By inserting individual arbitration clauses into a soaring number of consumer and employment contracts, companies like American Express devised a way to circumvent the courts and bar people from joining together in class-action lawsuits, realistically the only tool citizens have to fight illegal or deceitful business practices.
Thousands of cases brought by single plaintiffs over fraud, wrongful death and rape are now being decided behind closed doors. And the rules of arbitration largely favor companies, which can even steer cases to friendly arbitrators, interviews and records show.
The sharp shift away from the civil justice system has barely registered with Americans. F. Paul Bland Jr., the executive director of Public Justice, a national consumer advocacy group, attributed this to the tangle of bans placed inside clauses added to contracts that no one reads in the first place.
“Corporations are allowed to strip people of their constitutional right to go to court,” Mr. Bland said. “Imagine the reaction if you took away people’s Second Amendment right to own a gun.”
– From yesterday’s New York Times article: Arbitration Everywhere, Stacking the Deck of Justice
I’ve followed the dangerous trend of the increased corporate use of arbitration clauses in contracts for several years now, and yesterday’s New York Times investigation into their civil liberties destroying nature, is one of the best pieces I’ve seen on the subject to date.
What’s so fascinating about this article is it goes all the way back to the origins of the practice, during which lawyers representing big banks got together with Philadelphia attorney Alan S. Kaplinsky to strategize on how best to write class-action bans into arbitration clauses. It also explains how current Supreme Court Chief Justice John Roberts had been actively petitioning the high court to uphold such bans while he was a corporate lawyer, and then led the way to a 5-4 decision to solidify the bans after becoming Chief Justice.
In practice, what these bans essentially achieve is to allow companies to nickel and dime consumers and their employees while leaving very little recourse available. While the individual infractions are generally minor financial burdens, when aggregated across a large number of victims, it can amount to billions of dollars.
Let’s turn to some excerpts from the Times article for additional information:
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