Google workers want to end mandatory arbitration—Here’s why this matters

From today’s Washington Post:

Employees at Google recently organized a phone drive to lobby Congress to end the practice of mandatory or forced arbitration, in which an arbitrator — typically designated by the company — resolves a legal dispute, rather than a judge.

Over the last three decades, more and more corporations have forced their employees or customers to sign these contracts, agreeing to take their disputes to private arbitration instead of to court. A recent studyestimates that currently more than 60 million U.S. workers signed these mandatory arbitration agreements when they were hired. Anotherfound that, last year, consumers signed almost three times as many consumer arbitration agreements as there are people living in the U.S.

Arbitration’s spread has become controversial. Many on the left criticize it, while many conservatives support it. So it may be surprising that liberal reformers were the first to make arbitration popular. Here’s how the Supreme Court and Congress helped change arbitration from a liberal cause to conservative rallying cry.ADVERTISING

Businesses win — and employees lose — more often in arbitration than in court

Arbitration produces clear winners and losers. Employees win less frequently and receive lower damages in arbitration than in litigation. Employers win more frequently, especially if they use the same arbitrators repeatedly. That’s hardly surprising, given that the employers typically choose the arbitrators. Given recent public criticism, many prominent companies have discontinued mandatory arbitration requirements for sexual harassment claims.

The Supreme Court has helped expand private arbitration. Just last week, in Lamps Plus, Inc. v. Varela, conservatives decided that workers cannot join to bring similar complaints against a company through class arbitration unless their contracts specifically allow it. The 5-4 majority opinion relied heavily upon a controversial case from last term, Epic Systems Corp. v. Lewis.

These cases are just the latest in a three decades-long trajectory toward disallowing anything that discourages private arbitration, as part of a larger political strategy employed by business-friendly conservatives in Congress, the courts, and the private sector to constrict both access to courts and class-action lawsuits.

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SCOTUS Upholds Workplace Arbitration Contracts Barring Class Actions

From today’s New York Times:

 The Supreme Court on Monday ruled that companies can use arbitration clauses in employment contracts to prohibit workers from banding together to take legal action over workplace issues.

The vote was 5 to 4, with the court’s more conservative justices in the majority. The court’s decision could affect some 25 million employment contracts.

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Justice Ruth Bader Ginsburg read her dissent from the bench, a sign of profound disagreement. In her written dissent, she called the majority opinion “egregiously wrong.” In her oral statement, she said the upshot of the decision “will be huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.”

Justice Ginsburg called on Congress to address the matter.

Brian T. Fitzpatrick, a law professor at Vanderbilt University who studies arbitrations and class actions, said the ruling was unsurprising in light of earlier Supreme Court decisions. Justice Gorsuch, he added, “appears to have put his cards on the table as firmly in favor of allowing class actions to be stamped out through arbitration agreements.”

As a result, Professor Fitzpatrick said “it is only a matter of time until the most powerful device to hold corporations accountable for their misdeeds is lost altogether.”

But Gregory F. Jacob, a lawyer with O’Melveny & Myers in Washington, said the decision would have a limited impact, as many employers already use the contested arbitration clauses. “This decision thus will not see a huge increase in the use of such provisions,” he said, “but it does protect employers’ settled expectations and avoids placing our nation’s job providers under the threat of additional burdensome litigation drain.”

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Federal consumer protection agency announces reform agenda for 2014

From the New York Times by Tara Siegel Bernard:

The Consumer Financial Protection Bureau, which has already overcome considerable political resistance, has managed to pack some punches in the last few months on behalf of the purchasing public it represents.

In December, the agency ordered refunds by major companies for misleading business practices: American Express, more than $59 million; GE Capital Retail Bank, up to $34 million. A joint settlement with Ocwen Financial totaled about $2 billion. The list goes on.

And on Friday, new mortgage rules and consumer protections went into effect that were part of the financial overhaul bill that created the agency, which opened its doors just over two years ago.

Yes, there’s a new sheriff in town. But the true test of the consumer watchdog’s mettle will be in the year ahead, when the agency is set to take on several thorny issues that are likely to draw more resistance from the financial services lobby and give more impetus to Republican opponents in Congress who continue to try to reduce the bureau’s power. As recently as November, a House committee passed several bills to do just that.

(The agency’s new director, Richard Cordray, whose confirmation was being blocked by Republicans, was finally confirmed in July, two years after his appointment by President Obama.)

Consumer advocates say they will be watching several big issues closely, including something called forced arbitration, which amounts to waiving the right to sue in some kinds of cases, as well as debt collection and overdraft charges.

The consumer agency has already begun studying all of these areas, but how far it will go remains to be seen. Several consumer advocates, consumer law experts and others have weighed in on what they would like to see the agency accomplish in the year ahead on these issues and others: Arbitration, Overdraft Fees, Debt Collection, Student Loans, and Credit Report Disputes.

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