We all sign contracts at various times and unfortunately many do not read all the fine print. Among them are employment applications, credit card applications, etc. Big businesses, who are concerned about their bottom line and not yours, increasingly have inserted into their contracts mandatory arbitration clauses. What this means to you as a consumer is that your access to the court system is limited, if not cut off entirely should you have a dispute with the business. The major purpose of these clauses is to limit consumer access to class action lawsuits by allowing for individual arbitrations. Class actions are increasingly the only tool individuals have to fight illegal or deceitful business practices. Among class actions that have been recently dismissed are claims against Time Warner Cable for mysterious charges on their bills, employee actions against Taco Bell for denied promotions based on race and also for racial minorities being provided worse shifts than others and subject to degrading comments.
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Some judges have called the class actions bans as a “get out of jail free card” for big business. The bans on class actions have prevented class actions against predatory lenders, wage thieves and discriminatory policies in employment and housing. A continuation of this would allow big business to opt out of the legal system and continue to misbehave without penalty. The leaders of these bans were credit card companies. Once class actions were banned, many individuals gave up their claims entirely. Law enforcement officials have decried this claiming that business can continue to operate with impunity. The odds favoring big business are clear: roughly two thirds of consumers who contested credit card fraud, fees or costly loans received no monetary awards.
The genesis of this trend has been the 1925 Federal Arbitration Act. The United States Supreme Court has been very vocal in its support for big business and its agreement with arbitration against consumers. Now Chief Justice John Roberts, who was a corporate lawyer for the big business before joining the Supreme Court, got the most recent case. He felt that courts should enforce the arbitration agreement according to their terms. However, he seemed to quite conveniently ignore that most of these contracts are ones of adhesion. A contract of adhesion occurs when the parties are of unequal bargaining power and courts have intervened to challenge these agreements. The Court has stated that class actions can be outlawed even if the class action was the only realistic way to bring a case. Justice Scalia (a very conservative member of the court) has stated that antitrust laws do not guarantee an affordable procedural path to the vindication of every claim. A losing consumer in a case said that he has created a new cocktail called the Scalia which he characterized as “bitter and difficult to swallow”.
The questions presented are: do we want business to have the “get out of jail free card”. Do we want to modify the current system, or go back to the beginning and review what needs to be done. Shakespeare once said: “absolute power corrupts absolutely.” Do we want to condone this failure to accept responsibility from business?
On the potentially pro-consumer front is that expedited jury trials will be mandatory in cases valued at less than $25,000. The insurance industry fought this proposal. One need not wonder where the “good hands of Allstate” stood on this. I am sure they extended the special middle finger to consumer. Kudos to the legislature and the Governor for ignoring them. Demurrers (pleadings that
challenge the sufficiency of a pleading) will be streamlined to get cases resolved faster through the court system. The legislature is authorizing a standardized medical records request form that can be submitted to any health care provider for the purpose of providing a patient’s medical records. Thumbs up to the legislature for trying to simplify litigation and reduce its associated costs.