The New York Times, which can scarcely mention firearms policy without invoking the Gun Lobby, runs a big feature endorsing the claims of arbitration opponents that is curiously evasive about the role of the Litigation Lobby. Daniel Fisher, Forbes:
The writers who penned today’s New York Times Page One expose of arbitration clauses say they examined thousands of court documents and interviewed hundreds of lawyers, yet they fell for a rookie mistake: They confused class-action plaintiffs for the real thing….
The “article splayed across four pages of the Sunday Times” profiles the owner of the Italian Colors restaurant, the named plaintiff in a class action against American Express that went to the Supreme Court, as if he were typical of “plaintiffs [who] sprang up spontaneously and went out and hired lawyers to vindicate their rights?
Who were his lawyers? The Times doesn’t think you need to know. But here’s the main one: Gary B. Friedman, an attorney who specializes in suing credit-card companies. He recently suffered a bit of bad press when a federal judge in New York threw out a proposed settlement of another class action against Amex because Friedman had displayed “improper and disappointing conduct” by communicating sensitive information to a lawyer for the other side. The judge criticized Friedman for “blatant collusion” by negotiating a settlement with the defense that was “contrary to the wishes of the putative class.”
Now why couldn’t the enterprising Times reporters find room in such a large story for a mention of Friedman? Perhaps because he represents the real face of consumer class actions. These aren’t lawsuits by little guys like Carson trying to vindicate their rights against big corporations. Most are lawsuits by wealthy attorneys trying to get wealthier, by using the mechanism of the class action — originally developed to allow courts to declare classes of plaintiffs in civil-rights cases — to present companies with an offer they can’t refuse: Settle and pay us a rich fee, or risk a devastating loss in court.
Fisher summarizes: the Times “reports without skepticism the plaintiff-lawyer version of the story.” That’s a shame on a topic where even such a liberal figure as California Gov. Jerry Brown, who recently vetoed an anti-arbitration bill, acknowledges there are genuine concerns on both sides.
Our coverage of contractually agreed pre-dispute arbitration — including both the practical and the freedom-of-contract arguments for it — goes back to the early days of this site, including Coyote (“Here is how you should think about this proposed law: Attorneys are the taxi cartels, and arbitration is Uber. And the incumbents want their competitor banned.”), James Taranto on the Times as “two papers in one,” Andrew Pincus on arbitration as still pretty much the Litigation Lobby’s number one target. Much coverage also at Point of Law, including Ted Frank on a familiar-sounding law firm’s use of pre-dispute arbitration clauses.
P.S. I’ll bet he has: “Having worked extensively with Silver-Greenberg on this series over the past several months…” [Deepak Gupta, Public Citizen]
And: more thoughts at Cato at Liberty, including links to Cato work and discussion of why consumers so seldom switch from one provider to another in search of more favorable fine print on class action availability.
7 Comments
“Here is how you should think about this proposed law: Attorneys are the taxi cartels, and arbitration is Uber. And the incumbents want their competitor banned.”
This is nonsense. Consumers are free to choose each and every trip whether they want to take a taxi, Uber, city bus, rickshaw, etc… The analogy only works if you find out that, thanks to some fine print you agreed to years ago, you’re now required to get around exclusively by Uber, even if the Uber driver’s car smells funny and he insists on taking the FDR and Uber is surging 3X. Pre-dispute arbitration clauses are slipped into lengthy consumer contracts of adhesion and are unavoidable in daily life.
If arbitration is so great for both sides, why is it being foisted by companies on individuals with no negotiating leverage?
The focus I got from the article is that people dislike arbitration because it is an unfair process. They claim there are no rules and that arbitrators routinely rule for defendants without regard to the actual facts and circumstances of the case.
The part about Friedman is a red herring and totally irrelevant to the focus of the article.
I think one can be very suspicious of arbitrators and of class action attorneys. Both are doing what they believe to be in their own economic interests. And that is the problem with arbitration (and the class action suites).
Certainly. If the issue is class action reform, then focus on that rather than keeping people out of court for any reason.
As for the “freedom to contract” argument, no rational person feels more free after discovering that the fine print in a contract they had no ability to negotiate means that this country’s court system is unavailable to them when they need it.
A Big caveat. Apparently, this was a three part series. Mr. Olson linked to the second part. The Forbes article apparently responds to the first part. (There is a similar response from the Chamber of Commerce out there). That is significant, because the first part does focus on class action matters, while the 2nd and 3rd do not.
So… As far as non-class action matters, I stand by my point that arbitration clauses are not a panacea and the Forbes article does nothing to dissuade me.
As far as arbitration as a way to do away with class actions, I believe that the NYTimes makes a good case that there is a violation of public policy perpetrated by businesses at the expense of consumers. Federal policymakers made a choice to have class action suits as a way for consumers who suffered smallish losses to band together to try to force corporations to disgorge ill-gotten gains.
Unfortunately, class-action suits were pirated by attorneys who saw them as a way to enrich their coffers. Corporations, who disliked class-action suits because it prevented them from lining their own coffers, came up with a strategy to undermine the suits and
(not unjustifiably) painted class-action lawyers as leeches.
I say a pox on both their houses. In reality, the problem is that companies are taking nickels and dimes from consumers. 100 million dimes a month adds up. No-one is addressing how to fix the real issue.
Yes. Forced Binding Arbitration is a rigged system that helps companies evade responsibility for violating anti-discrimination, consumer protection, and public health laws. These companies, are “repeat offenders” this means they are using forced binding arbitration to commit white collar crimes of fraud against the American tax payers in a “pre-meditated way”. Meaning they have a long long list of law suits against them for the “SAME” behaviors…such as in my case, which was one of the ones that got the furthest before I was slapped down by the arbitrator who sided with the company I sued. The arbitrator sided with the company “EVEN THOUGH” I had inside witnesses who worked as employees who gave depositions in our favor. My story is in the second part of the three part NY Times series.
Also, see the documentary I was a part of in October 2014 called “Lost in The Fine Print”. We had to choose from a list of arbitrators from the AAA that were all “PRO BUSINESS” and the company we sued had a choice or not as to whether or not to allow that arbitrator to serve on the case. My attorney said when we got the list from the AAA…that “none of these arbitrators are good for our side…but we are required to choose one.”
AGAIN…do not miss the fact that we had multiple inside witness testimony on our behalf and we still lost! Not only that…but we were slapped with hundreds of thousands of dollars in a judgement to pay the repeat offenders legal fees! Does this sound like a fair system of justice? Believe Me! You do not want to get locked out of the justice system.
Lost in The Fine Print
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