Public attention on critical Supreme Court case is growing

Next Tuesday, the Supreme Court will hear oral arguments in AT&T v. Concepcion, a significant case that will decide whether corporations can use the fine print of their contracts to ban consumers and employees from participating in class actions. Public Citizen’s Deepak Gupta is lead counsel for the respondents in the case.

David Lazarus of the Los Angeles Times discussed the case in a column today. The Huffington Post saw fit to highlight Lazarus’ article, posting it as its lead central story for a time on its web site. The story has garnered over 4,000 comments from readers, mostly critical of business’ effort to take away ordinary citizens’ legal rights.

The NAACP Legal Defense and Educational Fund points out on its web site that the outcome of AT&T v. Concepcion could have severe implications on civil rights litigation. Class action lawsuits, such as Brown v. Board of Education, made “significant progress toward the Constitutional aspiration of a “more perfect Union,”” the NAACPLDF says on it web site.

Consumer Action, a national nonprofit organization that provides consumer advocacy and education, released a statement today on the case. “Class actions are a critical tool for consumers to pursue justice against giant corporations like AT&T,” says National Priorities Director Linda Sherry.

Both the NAACPLDF and Consumer Action submitted amicus briefs in favor of the consumers in Concepcion.

Christine Hines is the consumer and civil justice counsel for Public Citizen.

Cross-posted from FairArbitrationNow.org

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Hopeful in St. Louis

All around the country, newspapers’ consumer journalists are taking notice and reporting on the injustice of forced arbitration. Most recently, Matthew Hathaway, columnist for the St. Louis-Post Dispatch, posted a short article on the “The Savvy Consumer” blog. While Hathaway reports on the biases and unfairness of the predatory corporate practice, he’s a tad overly optimistic that it may soon come to an end.

As Hathaway noted, the new Consumer Financial Protection Bureau created by the recently passed financial reform law will be authorized to ban or restrict forced arbitration. So will the Securities and Exchange Commission. But here’s what Hathaway leaves out: millions of other consumer contracts exist that fall outside of these agencies’ jurisdictions. The CFPB and SEC can restrict investor-broker contracts and contracts for other financial products as designated under the new law. But they have no authority to restrict or ban forced arbitration in numerous consumer contracts, such as those for employment, nursing homes, cell phones, and home building.

Hathaway guesses that the days of forced arbitration “could be numbered.” His optimism is refreshing. But even with SEC and CFPB’s new authority, we still need Congress to pass the Arbitration Fairness Act to eliminate pre-dispute forced arbitration from all consumer contracts for good.

Christine Hines is the consumer and civil justice counsel for Public Citizen.

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Let’s hope Elizabeth Warren gets “The Colbert Bump”

Famed comedian and talk show host Stephen Colbert has long acknowledged “The Colbert Bump,” meaning the increased popularity of a person, website or issue after appearing as a guest or discussed on his show, The Colbert Report.

Here’s hoping that’s the case after last night’s show, because Colbert discussed a few issues near and dear to our hearts here at Public Citizen.

First, he discussed the new Consumer Financial Protection Bureau, created with the new Wall Street reform law, and mentioned Elizabeth Warren as liberals’ pick to head the new agency. (Public Citizen thinks she should.) But then — BAM —

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Kagan hearings shine light on injustice of forced arbitration

Gupta

The forced arbitration of claims arising out of statutory protections for consumers and employees has become a hot topic at the Kagan hearings. The parade of comments by Senators started even before the hearings began, with a written statement by Senator Leahy criticizing the Supreme Court’s 5-4 decision in Rent-a-Center v. Jackson, and similar remarks on the Senator floor by Senator Franken (video of which we’ve already posted here). The topic was raised again in Senator Whitehouse’s opening statement on Monday and in an extended colloquy between Franken and Kagan this morning.

In his statement, Leahy called the Rent-a-Center decision “a blow to our nation’s civil rights laws and the protections that American workers have long enjoyed under those laws.” He noted that

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Sen. Franken condemns 5-4 decision in Rent-a-Center v. Jackson

From Consumer Law & Policy Blog: On the Senate floor, Senator Al Franken condemned the Supreme Court’s decision in Rent-A-Center v. Jackson (in which a 5-4 majority of the Court upheld the power of arbitration agreements to remove even threshold questions of validity from review by a court) and discussed how the case of Jamie Leigh Jones illustrates the effect of cases like Circuit City Stores v. Adams.

“Clearly this is a ruling that Congress needs to fix and I look forward to working with my colleagues to do so,” said Franken. “Sometimes it’s easy to forget that Supreme Court matters to average people, to our neighbors and our kids.”

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The push for arbitration fairness continues

When the Supreme Court ruled last week in favor of Rent-A-Center in another controversial 5-4 decision, the justices again put the interests of corporations above those of the people.

