Forced arbitration, which has been eroding our rights for too long, is finally suffering a long-overdue correction. The #MeToo era has made it impossible to justify why workers should be forced to sign away their rights to pursue sexual harassment claims in court. This development deserves to be followed by a move to put all of the “fine print,” which so often characterizes forced-arbitration clauses, under the microscope.
Over the next several weeks, the House of Representatives is set to consider bills that all have one thing in common: to make it more difficult for everyday Americans to hold corporations accountable when they are victims of fraud; when they are injured because of corporate negligence; or when their rights are violated.
These pieces of legislation – which are being considered with blinding speed – are all designed to tilt our justice system to one that favors corporations and special interests over workers, consumers and investors; the bills would make it far easier for corporations to violate the law without consequence. Read more
Peter Thiel has said many things people might find objectionable. Last month, Thiel stated, “If you are a very talented person, you have a choice: You either go to New York or you go to Silicon Valley.” Only one problem—he was in Chicago when he made the remark.
More concerning are his comments about the 51% of our citizens with two X chromosomes. In his 1995 book The Diversity Myth, Thiel wrote that “since a multicultural rape charge may indicate nothing more than belated regret, a woman might ‘realize’ that she had been ‘raped’ the next day or even many days later.” He added that the “rape crisis movement seems as much about vilifying men as about raising ‘awareness.’” In 2009, he bemoaned that he no longer believes “that freedom and democracy are compatible,” largely because the 20th century saw a “vast increase in welfare beneficiaries and the extension of the franchise to women,” which has “rendered the notion of ‘capitalist democracy’ into an oxymoron.”
Ever been ripped off by a big bank? Were you charged fees you never expected? Were you misled about the terms of a loan?
If so, you may have a tough time standing up for your rights in court. That’s because many big banks have buried forced arbitration agreements in the fine print of their customer contracts. As we explain in our short documentary, Lost in the Fine Print, if the bank has a forced arbitration clause you can’t take the bank to court. Instead, you have to go to an arbitrator effectively chosen by the bank itself.
One study found when consumers go up against businesses in arbitration, the business wins 94 percent of the time.
The Consumer Financial Protection Bureau has the power to ban forced arbitration in contracts for consumer financial products, including banking services. It is expected to issue a report on the issue next year.
But we’re not waiting. We’ve joined with other activist and consumer groups to demand that five big Wall Street banks drop their forced arbitration clauses. Want to join us? Click here to sign our petition.
If we don’t stop them, the practice of forced arbitration will only spread. And you can take that to the bank.
The computer giant is trying to force us into forced arbitration
Microsoft, the company that gave us Vista, Ctrl-Alt-Delete and Clippy, has something in store for us that’s even worse. The company has been phasing in forced arbitration clauses in its “services agreement.”
That means if you are harmed by a Microsoft product or service, you can’t stand up for your rights in court. Instead, you have to take your case to an arbitrator hired by Microsoft. Arbitrators do not need to be lawyers or follow precedent, yet their word is nearly always final and unappealable. One study found that such arbitrators rule for the businesses that hire them 94 percent of the time.
Microsoft also won’t let you band together with others the company has wronged and bring a class-action suit – often the only way to stop a corporation from cheating millions of consumers. The latest version of the services agreement makes this ban even more strict.
One can see why Microsoft might be fond of forced arbitration. In a 2003 e-mail, company founder Bill Gates used the following terms to describe what it was like to use one of his own products:
disappointed, backwards, unusable, totally confusing, strange, pathetic, completely odd, weird, scary, crazy, slow, garbage, not usable, crapped up, crap, absolute mess, craziness, terrible.
Perhaps the best indicator of just how bad a deal forced arbitration is for consumers is the sneaky way big businesses force it on us.
Take Microsoft’s latest email announcing the changes. “Our users’ needs are at the center of everything we do,” says the happy little email. “That’s why we are updating the Microsoft Services Agreement.” But there’s no mention of forced arbitration in the email itself. And there’s no mention of it in the FAQ that supposedly offers the “highlights.”
No, you have to click on the link to the fine print and scroll down to Section 10 before you find out what Microsoft is taking away. If forced arbitration is so great, why does it have to be forced? Why not offer it on a voluntary basis? And why aren’t companies bragging about it instead of tucking it away in those long, long “agreements” that few of us have the time to read?
There is a solution. The Arbitration Fairness Act would put an end to these outrages. If you don’t want your rights “clipped” by the company that gave us Clippy – or by all the other corporations on the forced arbitration bandwagon – tell your Members of Congress to pass the Arbitration Fairness Act.
By Erika K. Duthely
AFJ Dorot Law Fellow
UPDATE, APRIL 20, 2014: General Mills has given in to public pressure and reversed the policy described below. But even in the blog post announcing the reversal, the company continues to mislead consumers about what forced arbitration really does. And, of course, other companies continue to impose forced arbitration clauses on consumers and employees. So we still need the Arbitration Fairness Act.
Take action. Tell Congress to stop General Mills – or any other company – from putting “Trix” in the fine print.
