Most Americans don't realize that almost every time they sign a contract for a product or service these days the small print says that you must go to arbitration if you get screwed and you have no right to a jury trial.
|Joanne Doroshow: “Even though there should be a right to go to court
to remedy discrimination, to remedy fraud and abuse, the Court said: We
Janine Jackson interviewed Joanne Doroshow about the forced arbitration for the November 6 CounterSpin. This is a lightly edited transcript.
Janine Jackson: Say you discover that your cell phone company has been taking money from you for roaming charges for calls you made from your home. Or that your employer has been denying you payment for extra work you’re required to do. Or your mother’s nursing home gives her too much medication, and she dies. What power do you as an individual have compared to a big corporation, except to take them to court?
But then, what if it turns out you can’t? Why? Because you signed away your right to a jury trial in the fine print contract you had to agree to, to get that cell phone service, that job, that nursing home care.
This is the alarming reality exposed in a recent New York Times series reported by Jessica Silver-Greenberg, Michael Corkery and Robert Gebeloff. Here to bring us more on the issue and what we can do about it is Joanne Doroshow, founder and executive director of the Center for Justice and Democracy, and co-founder of Americans for Insurance Reform. She’s also adjunct professor at New York Law School. Welcome back to CounterSpin, Joanne Doroshow.
Joanne Doroshow: Great to be here.
JJ: There are some distinctions to be made here. There’s a difference between having arbitration as an option and forced arbitration, for one. And then what the Times is talking about is the increased use of contracts that both push consumers and employees to arbitration to settle disputes, and ban them from participation in class action lawsuits. For those who haven’t seen the Times series, and I think we both recommend it, what’s going on here? It seems deeply significant.
JD: Yes, it is, and it’s fairly recent. It’s really the result of two major Supreme Court decisions, one in 2011 and one in 2013, that upheld companies’ use of what we call forced arbitration clauses and class action bans. In other words, what we are seeing now, with the support of the US Supreme Court, are companies inserting in fine print of technically “contracts,” but they’re the kind of things–for example, if you’re purchasing something on the internet, you just hit “agree” and you don’t really read those long contracts that are there. You know, they’re there, but nobody really reads them.
And one of the clauses in these contracts now says that if you have a dispute with the company, you no longer have your constitutional right to civil jury trial. You must resolve that dispute in a corporate-designed arbitration system, run by an arbitrator who may or may not even be a lawyer, who doesn’t have to follow any rules of law; it’s secret; there’s basically no appeal; you are basically subject to the biases and manipulations of the arbitrator and the company who hired that arbitrator.
And as you also mentioned, the US Supreme Court also upheld a part of the forced arbitration clause which bans class action suits. That means–let’s say you’ve been cheated by your bank, and it’s a relatively small amount of money; you are never going to be able to see that bank in court. The only possible way you have of recovering the money you’ve been cheated out of is to join with others in a class action lawsuit, and it’s the only way to get the company to stop this behavior.
JJ: If I can bring you back to that 2013 Supreme Court ruling, Scalia actually said, “Antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.” That seems monumental, but as I understand it, it wasn’t made much of at the time.
JD: The Court looked at, strangely enough, a 1925 law called the Federal Arbitration Act, which was passed at the time just to facilitate arbitration between businesses. It was never intended by Congress to be expanded to affect consumers and their disputes with big institutions, but the Supreme Court said, nonetheless, this 1925 law takes precedence over every other state and federal law on the books. And even though there should be a right to go to court to remedy discrimination, to remedy fraud and abuse, the Court said: We don’t care; if a company wants to force you to arbitrate, that’s OK.
JJ: People think that when you talk about corporations getting together and making a decision to remove legal rights from consumers and employees, that sounds like conspiracy theory, but in a sense, that’s really what happened.
JD: Yeah, what we found out from this New York Times series is that in 1999, a bunch of big companies got together in a room and decided how they were going to start strategizing to make sure that they could start doing this to consumers, that they could start inserting these clauses and banning class actions, and that the US Supreme Court would uphold it. It was really startling to find out that the current Supreme Court chief justice, John Roberts, when he was a corporate defense lawyer, was part of all of that; he was representing Discover, the credit card company at the time. And so now we are stuck with these decisions.
JJ: It seems important, again, to underscore that class action lawsuits, while they might be about the $30 overcharge that one person got, they really also are the only way, in some ways, you can expose wrongdoing on a big scale. I mean, some of these cases are about Taco Bell, for example, the charge that they—at least one outlet—was denying black people promotions. The class action lawsuit isn’t just about the particular legal remedies for individuals; they really are about exposing wrongdoing on a larger scale.
JD: Absolutely; one of the most famous class actions in history was Brown vs. Board of Education. It is a very important tool for anyone who has been discriminated against, or who wants to try and hold big institutions to account for any kind of wrongdoing.
JJ: The pushback to the Times series is already underway. Forbes had a piece saying: Aha, the Times doesn’t tell you who the lawyer was for the one of the businesses involved in the case against American Express; he’s a lawyer known for fighting credit card companies! That’s the real face of consumer class action. These aren’t lawsuits by little guys trying to vindicate their rights; they are lawsuits by wealthy attorneys trying to get wealthier.
JD: That’s the only thing they have to say, is to try to blame lawyers. But there’s nothing I’ve seen so far, in any of the critiques of these New York Times articles coming from businesses, that suggests in any way that there is anything inaccurate about anything they said. What these businesses try to do is make it seem as if consumers are not benefiting from these class actions, but what we also know is that the Consumer Financial Protection Bureau in March, after a long, empirical study, they found, in just the last year, tens of millions of people benefiting to the tune of hundreds of millions of dollars.
JJ: And the Times series actually cites that it’s not just lawyers but law enforcement and judges saying we’ve lost a critical tool here. Hopefully this Times series is shining a light on something, but what can we do about it, and what is being done about it?
JD: There is a bill in Congress called the Arbitration Fairness Act; it is being spearheaded and pushed very hard right now in the Senate by Senator Franken, Senator Leahy, and there’s a companion bill in the House by Congressman Johnson. People should let their members of Congress and senators know that they support the Arbitration Fairness Act.
The other important thing to remember is the Consumer Financial Protection Bureau is about to issue a rule; while they wouldn’t ban forced arbitration clauses, they would prohibit companies from putting class action bans in these arbitration clauses. So this is a very important development, and this agency needs a lot of support from the public, because there’s enormous pushback coming from big business on this proposed rule.
JJ: Hopefully other reporters will not just think, well, the Times did it and it’s done, but report out the story in its various adumbrations.
JD: Absolutely, because these are horror stories that are happening everywhere in the country, so any local reporter can easily find them in their area. So I do hope that people continue to pay attention to it.
JJ: We’ve been speaking with Joanne Doroshow of the Center for Justice and Democracy.
You can find them online at CenterJD.org. Joanne Doroshow, thank you so much for joining us this week on CounterSpin.
JD: Thank you; it was great to be here.