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Stories tagged with “Forced Arbitration

Justice

Meet The Most Important Consumer Rights Bill That You’ve Probably Never Heard Of


In 1925, Congress enacted what they thought was a modest law enabling sophisticated businesses to agree to resolve their disputes through private arbitration. Decades later, the Supreme Court transformed it into something completely different — enabling corporations to force workers and consumers into signing away their right to appear in a real court, and shunting them into a privatized arbitration system where the arbitrator is often closely aligned with the corporation. In one case, a private arbitrator even ordered a woman to pay more than $11,000 that she did not owe because she has the same name as another woman who did owe money.

There are supposed to be safeguards against the most abusive forms of forced arbitration. Federal law provides that forced arbitration cannot be used against “workers engaged in foreign or interstate commerce,” for example. But, in Circuit City v. Adams, five conservative justices held that forced arbitration can be used against workers engaged in foreign or interstate commerce. Federal arbitration law does not even mention class actions — which are often the only way that plaintiffs with relatively small claims can vindicate their rights — yet the conservative justices used it to effectively immunize corporations from class action lawsuits. Under this Supreme Court, the 1925 Federal Arbitration Act has been transformed into a magic wand corporations can wave in order to make lawsuits against them go away.

Earlier this week, Rep. Hank Johnson (D-GA) and Sen. Al Franken (D-MN) introduced a bill to fix this. Under the Arbitration Fairness Act, “no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute.” So your boss cannot illegally fire you and then force you into a corporate-owned court. Your cell phone company cannot overcharge you and then escape meaningful accountability. And your mother’s nursing home will no longer be able to abuse its charges and then shunt any lawsuits into a biased arbitration panel.

At least, that is, if this bill is signed into law. Until then, the Supreme Court’s decisions expanding federal arbitration law into areas expressly forbidden by the law’s text will remain in effect.

Justice

Poll: Fewer Americans Than Ever See The Supreme Court Positively

As the Supreme Court prepares to hear one of the most politicized lawsuits in decades, a new poll finds that public support for the nine justices has cratered:

[F]ewer voters than ever view the high court positively. . . . The latest Rasmussen Reports national telephone survey of Likely U.S. Voters shows that 28% give the Supreme Court good or excellent ratings. Nineteen percent (19%) rate the highest court in the land as poor.

Admittedly, this poll was conducted by Rasmussen Reports, a conservative polling firm with a history of inaccuracies. Nevertheless, Rasmussen’s finding is consistent with other polls showing that Americans increasingly believe that, despite the fact that the justices’ very legitimacy stems from their ability to apply the law fairly and independent of partisan concerns, the Court’s decisions are driven in large part by politics.

Certainly, the Supreme Court’s five conservatives have done nothing to disabuse the American people of this unfortunate perception. To the contrary, the Roberts Court has consistently pushed an ideological agenda from the bench — often despite decades of precedent to the contrary:

So it is easy to understand why the American people are increasingly skeptical of a conservative Supreme Court that appears much more interested in advancing a political agenda than it does in applying the law. Next week, the justices can either show that they are still capable of respecting the Constitution by applying the nearly 200 years of precedent establishing that the Affordable Care Act is constitutional, or they can reveal themselves to be nothing more than politicians in robes by accepting an anti-health care argument that, in the words of conservative Judge Laurence Silberman, has no basis “in either the text of the Constitution or Supreme Court precedent.”

Justice

Now That We Have A CFPB Director, It’s Time To Ban Corporate-Owned Courts In The Financial Industry

One of the most important, if overlooked, provisions in the law creating the new Consumer Financial Protection Bureau is a provision allowing the agency to push back against one of the most egregious errors committed by the Supreme Court in recent years — a line of decisions allowing companies to force their consumers into a privatized, corporate-owned arbitration system that overwhelming favors corporate parties. Now that CFPB Director Richard Cordray is in place, his agency can ban this practice altogether from much of the consumer finance industry:

(a) STUDY AND REPORT.—The Bureau shall conduct a study of, and shall provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.

(b) FURTHER AUTHORITY.—The Bureau, by regulation, may prohibit or impose conditions or limitations on the use of an agreement between a covered person and a consumer for a consumer financial product or service providing for arbitration of any future dispute between the parties, if the Bureau finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers. The findings in such rule shall be consistent with the study conducted under subsection (a).

In essence, this provision enables CFPB to prevent many lenders, investment advisers and other financial service providers from using one of the most abusive tools endorsed by the Supreme Court’s misreading of federal law — locking consumers out of real courts and forcing them into corporate-run arbitration. Moreover, because the Supreme Court recently piggybacked on its forced arbitration decisions to allow corporations to immunize themselves from the class action lawsuits that are essential to prevent companies from bleeding their consumers dry a few ill-gotten dollars at a time, CFPB can also eliminate this practice within much of the financial industry.