Read more about Forced Arbitration.
Did you enjoy a bowl of cereal this morning, like so many other Americans? Well, you may want to reconsider next time you pick up that spoonful of Cheerios.
Increasing numbers of companies have begun including these clauses in their terms of service, ever since the Supreme Court ruled in AT&T Mobility v. Concepcion that federal arbitration law – allowing for such arbitration clauses—preempts all state laws that may limit their use. This was made even worse when the Supreme Court decided in American Express Co. v. Italian Colors Restaurant that corporations can enforce class action bans in arbitration agreements even when doing so would make it effectively impossible for individuals and small businesses to vindicate their legal rights. Although there was a flood of forced arbitration clauses that hit the market after these decisions, General Mills is the first large food company to include such a clause, which has dangerous implications for public safety.
This is unacceptable. Americans have the right to have their day in court and we cannot continue to let big businesses take this right away from us. There is a solution. The Arbitration Fairness Act would put an end to these injustices.
Take action. Tell Congress to stop General Mills – or any other company – from putting “Trix” in the fine print.
Read more about Forced Arbitration.
Yesterday morning, I was privileged to attend Supreme Court oral arguments in Halliburton Co. v. Erica P. John Fund, Inc.
This is the case where Halliburton is asking the Supreme Court to overturn a 26-year old precedent in order to make it infinitely more difficult for shareholders to stand up for their rights in court against corporations that have defrauded them out of their hard-earned money. Halliburton itself is accused by plaintiffs, led by an organization supporting the charitable work of the Archdiocese of Milwaukee, of making material misrepresentations to its investors on such issues as its asbestos liability, causing losses to those investors.
As Alliance for Justice noted in our new report, “Halliburton at the Supreme Court: What’s at Stake in Halliburton, Inc. v. Erica P. John Fund,” if the Supreme Court rules the way Halliburton is asking it to, “In many instances, it would essentially be giving businesses like Halliburton a ‘get out of jail free’ card to defraud their own shareholders without consequence.” Read more
By Jason Zuckerman
On Tuesday, the Supreme Court held in Lawson v FMR that employees of contractors and subcontractors of publicly-traded companies are protected against retaliation under the whistleblower protection provision of the Sarbanes-Oxley Act (SOX). The decision is a big win for corporate whistleblowers, a rejection of the Chamber of Commerce’s attempt to create a massive loophole in SOX, and an important bulwark in protecting investors and avoiding another Enron.
Jackie Lawson and Jonathan Zang were employed by private companies that provided investment advisory services to the Fidelity mutual funds and brought SOX retaliation claims alleging that their employment was terminated for disclosing violations of SEC rules. In the mutual fund industry, the corporate entities that are required to file reports with the SEC typically do not have employees, and the funds are managed by employees of investment advisors. Despite statutory text prohibiting contractors and subcontractors of publicly traded companies from retaliating against whistleblowers, the First Circuit held that SOX covers only employees of publicly-traded companies, thereby excluding employees in the mutual fund industry from SOX whistleblower protection.
Applying the plain meaning of the statute and what Justice Ginsburg termed “common sense,” the Court held, by a vote of 6-3, that employees of contractors and subcontractors of publicly-traded companies can bring SOX actions when they suffer retaliation for disclosing what they reasonably believe to be a violation of an SEC rule, shareholder fraud, mail fraud wire fraud, or bank fraud.
Implications of the decision include: Read more
The House of Representatives is scheduled to vote tomorrow on legislation that bears the Orwellian title: Furthering Asbestos Claim Transparency (FACT) Act. The bill places lengthy and burdensome new reporting requirements on victims seeking compensation for asbestos-related illnesses. As AFJ President Nan Aron has said: “Were there a truth-in-labeling law for legislation, this bill would be called the ‘Delay Till They Die’ act.”
Some proponents of the legislation actually claim it will help asbestos victims. The victims know better. That’s why Alliance for Justice joined representatives from three victims’ groups, the Asbestos Cancer Victims Rights Campaign, the Asbestos Disease Awareness Organization and the Wisconsin Asbestos Victims Network at a telephone news conference today to oppose the bill.
Listen to the news conference:
This post is adapted from comments during the news conference by AFJ Director of Justice Programs Michelle Schwartz:
At Alliance for Justice, we work to provide access to justice for everyday Americans who have been harmed, and make sure our justice system serves everyone equally and is not tilted toward powerful interests.
This bill is a transparent attempt to take access to justice away from some of the most vulnerable people in our country, in order to help corporations that got rich knowingly making them sick.
In addition to groups formed by and for asbestos victims and their surviving family members, labor and consumer organizations, including the AFL-CIO, Public Citizen, U.S. Public Interest Research Group, and the Environmental Working Group, also strongly oppose the FACT Act.
So the question is: Who supports this bill? That’s a much shorter list:
First, the Chamber of Commerce. Second, the asbestos companies. The very same companies that knew for decades that asbestos causes fatal diseases for workers and their families. The very same companies that spent decades covering up that information.
So don’t be fooled by any of the bill’s supporters who claim to speak for the victims.
