For years, AT&T worked tirelessly to erode its customers’ legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators, chosen and paid by the companies under fire, unsurprisingly rule in favor of companies more often than not. Initially, the lower courts derided this anti-consumer behavior for what it was, noting that however brutally flawed the class action is, binding arbitration, at least the way we let companies design it, in many ways made things worse.
But these lower court roadblocks quickly evaporated when the Supreme Court ruled in 2011 (Mobility v. Concepcion) that what AT&T was doing was perfectly OK. While lower courts saw this as an “unconscionable” abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. In reality, it shifted things to a form of binding arbitration that was costly, lopsided, and cumbersome for consumers, and less transparent for those used to visiting Pacer to dig up legal histories.
Fast forward to a few years ago, when a growing number of companies and services (like Fairshake) began streamlining the arbitration process, making it easier and less expensive for consumers (and yeah, class action lawyers). This shifted the balance of power back toward consumers, and starting in 2018 or so companies like Uber, AT&T and Comcast began to complain they were being swamped with arbitration feuds.
So now we’re seeing another sea change. Now, even giants like Amazon are being forced to take consumer complaints back to the courtroom, in part because a system they constructed to dodge accountability is no longer helping them do that.
At the same time, company lobbyists are firing up their opposition to the Forced Arbitration Injustice Repeal (FAIR) Act, which would (as the name implies) prohibit the practice in several sectors. The bill has already passed the House, and to prevent it from passing in the Senate companies have been cultivating phony “grass roots” astroturfed opposition to the bill. That usually involves using some proxy org (in this case the U.S. Chamber of Commerce) to throw money at people to write (or just support) op-eds in papers around the country insisting how wonderful binding arbitration is:
“The pro-arbitration op-ed was already written and included in the body of the email. The op-ed calls arbitration “a relatively cheap and fast process” in a “much more relaxed” environment than a courtroom, which “could soon be eliminated if plaintiffs’ lawyers have their way.” The last line makes its objective clear: “Arizona’s workers and consumers can’t afford for Senators Sinema and [Mark] Kelly to allow [the FAIR Act] to happen.”
As with most campaigns of this kind (they’re pretty common in telecom), it involves reaching out to credible people to see if they’d willing to sell their principles downstream for some cash:
“Late last week, David Chami, an Arizona attorney who specializes in consumer protection, received an email from Drew Johnson, who identified himself as working with the U.S. Chamber of Commerce. Johnson offered Chami $2,000 if he could get one of his clients to sign their name to an op-ed opposing the Forced Arbitration Injustice Repeal (FAIR) Act, a bill in Congress.”
You know you have a sound argument when you have to pay people to support it. There’s so much valid disdain against the class action process (which usually provides lawyers a new boat and plaintiffs a $20 gift certificate to Arby’s if they’re lucky), it’s not hard to lean on that to nab support for binding arbitration. But that in and of itself doesn’t mean binding arbitration is good.
While conceptually the idea of binding arbitration isn’t terrible, the way it has been implemented in the United States is an incomprehensible mess. It reduces the chance of a fair hearing of consumer grievances and makes it as annoying as possible for consumers to challenge corporate power. That’s why surveys tend to suggest broad, bipartisan support for eliminating the practice. Yeah, the traditional class action system is also a hot mess. But replacing it with something less effective and more annoying was never quite the solution many companies pretended it was. And now that awareness of this fact is growing, they’re getting a bit nervous.
More Law-Related Stories From Techdirt:
DOJ Announces Investigation Of Phoenix PD’s Use Of Excessive Force And Abuse Of Homeless People
Shiva Ayyadurai Drops His Potentially Interesting Lawsuit About Massachusetts Officials Complaining To Twitter About Tweets
Judge Orders FBI To Return $57,000 Seized From A US Private Vaults’ Customer Since It Apparently Can’t Justify Keeping It