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Cheating With Impunity: Access to Justice Part One

Cheating With Impunity: Access to Justice Part One

By Arthur Bryant, Executive Director

The National Center for Access to Justice at Cardozo Law School just issued a new Justice Index – an online tool intended to provide “a visual and data-based picture of the quality of access to justice in state justice systems.” Highlighted in a cover story in The National Law Journal, the Index provides important and disturbing information on how few legal aid lawyers there are to represent poor people and how little support there is for disabled people, people with limited English proficiency, and people without lawyers in state civil justice systems. 

Unfortunately, it misses an even more important and disturbing point: having a lawyer, more support, or being able to represent yourself doesn’t provide any access to justice in the state (or federal) civil justice system if you can’t hold who harmed you accountable there. And, increasingly, corporations cheating, injuring and discriminating against people – especially poor people, disabled people, and people with limited English proficiency – cannot be held accountable in court.

The Index ranks the state civil justice systems for access to justice. Minnesota’s scores the highest grade, 69.4 on a 100-point scale or what generous teachers call a D. Oklahoma scores the lowest grade, 23.7, and the national average is 48.7. Teachers call this “failure.” We need to do more.

Among many other things, the Index documents that:

  • 28 states have fewer than one civil legal aid attorney for every 10,000 people living below the poverty line.
  • The national average is 40 attorneys for every 10,000 people.
  • 22 percent of states allow judges to make hearing-impaired people pay for sign language interpretation.

These are big problems that need to be solved.

An even bigger problem, however, is that, even if there was a lawyer and adequate support for every poor, disabled, non-English speaking, and self-represented person, those people still could not get access to justice because, increasingly, it is simply impossible for them to sue successfully or at all in court. Corporations are using mandatory arbitration clauses, class action bans, and federal preemption (the argument that federal laws and regulations “preempt” or wipe out state laws that would allow them to be held accountable) to eliminate their customers’, employees’ and victims’ right to a day in court. And they’re being aided by what everyone from law professors to journalists to political scientists, economists, and Judge Richard Posner describe as one of the most conservative, pro-business U.S Supreme Courts in history.

Today, I’m going to talk about mandatory arbitration clauses and class action bans.

Mandatory arbitration clauses are now ubiquitous in consumer contracts – those non-negotiable “agreements” that companies send you or require you to sign or click on to buy anything from them. Almost no one ever reads them, but they bar customers from court and force them to pursue their claims in a secret arbitration system, closed to the public, designed and/or selected by the company. The arbitrator has the final decision, does not need to know or follow the law, is paid by the company, and knows he or she is unlikely to be hired again if the consumer’s claim is granted. Surprise, surprise: when consumers learn the facts, most don’t pursue arbitration. When claims are arbitrated, the vast majority of customers lose.

How ubiquitous are these mandatory arbitration clauses? About 94 percent of outstanding credit card loans are subject to arbitration; the largest cell phone providers all have arbitration clauses; the vast majority of car dealers and nursing homes have arbitration clauses; most on-line consumer products (iTunes, Dropbox, Amazon, etc.) have arbitration clauses. It is common to see arbitration clauses in rental car contracts, home construction contracts, warranty contracts, and a wide range of other consumer transactions as well. The best estimates are that between 30 and 40 percent of workers are subject to mandatory arbitration clauses.

Almost all of these “agreements” also include class action bans that prohibit the company’s customers or workers from bringing or participating in any class action against them in court or in arbitration, even if that means the company can take huge amounts of money and walk away. The companies call these “class action waivers,” as if the right to hold the corporation accountable was being consciously “waived.” The U.S. Consumer Financial Protection Bureau recently found that around “90 percent of the contracts with arbitration clauses — covering close to 100 percent of credit card loans outstanding, insured deposits, or prepaid card loads subject to arbitration— included such no-class [action] provisions.”

And the Supreme Court’s majority is behind them full force. The Court recently overturned the undivided views of the federal courts in AT&T Mobility LLC v. Concepcion and abandoned decades of well-established law in American Express Co. v. Italian Colors Restaurant  to enforce class action bans, effectively barring millions of consumers from suing AT&T for cheating them out of $30.22 each and millions of small businesses from holding American Express accountable for violating the antitrust laws and overcharging them about $5,000 each.

Why does this matter? The answer is why class actions matter. As Judge Posner once wrote, “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.” So, if AT&T can cheat millions of people out of $30 each and they can’t bring a class action, AT&T can just break the law and keep what it took. The small businesses said American Express stole $16.64 billion from them. (Sound fantastic? Visa and MasterCard agreed to settle a similar suit for $6.5 billion.) The Supreme Court said they couldn’t do anything about it. The lawyers or support available to them make no difference.

Here’s the critical point: providing lawyers and support to poor, disabled, non-English speaking, and unrepresented people can improve access to the state (and federal) civil justice systems, but it cannot improve access to justice unless people can actually sue and get justice in the courts.

So keep your eye on what the Supreme Court is deciding about your rights. Reach out to people who can help safeguard those rights. We all have to make sure people can have their day in court.

Next week: What is federal pre-emption and why should you care: Access to Justice Part 2. 

photo credit: Clearly Ambiguous via photopin cc