Christmas in October

Episode 124 of the More Perfect Union podcast covers the first wave of the Robert Mueller Russia investigation indictments, the ongoing dysfunction in the Trump White House, a new conspiracy theory tied to the JFK assassination document dump, and why otherwise honorable 93-year-old men in wheelchairs should not be judged by the size and location of their hands.

One thought on “Christmas in October”

  1. I really enjoy your show but found your discussion of arbitration inexcusably superficial. It demonstrated a real ignorance of the issue that troubles me for a group of people who are otherwise very well informed.

    Let’s start with the “baseball example.” As you point out, the players union negotiated for arbitration in their collective bargaining agreement with the owners. The players had equal (or close to it) bargaining power. Owners can’t field a team without players. Second, baseball players, in individual negotiations with owners in the era of free agency, have near equal bargaining power. They also have equal representation – good agents and lawyers. They also know the arbitration process exists.

    Now let’s take your average consumer who opens an account at a bank. Somewhere in the fine print of the paperwork he receives, there’s an arbitration clause. Even assuming he reads it, he doesn’t have the option to “opt out” other than to go to another bank who, in all likelihood, has the same clause. The customer doesn’t have equal bargaining power in the negotiation (there’s no negotiation). We call that a contract of adhesion.

    But let’s say he signs up and later finds out the bank has been charging an extra fee of $.50 per month to that customer for a “massive” loss of $6 a year. But that customer isn’t alone; there are millions like him/her. That individual consumer doesn’t have a lawyer (or agent) because no lawyer is going to take a $6 case into arbitration or court. He also doesn’t know he has access to an arbitration process because the Bank has buried the language about arbitration in the fine print of a document he got when he opened his account. So he does nothing or calls and complains. Maybe he gets his $6 back but the other million odd customers keep getting charged until they figure it out.

    Arbitration is also done in secret, meaning that if you participate, you can’t discuss it while it is happening and any result is also confidential. Often, the confidentiality provisions have significant penalties attached for breach.

    Court proceedings happen in the open. There’s a discovery process. The press can cover the case. If a bank has been bilking its customers the world hears about it. As one of you pointed out, that’s a great motivator to change behavior.

    After the Supreme Court’s decision in ATT v. Concepcion, the Banks can put a provision in the arbitration clause that prohibits collective actions, i.e. every individual customer must bring his claim individually for his $6, assuming he can figure out how. I challenge you to go find the procedure for filing for arbitration against your credit card company or cell carrier. No lawyer can afford to help him on a contingency basis and can’t justify billing the customer on an hourly basis for such a small recovery (oh, and the customer can’t afford it).

    Do lawyers make a lot of money when they file consumer class actions? Yes. Does the work involved in successfully litigating a class action of that scope (often millions of individuals); the fact that no one would recover anything in the absence of their work; and the inherent value of holding a corporation accountable for bilking its customers justify a large contingency fee? Absolutely. But if the real gripe is with the size of the fees, there’s a much simpler, consumer friendly solution – cap the fees at a certain percentage of the award.

    The notion that the Rule would flood State courts with small cases is laughable. The reality is that consumers don’t go file these cases pro se and, unless there’s a possibility of a class action, no lawyer is going take the case. When multiple cases are filed in different courts, they are invariably consolidated in one court (typically federal) through a process known as multi-district litigation.

    Finally, your attack on the integrity of the judiciary suggests that you don’t really understand how judges are selected in many states. In Georgia, for example, we elect our judges in non-partisan elections. Granted, some of those elections, especially for appellate judges, get hijacked by special interests groups, i.e. the Chamber of Commerce and its allies, but that’s a story for another day.

    More importantly, neither party gets to pick the judge in a court proceeding. Not so in arbitration. Arbitrators are lawyers, just like judges. But they aren’t on a government salary; they get paid for each arbitration BY the party who has imposed the arbitration clause, i.e. the Corporation. The individual customer gets to participate in selecting an arbitrator from a panel but he has no idea who the arbitrators are; the bank, on the other hand, knows exactly who they are and how they’ve ruled in other arbitrations involving the bank. The customer is going to arbitrate once; the bank is arbitrating all the time and selecting from the same panel of “neutrals.” Those “neutrals” know who is paying them. If a “neutral” rules against a bank and awards money to a customer, do you think the bank is going to chose that arbitrator again? How do you think that impacts the “impartiality” of the “neutral”?

    I haven’t even gotten into the impact of arbitration in other areas, employment discrimination/sexual harassment, consumer contracts (cell phone service, etc.) and, recently, nursing home litigation (at least in Georgia).

    The Republican party reflexively supports any legislation that reduces access to the courts because they hate trial lawyers (why trial lawyers contribute to the Democratic party) and love “big business.” They also profess to be strict constructionists – the Constitution means what it says, etc. Well the 7th Amendment is clear – we have the right to trial by jury in civil cases. The federal Arbitration Act (1926, I believe) is a law passed by Congress, not a constitutional amendment. That is the basis for the USSCs series of cases expanding the legality of arbitration clauses. So much for putting the Constitution first.

    I love the show. I realize you’ve got a limited amount of time to discuss complex issues. You usually do a great job. Not this time.

    Disclosure: I am a trial lawyer. I handle catastrophic personal injury and civil rights (police misconduct) cases. I do not do consumer class actions.

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