The New York Times published this great editorial about it over the weekend, highlighting the absurdity of SCOTUS’s decision:

The court ruled last Monday there was nothing wrong with requiring that the fairness of an arbitration clause be determined by — an arbitrator.

Congress is working to fix the problems with mandatory binding arbitration agreements as the members hash through the Arbitration Fairness Act (H.R. 1020 and S. 931) and the Fairness in Nursing Home Arbitration Act (H.R. 1237 and S. 512).

While it was scheduled for markup last week, the committee did not get to the AFA and the nursing home bill last Wednesday. Stay tuned for a rescheduled date for Congressional action on these bills because your representatives in Congress will need to hear from you.

Learn more about forced arbitration and the problems with it.

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Supreme Court decides another case in favor of corporate power

From the Consumer Law & Policy Blog: A divided Supreme Court today dealt a major blow to consumers and employees seeking to challenge arbitration agreements on the ground that they are unfair or unconscionable. Public Citizen was co-counsel in the case, Rent-a-Center v. Jackson, and will be spearheading efforts in Congress to curtail its effects.

In a 5-4 decision by Justice Scalia, the Court held that if a company’s arbitration agreement includes a clause delegating fairness challenges to the arbitrator, a court must enforce that agreement and send the matter to arbitration. The Court’s decision arose out of an employment discrimination claim brought by Antonio Jackson, an African-American Nevada man, against his former employer. When Mr. Jackson sued, the company invoked its arbitration agreement and claimed that, under the agreement, any challenges to the agreement had to be decided by the arbitrator.

Until today’s Supreme Court decision, consumers and employees had the right, under Section 2 of the Federal Arbitration Act, to go to court and ask a judge to find an arbitration agreement unconscionable or unfair and therefore unenforceable. Although most arbitration agreements are enforceable, court review weeded out the very worst abuses—like imposing exorbitant fees, forcing consumers or employees to travel great distances to arbitrate, or allowing a corporation to pick an arbitrator that is clearly biased in its favor.

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I wouldn’t sign the document

Yesterday evening I met with a financial advisor from a large financial company. The meeting was going well and I was ready to sign on for much-needed financial advice until we started discussing the agreement.

First, he told me that the agreement was not a contract. I quickly corrected him and explained that they were one and the same. Then I started flipping through the three-page document. Lo and behold, there it was, in bold: an arbitration clause AND a statement claiming that there is no agreement to enter into any class action arbitration.

I explained to him in my excitable way that I wouldn’t sign the document, explained to him what the arbitration clause meant and its impact on consumers. He was shocked. In a very brief moment he removed the professional mask and showed that he was appalled by the provision’s meaning. I told him about the need to support the Arbitration Fairness Act in Congress. He asked if it would eliminate arbitration. I explained that it wouldn’t – but it would make it voluntary, rather than forced.

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A consumer’s nightmare: A victim of forced arbitration tells his story

In 2007, John Perz (whose story has been covered by Consumer Reports, and who tells his own story here) bought a used car from a local lot in San Diego. The car had a rattle, but the salesman promised Perz that if he made an appointment, the rattle would be fixed free of charge. When he brought the car back the next week, however, the mechanic told him that not only could the car not be fixed, but the 48 hour return window had already passed, meaning Perz was stuck with a car that rattled and rolled. He had the car inspected and learned that the certified vehicle he purchased had substantial water damage, possibly from a flood, and had previously been wrecked.

However, when purchasing the car, Perz signed the dealer’s arbitration agreement, meaning that despite hiring a lawyer his case would never reach a judge. Despite being advertised as faster than litigation, after three years his case is still in arbitration. Now he’s up against an arbitrator whose record against consumers is abysmal.

Consumers for Auto Reliability and Safety produced this video detailing Jon Perz’s fight against the dealer and against arbitration. Check it out!

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Public interest battle vs. Wall Street rages on

The House financial reform battle has been nothing if not brutal. Can you join the fight for the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173)? The bill goes to a vote on the House floor tomorrow, and we need you to turn up the pressure on your representatives.

Here is an update on amendments that your representative needs to know you support, and those that need to be defeated.

• SUPPORT the Stupak/DeLauro/Larson/Van Hollen amendment on derivatives. Regulators must have the authority to ban abusive derivatives instruments rather than simply reporting them to Congress, and transactions which violate the law should be considered invalid.
• OPPOSE the Minnick amendment to eliminate a new Consumer Financial Protection Agency (CFPA) from the bill. It would leave enforcement of consumer protection and civil rights laws in the hands of the same existing regulatory bodies that resoundingly failed to use them.
• OPPOSE the Marshall amendment, which would deny financial whistleblowers the right to hold their employer accountable in court when they are retaliated against.

Call or email your representative today. You can also show your support by signing the petition at Change.org . With enough signatures, the message about the need for a Consumer Financial Protection agency will be blasted to thousands more activists. We need to stand firm against predatory banking practices and prevent financial crises from crippling our economy ever again.

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