Scalia & Company kick America in the balls once again.
Does anyone here think this is a “good” thing?
Sounds perfectly awful to me.
Some bloggers are abuzz with one of today’s Supreme Court decisions, saying that it gives full legal force to that clause in consumer contracts that bar all kinds of lawsuits against the company that makes the product - that now it’s definitely arbitration or nothing.
However, I read the thing, and it’s one of those impenetrable parades of legalese to me. Can someone interpret it for me, and tell me what it actually does do? In what ways, if any, is it consumer-unfriendly?
ETA: Oops, Whack-a-Mole has a thread on this already… Gonna ask for a merge, since his thread doesn’t have a link to the decision in the OP. 
Merged threads and expanded the thread title.
If AT & T cheats all their customers out of about 50 bucks you will have no recourse. If you went to a lawyer, he would charge you a lot more than the 50, so it would not be worth your money to fight them. It makes us all vulnerable to being nickel and dimed by corporations.
Every contract will have a binding arbitration clause forcing you to use their choice as an arbiter. It is just another anti consumer /pro corporate decision by the court.
This gets into rather technical arbitration law stuff way too quickly for me to pass any judgment on the merits. I guess the Federal Arbitration Act and preemption come into it, but I’ll be damned if I can make heads or tails of it.
I do agree that from a “sense of justice” perspective it’s rather shitty that the fine print in a user agreement means you waive all right to class action against being screwed by the company. And, of course, the specific breakdown of the court is not particularly surprising.
Sounds like the right remedy is new legislation.
So you’re in favor of federal preemption when the issue is Arizona’s immigration law… but not when the issue is binding arbitration?
In this case, there’s a federal law: the Federal Arbitration Act (FAA), 9 U. S. C. §2. It says that binding consumer arbitration agreements in contracts are valid and enforceable, in just the same way that any other contractual term is.
There was also a California state supreme court decision: the “Discover Bank” rule. It says that in California, class waivers in consumer arbitration agreements are unenforceable.
So we have a state that makes law contrary to federal law. The Supreme COurt today said that since Congress had made plain their desire to legislate in this area, the doctrine of preemption applied, and the federal rule overrides the state rule.
This, according to Whack-a-Mole, is just terrible. Apparently states should be able to override federal law with their own.
Except if the state is Arizona.
Yep. If you don’t like this rule, amend the FAA to get rid of it.
The policy results of this decision are terrible, but the majority got it right.
Basically the opinion turns on one question: Is class-wide arbitration a sufficient departure from ordinary arbitration that requiring the option of class-wide arbitration undermines the purposes of arbitration? And the answer is pretty clearly that it does (since class-wide arbitration, to be binding on the class members, is necessarily more formal, slow, and expensive), though the majority could have spent more time defending that.
Congress should permit state legislatures to set up limits on arbitration according to those legislatures’ views of what is fair in an adhesion contract. If the concern is that judges were anti-arbitration to protect their turf, then take the issue away from them, but leave it with the state legislatures. But since that would hurt the unethical corporations, federalism will probably lose out as a political proposition.
For those not following the issue, the summary is this:
Back when arbitration first came onto the legal scene, many decades ago, judges were pretty hostile to it. But Congress quite liked it. Congress felt, among other things, that there was some economic benefit to a dispute-resolution mechanism that didn’t involve the full rigorous process used in courts. And since people are free to contract into arbitration or not, Congress sought to protect that freedom of contract.
So Congress passed a law that says, basically, judges have to enforce arbitration agreements except in those circumstance in which they wouldn’t enforce any contract (for example, when you’ve signed it under duress).
Now, most states, including California, have laws that say that some kinds of contracts are unconscionable – meaning, so procedurally and substantively unfair as to be void. California decided that adhesion contracts – which are the ones you sign without negotiating them (or even reading them, most of the time) – that include mandatory arbitration, but don’t allow class-wide arbitration, are unconscionable.
So the question before the Court was whether this rule was the kind of rule that Congress allowed (i.e., one that is a rule that applies to all contracts, and therefore can be applied to whether an arbitration agreement is binding), or whether it was the kind of rule that Congress sought to banish (i.e. rules preventing arbitration).
As a policy matter, the complaint is that no one is going to hire a lawyer to win $30. So a company can safely defraud or mislead or otherwise harm customers a few bucks at a time without fear that any significant number of them will ever take it to arbitration. The critics argue that it functionally eviscerates all the laws protecting consumers, and leaves it all to the market, since very few people even know they’re signing up for mandatory arbitration, and so there’s no incentive not to put it into every contract now.
