they at least allowed the claim to be considered by a real judge in a real court.
Today, in a 5-4 decision in Rent-a-Center v. Jackson, the Supreme Court largely closed this escape valve. In a difficult-to-follow opinion by Justice Scalia, the Court holds that, with very rare exceptions, a party claiming that they were tricked, trapped or forced into an arbitration clause is no longer allowed to challenge that clause in court. It’s as if BP said that all suits brought by victims of the Gulf oil disaster must present their complaints to a BP executive, and only that BP executive can decide whether or not they are entitled to damages.
Without access to a neutral and unbiased judge, victims of arbitration clauses are trapped into corporate-owned courts that virtually never rule in ordinary Americans’ favor. The practical effect of today’s decision is that millions of Americans will be left with absolutely no recourse whatsoever when they are harassed at work, scammed by their credit card company, or even raped by co-workers.