Lest there be any doubt, corporate arbitrators simply cannot be trusted to provide a fair hearing to consumers — in large part because corporations typically have a great deal of influence over who will arbitrate their cases. One of the most notorious forced arbitration firms — which thankfully was largely shut down after the state of Minnesota challenged its many abusive practices — once ordered a woman to pay a credit card company almost $8,000 because she had the same name as another woman who owed that company money. When a Harvard law professor who used to work part-time as an arbitrator handed down a single decision against a credit card company she was stripped of her caseload by the arbitration firm at the request of the credit card industry.

Our justice system cannot work when one side gets to choose who judges them. The CFPB’s new director has an important opportunity to restore a functioning system of justice to much of the financial industry — he should not hesitate one second before he takes it.

Justice

Walmart Women Launch Another Round Of Discrimination Suits, But Will It Even Matter In The Long Run?

Last June, the Supreme Court tossed out a class action lawsuit brought by over a million Walmart employees alleging that the company systematically discriminates against women. The Court did not allow the women to try to prove that such discrimination exists, instead holding that the women did not have enough in common with each other to come together in one lawsuit. Yesterday, the women responded to this setback with the first of several cases breaking them down into smaller groups:

The lawyers promised an “armada” of other lawsuits in the next six months making discrimination claims in other regions of the country, as opposed to nationwide. “The case we are starting today is the first of many,” said Brad Seligman, one of the lead plaintiff lawyers. He added that the new lawsuits are “what we like to call Wal-Mart 2.0.” [...]

The lawsuit filed Thursday in the United States District Court for the Northern District of California contends that Wal-Mart’s discriminatory practices on pay and job promotion affected more than 90,000 women currently or formerly employed at Wal-Mart and Sam’s Club stores in four regions in California and neighboring states.

This tactic could ultimately prove successful, and it is possible that many hundreds of thousands of women could receive long overdue justice by joining together in somewhat smaller groups. Even if they win, however, the sad truth is that this victory could probably never be repeated thanks to an enormous gift the Supreme Court gave powerful corporations last April.

When the Supreme Court’s Wal-Mart case was handed down, ThinkProgress called it only “the second worst class action case this Supreme Court term.” The worst decision — indeed, one of the very worst Supreme Court decisions in the last decade — was AT&T Mobility v. Concepcion. Concepcion built off a long line of misguided decisions allowing corporations to force their consumers and workers to sign away their right to sue the company in a real court and shunt any disputes into a secretive, privatized arbitration system that overwhelming favors corporate parties. Under Concepcion, corporations can not only take away your right to hold them accountable in a real court, they can also take away your right to join together with other victims of the corporation’s lawbreaking to form a class action lawsuit.

Thanks to this deeply erroneous decision, Walmart can now force each and every one of their workers to sign away their rights or they are fired. And without the ability to bring class actions in the future, many of these workers will be completely powerless against their megacorporate employer.

The class action one of the very few tools enabling vulnerable Americans to stand up to a wealthy and influential corporation. If a major corporation cheats a thousand of its workers out of a thousand dollars each, for example, very few of them will decide it is worth the hassle and expense of a major lawsuit and virtually no lawyer will be willing to take such a low dollar case on a contingency fee basis — meaning that the plaintiffs will have to pay more for legal counsel than they are likely to win in the end. If these thousand workers are able to join together into a class action, however, their million dollar claim suddenly becomes very attractive to top litigators — and the hassle of litigation will be virtually non-existent for most of the plaintiffs. Thanks to Concepcion, however, that is probably no longer an option.

Concepcion was an earthquake, and it shook one of the foundations of our civil justice system to the ground. Walmart may still be held accountable for its past actions, but it is doubtful that any of its workers will ever be able to join a class action against them again.

Justice

Has Corporate America Achieved Total Judicial Victory Over American Consumers?

U.S. Chamber of Commerce President Thomas J. Donohue addresses consumer rights groups

One of the most surprising developments during this new Supreme Court term is the relative absence of blockbuster cases that could provide corporate America with broad new immunities from laws protecting consumers and other ordinary Americans. To be sure, corporate immunity is far from absent from the Court’s docket — sub-prime credit card companies could gain the ability to force their consumers into corporate-run arbitration, for example — but there is nothing like the mortal blow that the Court dealt to consumers class action lawsuits last term.

At a conference last August, Justice Anthony Kennedy offered this explanation for why this could be:

“The docket seems to be changing,” Justice Anthony M. Kennedy told reporters at a judicial conference in August.

A lot of big civil cases are going to arbitration,” he said. “I don’t see as many of the big civil cases.”

Of course, Justice Kennedy deserves much of the blame for the fact that so many big cases are going to privatized arbitration rather than real courts. Kennedy wrote the Supreme Court’s decision in Circuit City v. Adams, which held that corporations can force victims of workplace discrimination into corporate-run arbitration. He cast the key fifth vote in Rent-a-Center v. Jackson, which stripped individuals of their ability to challenge in court many of the most abusive contracts that force people into privatized arbitration. And he also cast the key vote holding that federal arbitration law allows corporations to strip ordinary Americans of their ability to join together and fight widespread corporate abuses through a class action lawsuit.

Indeed, Justice Kennedy and his four conservative colleagues’ efforts to kick ordinary Americans out of court have been so widespread and so successful that corporate America appears to be running out of new favors it can ask from the nation’s most powerful Court.

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