“Have We Lost A Constitutional Right In The Fine Print?”
On the November 12, 2015 edition of Fresh Air, Dave Davies interviews New York Times reporter Jessica Silver-Greenberg, co-author of the New York Times Special Report on arbitration. I have blogged about the series, as well as the retort by the U.S. Chamber of Commerce, in November 1, 2 and 5, 2015 posts. Now you can learn the gist of the report by listening to the interview with Jessica Silver-Greenberg.
On November 1 and 2, I reported on the NYT Special Report about arbitration – articles highly critical of the spread of arbitration. While the report is one-sided in its approach, it does serve to highlight the revolution that is quietly occurring in our legal system, as arbitration clauses become increasingly widespread – and enforceable – in employment law, and consumer law.
Predictably, the U.S. Chamber of Commerce has not taken the attack on arbitration lying down. In a spirited defense of arbitration, the U.S. Chamber describes the NYT investigation as “little more than an opinion piece masquerading as fact. . . . incomplete, misleading, and one-sided . . . underscored by the article’s resort to innuendo about the ethics of a Supreme Court Justice . . . “
COMMENT: U.S. Chamber of Commerce v. NYT is only the latest sign that the role to be played by arbitration in the American legal system is now highly politicized. The fault lines are apparent in the liberal/conservative split in SCOTUS arbitration decisions, and the polarization in the statements of labor and consumer versus business interests.
Yesterday I reported that the New York Times has kicked off its special report on arbitration with Part I, an article entitled “Arbitration Everywhere, Stacking the Deck of Justice.” The NYT has now moved on with Part II, “Privatizing Justice,” and Part III, “In Religious Arbitration, Scripture Is The Rule Of Law.”
The article on privatizing justice presents a litany of problems with arbitration. Though the article does not exactly describe what “privatizing justice” means, it circles around certain aspects of arbitration: the loss of judges and juries, the secretive nature of arbitration in a system where cases need not be reported and proceedings are confidential, the common perception that unlike judges, arbitrators are “beholden to companies” that are their real clients, and the inability to effectively appeal bad awards. The authors’ point of view appears to be that if sunlight is the best disinfectant, then arbitration is a black hole.
The article on religious arbitration presents some interesting examples involving Christian arbitration, as well as Scientology arbitration. The article points out that in addition to the usual inability to review arbitration awards for mistakes of law or fact, judges will not review religious arbitration awards for fear of church-state entanglement issues.
The Article Is Critical of Enforcement Of Individual Arbitration In Situations Where Only A Class Action Can Be Economically Prosecuted.
Jessica Silver Greenberg and Robert Gebeloff have authored a special report appearing in the New York Times online edition on October 31 and November 1, 2015, under the title: “Arbitration Everywhere, Stacking the Deck of Justice.”
The article promises to be “the first part in a series examining how clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court.”
The issues discussed in the article will be familiar with readers who have followed arbitration decisions of the Roberts Court. Still, without offering too many spoilers, here are a few interesting tidbits:
“More than a decade in the making, the move to block class actions was engineered by a Wall Street-led coalition of credit card companies and retailers, according to interviews with coalition members and court records.”
Attorney John G. Roberts Jr. – now Chief Justice Roberts - represented Discover Bank when it unsuccessfully petitioned the Supreme Court to hear a case involving class-action bans.
The NYT studied 1,179 federal class actions filed between 2010 and 2014 that companies sought to push into arbitration, and found that judges ruled in their favor in four out of every five cases.
Though there is no central database for arbitration, the NYT concluded that between 2010 and 2014, only 505 consumers went to arbitration over a dispute of $2,500 or less.
Verizon and Times Warner have arbitration clauses in their consumer contracts, and from 2010 to 2014, “Verizon, which has more than 125 million subscribers, faced 65 consumer arbitrations . . . . Time Warner Cable, which has 15 million customers, faced seven.”
“One federal judge remarked in an opinion that ‘only a lunatic or a fanatic sues for $30.’”
Andrew J. Pincus of Mayer Brown, succinctly states one of corporate America’s economic arguments for arbitration: “Arbitration provides a way for people to hold companies accountable without spending a lot of money.”
Last year, “attorneys general in 16 states warned that ‘unlawful business practices’ could flourish with the proliferation of class-action bans.”
Examples of companies that now have arbitration clauses in their consumer contracts include Netflix, at&t, TimeWarner, T Mobile, ebay, Expedia, Budget, Discovery, Starbucks, and Electronic Arts.
An Uncertain Future In California: The Arbitrability Of Statutory Representative Actions Brought For The Benefit Of The Public.
Thanks to the generous permission of California Litigation, The Journal of The Litigation Section, State Bar of California, my article “Can Private Attorney General Actions Be Forced Into Arbitration?” is now available on my website by clicking here. The article appeared in the latest issue of California Litigation, Vol. 28, No. 2, 2015.
Daily Journal Publishes My April 17, 2015 Article On The Perils Of Blogging
Published by The Daily Journal on April 17, 2015, my article on the legal perils of blogging will interest those of you who blog, or who are considering blogging. With the permission of the Daily Journal, I am making it available to my readers. Click here if you wish to read it. Note you may have to rotate the article in your viewer or enlarge the text to make it easier to read.
Article By Mediator/Arbitrator Paul Dubow Anticipates Arbitration Issues Arising From California AB 2617 And Proposes Solutions.