In my experience as a beneficiary of class action lawsuits against companies who have “cheated” me out of about $50 (which has happened twice), I don’t get the $50 dollars back. In one, I got a check for twenty bucks, and in the current one, I am being offered a $37.50 gift card which I may use at the cheater’s stores.
I’d say “poor,” rather than terrible, but yes. I agree. In my view, from a public policy perspective, the states should be free to write their own rules. But Congress clearly has the power to take the issue away, and equally clearly: they did. So the Court had little choice here.
This is absolutely right. Most class actions don’t actually benefit consumers as much as if the consumers had brought individual actions. Their importance is that they encourage lawful behavior on the part of companies. They benefit you not because you’ll get a lot out of the rare one you’re a part of, but because they prevent lots of other instances of minor harm to you by tipping the scales a bit in favor of more law-abiding companies.
Consider the case of misleading claims about a product – that’s it’s 50% brighter or lighter than the leading competitor (and it isn’t), say. If I’m a company considering whether to market my gizmo in a way that might mislead consumers, I have to seriously consider the possibility of an expensive class action. Without that counter-balance, there’s no serious incentive to avoid that kind of misleading advertising. Misleading claims rarely come to light on their own, such as by media reporting. Maybe some consumers will start to spread the word about misleading claims, and a few might bring individual suits which will be settled for a pittance, but often the company is happy to sacrifice the few consumers who do their research for the increased sales overall. The same basic calculations are true of lots of other kinds of consumer class actions beyond misleading product claims.
Only in Brickerland is the US Constitution being violated the same as a federal law. :rolleyes:
(14th Amendment trumps Arizona pretty clearly…at least so far a court thinks so)
Not to mention (and I admit I am unsure of the law here) I thought there was a difference between a contract entered into via negotiation and a contract entered into because I bought some of your stuff and you had a ten page, small print book inside denoting our legal relationship that I have accepted by default. One written in legalese that the majority of people could not decipher because they lack the training to do so. Or does the court think we should pay our $300/hour attorney to read every legal insert on a box of whatever before we purchase something?
Why don’t companies print that after 5 years you agree to transfer all property to them? Sure they will piss off customers but AT&T would end up owning half the US in no time. Don’t like it? You can submit to their arbitration.
You’re going to cede to Bricker the land of reality, are you?
The Constitution is being violated when a state tries to trump federal law, regardless of whether the source of the federal law is statutory or constitutional. Article VI, Clause 2, it’s not just a good idea, it’s the SUPREME LAW OF THE LAND.
Why? Because a state has never successfully challenged a Federal law?
What does that have to do with anything? Do you think the Federal Arbitration Act is unconstitutional?
My goodness.
Here is a PDF of the court’s opinion. Please quote the section where the court says that the 14th Amendment is involved.
It’s not. At all.
In the Arizona case, the court says: Congress passed the Immigration Act. That means that Congress wants to control immigration, and the US Constitution’s Supremacy Clause means that this trumps state law.
In the current case, the court says: Congress passed the Federal Arbitration Act. That means that Congress wants to control arbitration, and the US Constitution’s Supremacy Clause means that this trumps state law.
So it’s not “in Brickerland.” In both cases, the issue is the same: the US Constitution’s Supremacy Clause, which says that when Congress legislates, it overrules the states.
Arizona legislates, and runs into the federal Immigration Act. Arizona loses.
California legislates, and runs into the federal Arbitration Act. California loses.
THE SAME ISSUE.
This is a policy argument, except for your speculation about adhesion contracts.
The court doesn’t care. The court simply recognize that CONGRESS cares. CONGRESS wrote the law that says you should pay your $300/hour attorney to read every legal insert on a box.
I’m sure a state has.
But that’s not what happened here. California did not sue the federal government, claiming that the Federal Arbitration Act was unconstitutional. They simply instituted a state rule that conflicted with it.
So I have no idea what your question means.
I know only one thing: you’re completely wrong here, but you won’t own up to it.
Fine, the 14th amendment is not mentioned. They do however deem it unconstitutional and not merely a matter of federal law.
Is the only way federal laws are challenged by states via directly suing the federal government?
Seems to me there have been a plethora of laws restricting abortion that were passed by a state and then challenged. They throw shit at the wall and see what sticks. The states did not sue the federal government though in those cases.
So, you were wrong about the constitutionality question and wrong about this.
I await your admission of error (but won’t hold my breath).