On Monday, Governor Jerry Brown signed a bill that prevents victims of sexual assault from suing their attackers. The law is part of an effort to protect due process rights and prevent frivolous lawsuits against public entities like colleges, prisons and police departments. But the new law creates a conflict with California’s civil justice system and threatens fairness in our courts by opening the door for harassment, discrimination or profiling based on sex without recourse for affected parties
The “what is the purpose of the civil justice system” is a question that I will answer in this blog. The purpose of the civil justice system is to serve as a fair and impartial forum for resolving disputes within society.
The House of Representatives approved a measure this week that might limit your ability to join a class action lawsuit.
The Fairness in Class Action Litigation Act of 2017, or H.R. 985, aims to “assure plaintiffs and defendants of fairer, more efficient results.” However, H.R. 985, according to 120 civil rights organizations, would primarily benefit companies.
To further understand how the measure might impact the legal rights of millions of American consumers, we talked with Werner, Amanda, an economic justice advocate who works for Public Citizen and Americans for Financial Reform. Werner also discussed how arbitration, often known as the “ripoff clause,” is robbing us of our opportunity to participate in class action cases.
What exactly is H.R. 985, and why should Americans be concerned?
Werner, Amanda
H.R. 985 is one of the most serious threats to civil justice in recent years. It would effectively eliminate class action lawsuits as a way of obtaining justice.
That would imply that a lot of corporate misbehavior would go unpunished; firms would be free to steal from customers, destroy the environment, and mistreat their employees with no one to hold them accountable. As a result, it’s a big problem, particularly at a time when the courts seem to be our last line of defense when it comes to enforcing our rights.
Why is it so crucial for us to be able to join a class action lawsuit?
Class actions are especially significant when unlawful activity affects a large number of individuals but only involves modest sums of money per person. For example, a bank may overcharge each of its customers by $20, which is little enough that the customer may not notice. When that number is multiplied by a million consumers, the bank has just stolen a large sum of money. They’d get away with it if there were no class actions, and they’d have a competitive edge in ripping off their consumers.
So, not only do we need class actions to expose the public to fraud, but we also need class actions to inform the consumers themselves. For example, many consumers were unaware that they had many credit cards or bank accounts open in their name until they heard about the Wells Fargo false accounts crisis. Even if a customer discovers the problem, they are unable to do anything about it since suing a bank for $20 on your own is too expensive.
H.R. 985’s supporters say that it will assist class members in receiving greater prizes. What are your thoughts about that?
“If these claims can’t be filed, customers won’t be able to recover anything at all, much alone bigger amounts.”
It’s a total fabrication. Every major social justice, civil rights, and consumer organization is united in its opposition to this law.
How can you make a class action far more difficult to file while yet claiming that it will benefit individuals more? Consumers will be unable to recover at all, much alone recover bigger amounts, if these claims are not allowed to be filed.
The law stipulates that the claimants must have suffered the same damage. What exactly is the issue here?
It’s a remedy to a non-existent issue. There are already severe criteria in place to guarantee that members of a class suffer from the same sort of injury—standards that have risen dramatically in recent years. When you raise those criteria even higher and make them so detailed, it eliminates the capacity of consumers to file a claim. That is the true goal of this exercise.
“It effectively compels everyone to bring their own case, which is both wasteful and counterproductive to the goal of class actions.”
One of the provisions of the law is that everyone must have the same level of damage. Returning to the Wells Fargo incident, one client may have lost $150 because a false account was formed and fees were charged, while another may have lost $35. Even if the real pain they sustained is extremely comparable, the somewhat varied sums of money might result in a distinct scope of impairment. They will have a lot greater difficulties filing action under this measure because they will be unable to certify that class.
At some point, the injury standards become so detailed that everyone must file their own lawsuit, which is not only wasteful but also defeats the purpose of class actions.
Forced arbitration, sometimes known as the “ripoff clause,” poses a similar danger to our legal rights. Could you please elaborate on this?
The ripoff clause is small text that companies smuggle into consumer contracts—think of the terms and conditions of an iTunes agreement—that states that if you have an issue with the firm, you won’t be allowed to go to court or join a class action. Instead, you must pursue the firm in compulsory arbitration on your own.
Arbitration is a private system in which the company selects the business that determines the case, the rules that apply, and sometimes even the location of the arbitration.
The arbitrators have a motive to decide in favor of the corporation that will rehire them, hence the system has an inherent bias. According to the most thorough government survey, businesses win 93 percent of the time in arbitration. Consumers gain just twelve cents on the dollar on average, compared to companies, which win ninety-eight cents on the dollar on average.
“Consumers gain just twelve cents on the dollar on average, compared to companies, which get ninety-eight cents.”
But even more crucial than the arbitrator’s partiality is the fact that ripoff provisions typically prevent consumers from filing claims at all. The Consumer Financial Protection Bureau discovered that approximately 400 arbitration claims were filed against banks and lenders each year, compared to the millions of Americans who benefit from class actions each year.
(See this consumer’s unfavorable arbitration experience with Citibank for more on ripoff provisions.)
The Arbitration Fairness Act aims to abolish scam provisions in arbitration agreements. What will be required for the measure to pass?
The Arbitration Fairness Act has been proposed in the last several Congresses, and there has been an increase in public interest in this problem throughout that period.
Our greatest challenge, I believe, has been a lack of public awareness. Part of this is due to the fact that it is a relatively recent occurrence. For many years, businesses have used arbitration to resolve problems amongst themselves, but arbitration—particularly class action bans—has only lately been deployed on consumers, students, and other groups with little bargaining power.
Unfortunately, I’m not confident that these legislation will pass this Congress, particularly given the fact that H.R. 985 and other House proposals are massive attacks on civil justice. But I believe that if people demonstrate that we are paying attention, that we support class action rights, and that we desire the opportunity to protect our rights in court, the tide will begin to turn.
What can Americans do to ensure that their right to join a class action lawsuit is protected?
“Many of us take for granted our right to a day in court… However, most individuals are unaware that they have had to sign it away mistakenly or against their choice.”
The good news is that something is being done about these concerns right now. This week, seven legislation restricting the use of forced arbitration were presented, as well as a class action bill that we want people to vote against this week. When you contact your senator or congressman, there are a number of topics that will be on their mind.
People should also inform their friends and relatives about the value of class actions and the dangers of forced arbitration. Many individuals are unaware that their rights are being jeopardized in this manner.
Many of us take our right to a day in court for granted since it is a fundamental right guaranteed by the Seventh Amendment. However, most individuals are unaware that they have to sign it away just by engaging in the marketplace: by possessing a mobile phone, a bank account, or any of the other everyday activities.
Education and ensuring that people are aware of these issues is a big part of it.
For the latest on forced arbitration, follow #RipoffClause on Twitter. You can also follow Werner, Amanda: @wamandajd.
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