Paul J. Dubow’s article, “ADR Update: Dealing with AB 2617”, appearing in California Litigation, volume 28, No. 1, 2015, anticipates FAA preemption issues arising from AB 2617, passed by the California Legislature in 2014, and amending Civil Code sections 51.7, 52, and 52.1.
By way of background, The Ralph Civil Rights Act of 1976, Civil Code section 51.7, prohibits violence or threats of violence based on an individual’s race, color, religion, ancestry, age, disability, sex, sexual orientation, political affiliation, or position in a labor dispute. Civil Code section 52.1, part of the Tom Bane Civil Rights Act of 1987, provides plaintiffs may sue those interfering by “threats, intimidation or coercion” with the plaintiff’s exercise or enjoyment of any state or federal constitutional or legal right.
AB 2617 declares its legislative intent: “It is the purpose of this act to ensure that a contract to waive any of the rights, penalties, remedies, forums, or procedures under the Ralph Civil Rights Act or the Tom Bane Civil Rights Act, including any provision that has the effect of limiting the full application or enforcement of any right, remedy, forum, or procedure available under the Ralph Civil Rights Act or the Tom Bane Civil Rights Act, is a matter of voluntary consent, not coercion.” (italics added for emphasis).
Dubow anticipates that AB 2617’s assurance that any contract to waive rights under sections 51.7 and 52.1 must be a matter of voluntary consent will spawn disputes over arbitrability. While at first blush, AB 2617 is silent about arbitration, Dubow points out that the legislative history “makes clear that the bill was directed at arbitration provisions” – raising the specter of Federal Arbitration Act preemption. Thus, to the extent that contracts for goods and services will now contain waivers of the right to sue in court under sections 51.7, and 52.1, and will contain provisions for binding arbitration, issues will invariably arise as to whether the waivers are involuntary and unenforceable under AB 2617, or enforceable under the FAA, which will preempt state law where interstate commerce is involved.
Without arguing for or against preemption, Dubow offers drafting solutions for those who want to draft an arbitration waiver that will stick. Those suggestions include: (1) provide that arbitration is to be conducted under the FAA; (2) state that the court may not refuse to enforce the arbitration agreement and may not stay arbitration under Cal. Code of Civ. Proc., section 1281.2; (3) make the arbitration provisions prominent; (4) explain the consequences – e.g., that a jury trial is waived; (5) get the provision initialed; (6) include a prominent opt-out provision; (7) draft a fair agreement.
Dubow’s tips for drafting enforceable arbitration provisions are generally useful advice for employer-employee and consumer contract situations.
California Attorney’s Fees has a short post dated February 18, 2015, with tips for successful enforcement of arbitration clauses in fee retainers found in a recent article in the Daily Report, authored by Randy Evans and Shari Klevens of McKenna Long.
Lawrence Wright has written a fascinating book about the thirteen days of intense negotiations at Camp David in 1979 leading to a peace agreement between Egypt and Israel. Earlier, Wright earned a Pulitzer Prize for his book The Looming Tower about events leading up to 9/11.
Thirteen Days in September can be read as a background briefing about the political, historical, and religious obstacles to peace in the Mideast, as a collection of vignettes of the leaders and their entourages, as a meditation on war and peace, and as a detailed account of the procedural and psychological dynamics of immensely complicated negotiations.
The negotiations are an example of opposite sides dealing with seemingly intractable problems and “getting to yes”. In fact, President Carter and Secretary of State Cyrus Vance borrowed a concept from Harvard Law’s Roger Fisher, co-author of Getting to YES, by taking control of the negotiating document, and using it to narrow issues. The process did not start out that way, as Carter naively thought that bringing together Begin and Sadat would lead to an exchange of goodwill, and a mutual recognition of the shared interest in peace, but in fact, quite the opposite occurred, and it became necessary to separate Sadat and Begin.
Carter developed a rapport with Sadat, but not with Begin, whom Carter found to be legalistic and obstructionist. For Begin, the security of Israel was an existential problem, and he balked at exchanging the security buffer of the Sinai for the promise of peace.
On the brink of humiliating failure, Carter changed his role as facilitator and became more directive. The negotiation process evolved painfully, and at times dramatically, while the US draft progressed through 23 revisions. At several points, one side or the other threatened to walk out, and Carter played his trump card: you will destroy your relationship with the US, and you will be blamed for the failure of the peace talks.
Sadat and Begin each achieved important goals: a formal peace agreement between Egypt and Israel, and a continuing relationship for Egypt and Israel with the United States. Egypt regained control of the Sinai Desert. Since 1979, the peace Carter brokered between Israel and Egypt has lasted – between Israel and Egypt.
Carter hoped to successfully link the agreement between Israel and Egypt with an agreement to address UN Resolution 242 and the rights of the Palestinian people in Gaza and the West Bank. However, the Palestinians were not “present at the table”, and their issues were of secondary concern to Begin and Sadat. The agreement between Egypt and Israel was achieved by drafting “creative ambiguities” that imprecisely addressed the rights of Palestinians, without solving profound problems that were simply “papered over.” Thirty-five years later, the agreement between Israel and Egypt is still in place, and the issues presented by UN Resolution 242, Gaza, and the West Bank remain as open sores.
The Article Is About Two Extraordinary Cases In Which Judges Exercised The Summary Contempt Power.
Thanks to the generous permission of California Litigation, The Journal of The Litigation Section, State Bar of California, “Summary Contempt and Due Process: England, 1631, California, 1888” is now available on my website by clicking here.
An abbreviated version of this article appeared earlier as an August 6, 2014 post on California Attorney’s Fees, a blawg to which I co-contribute.