Left and Right Opposing the 'Privatization of the Justice System'

The New York Times is publishing a three-part series Beware the Fine Print, including, "Arbitration Everywhere, Stacking the Deck of Justice" and "In Arbitration, a 'Privatization of the Justice System'." The third part is forthcoming.

The Times reports: "On Page 5 of a credit card contract used by American Express, beneath an explainer on interest rates and late fees, past the details about annual membership, is a clause that most customers probably miss. If cardholders have a problem with their account, American Express explains, the company 'may elect to resolve any claim by individual arbitration.'

"Those nine words are at the center of a far-reaching power play orchestrated by American corporations, an investigation by The New York Times has found. ...

"More than a decade in the making, the move to block class actions was engineered by a Wall Street-led coalition of credit card companies and retailers, according to interviews with coalition members and court records. Strategizing from law offices on Park Avenue and in Washington, members of the group came up with a plan to insulate themselves from the costly lawsuits. Their work culminated in two Supreme Court rulings, in 2011 and 2013, that enshrined the use of class-action bans in contracts. The decisions drew little attention outside legal circles, even though they upended decades of jurisprudence put in place to protect consumers and employees. ...

"Among the class actions thrown out because of the clauses was one brought by Time Warner customers over charges they said mysteriously appeared on their bills and another against a travel booking website accused of conspiring to fix hotel prices."

DEAN CLANCY, dfclancy at gmail.com, @DeanClancy
Clancy is a tea party-aligned former White House and congressional aide, and current partner at Adams Auld LLC, who writes on U.S. health care, budget, and constitutional issues. He is a former VP at FreedomWorks, a former policy aide to House Majority Leader Dick Armey, and a former senior budget official in the Bush White House (2004 to 2006).

Clancy recently wrote the piece "Conservatives Should Oppose Forced Arbitration," which states: "The pro-market right should join the consumer advocates in opposing pre-dispute mandatory arbitration as a violation of liberty and an infringement of the Seventh Amendment right to a civil jury trial."

JOANNE DOROSHOW, joanned at centerjd.org, @centerjd
Doroshow is founder and executive director of the Center for Justice & Democracy and author of The Case for the Civil Jury: Safeguarding a Pillar of Democracy. She said today: "This Supreme Court has turned a 1924 law intended to make arbitration between companies easier, into a mechanism for denying individuals the right to a jury trial.

"Forced arbitration clauses impact virtually every aspect of your life, from buying a car to credit card agreements to your employment. They even wipe out the right to go to court for many civil rights violations. The constitutional right of a citizen to sue has been fundamentally taken away.

"Virtually every company is insisting on forced arbitration clauses and class action bans, so the individual has no negotiating power to keep these clauses out. These are not voluntary agreements. Even if you're aware of these clauses, which most people are not, there's virtually no recourse.

"One hope is that the Consumer Financial Protection Bureau earlier this year released a 700-page report on the importance of class actions, clearly showing the relief they provide to consumers, which arbitration does not. The CFPB has a rule proposal pending which could provide meaningful reform. Let's hope the forces behind class action bans and forced arbitration are unable to stop CFPB from doing the right thing."

See from the Center: "CFPB Considers Proposal to Ban Arbitration Clauses that Allow Companies to Avoid Accountability to Their Customers" and "FAQ: Vanishing Rights and Remedies Under Forced Arbitration." Also, see the Center for Justice & Democracy's letter on forced arbitration being used by nursing home corporations on the elderly.

The practice of consumers signing contracts that virtually no consumers read was (somewhat crudely) satirized on South Park in the episode "HumancentiPad." [partial video on Youtube]