- This bill was rammed through the House Judiciary Committee in May without the victims even having an opportunity to be heard.
- It passed in Committee with no Democratic support and bipartisan opposition—with Republican Representative Ted Poe of Texas and every Democrat on the Committee voting against it.
- Amendment after amendment to protect victims’ privacy and to protect veterans was voted down.
With all the issues facing our country, it is hard to imagine that the most pressing issue for the United States House of Representatives this week is delaying and denying justice to victims. It’s particularly insulting for the House to take up this bill the week of Veterans Day. Veterans have suffered disproportionately from asbestos disease, and would suffer disproportionately from this bill. And it especially seems like a waste of time when it’s clear this bill is going nowhere in the Senate.
It kind of makes you wonder why House Republican leadership has decided to devote time this week to this bill. Maybe they’re trying to get out of the Chamber’s doghouse after that whole government shutdown fiasco.
Whatever the reason for considering this bill, it certainly does not warrant placing additional burdens on asbestos victims who have already suffered so much.
We at AFJ are proud to be part of the coalition standing with asbestos victims to oppose this bill.
November 12, 2013
Many more Americans could lose the chance to stand up for their rights in court
UPDATE, FEB. 18, 2014:
By Michelle D. Schwartz
AFJ Director of Justice Programs
Even in Washington, conversations at parties rarely begin with “Have you heard about what they might do to Rule 26(b) of the Rules of Civil Procedure?!” But changes to this rule or others can make a huge difference in the lives of millions of Americans. Unfortunately, the changes now under consideration by a committee of the Judicial Conference, whose members are appointed by the Chief Justice of the United States, would make it even harder for Americans to stand up for their rights in court.
On Tuesday, discussion of these proposed changes made their way to the Senate which has oversight over the federal rules in a hearing called by Senator Christopher D. Coons, D-Del. Later today I will be testifying at a public hearing of the Advisory Committee on Rules of Civil Procedure, the body which proposed the rules and which will decide whether and how to proceed with any final rules.
The changes would be harmful in and of themselves. But they are even worse when seen in context. They add still more barriers to the many created in recent years that are eroding everyday Americans’ access to justice.
● The Supreme Court has made it harder to get into court at all. In a series of decisions the Court has upheld forced arbitration. Consumers are forced to make their case to an arbitrator hired by the very company that wronged them. It’s like walking out on the field to play baseball and discovering that the other team hired – and paid for – the umpires. No wonder one study found that arbitrators rule for big business 93.8 percent of the time.
● Even if individuals can get in the courthouse door, it’s harder for them to band together to stand up for their rights. When millions of people are cheated out of relatively small amounts per person, each can’t afford to go through a cumbersome legal process to get her or his money back. Similarly, when thousands of people face racial or sex discrimination by a big corporation it’s extremely difficult to fight the company one-by-one. But the Supreme Court has imposed stringent new limits on class action suits.
● If individuals get past these barriers they also have to overcome increased barriers to allowing a case to get to trial. Again, because of Supreme Court decisions, those trying to take on a large corporation must meet a higher standard of evidence early on—often before it’s possible to gather the evidence.
And now, new proposed stumbling blocks
For those victims who are able to avoid forced arbitration, survive the gauntlet of onerous class action restrictions and overcome heightened pleading standards—the proposed changes to the Rules of Civil Procedure threaten to add a whole series of new stumbling blocks.
The proposed change to Rule 26(b). This might best be called the Catch-22 rule. It involves “discovery” —when plaintiffs demand documents and other information from those they sue. Employees alleging sex discrimination, for example, might demand detailed information on salaries for male and female employees doing comparable work. The new rule would require plaintiffs to provide far more evidence that discovery requests are necessary—but, of course, that evidence often is in the documents the plaintiffs are trying to discover. The new rule also would upset decades of precedent and invite disputes over the meaning of the new language.
The proposed change to Rules 30, 31, and 33. Like the proposed change to Rule 26(b), these changes involve the information plaintiffs can obtain before trial. The changes would limit the number of depositions—statements one side gets from the other, which are given under oath—as well as the time spent in the depositions themselves—affecting how much information may be gathered under oath—along with interrogatories—written questions one side submits to the other.
Remember, the Supreme Court already has said plaintiffs must provide more evidence to avoid having their case thrown out in the early stages. But often, when plaintiffs go up against powerful corporate interests, much of that evidence is in the hand of the wrongdoer. These rules will make it much harder to obtain that evidence.
The proposed change to Rule 36. In many civil suits the parties ask each other to agree on certain basic facts, saving time and expense as the litigation proceeds. For example, in a suit over wrongful firing, one side might ask the other to agree that the firing took place on a specific date. The proposed change would limit the number of such request—meaning plaintiffs would have to allocate limited resources during trial to establishing facts that could have been agreed upon before trial.
If enacted, these changes will have a profound chilling effect on whether everyday Americans can even try to take on powerful corporate interests—because it is not economically practical to pursue a case that is likely to be dismissed.
Published Nov. 7, 2013