Respectfully submitted by Lawrence E. Rafferty (rafflaw)-Guest Blogger
A recent United State Supreme Court decision has made it almost impossible for small businesses and individuals to bring class action lawsuits against large corporations who may be in violation of antitrust laws. Not only did the case fly under the mass media radar, it also may allow corporations to use contractual language to insulate them from many other federal laws. I am talking about the American Express v. Italian Colors case that was decided by a 5-3 margin. What the Supreme Court majority did here was to allow American Express to force its small business customers to sign a contract that included language that precluded those same customers from having any viable access to judicial review of American Express’ business practices.
The Washington Post provides a good synopsis of the case. “In a second case, American Express Co. v. Italian Colors Restaurant , the same five justices ruled that corporations can insulate themselves from liability for violating federal law by inserting clauses in their contracts that prohibit class-action arbitration. A group of small merchants argued that American Express had violated antitrust laws by using its monopoly power to charge credit card fees 30 percent higher than those of its competitors. But American Express had used the same monopoly power to draft a form contract that directed all legal disputes into arbitration — and then forbade arbitration on a class-wide basis. The merchants argued that because antitrust claims are so expensive to prove, they are not worth pursuing on an individual basis and can be vindicated only through collective, class-wide proceedings.
The Supreme Court previously ruled that contracts may require arbitration rather than court litigation only if the arbitration proceeding provides an adequate forum for individuals to vindicate their rights. In Italian Colors, the court’s majority conceded that requiring individual arbitrations would make it too expensive to challenge American Express’s conduct, but, as Justice Elena Kagan paraphrased the majority’s response in her dissent: “Too darn bad.” ‘ Washington Post
Does it surprise anyone at this point when the Roberts Court favors large corporate interests over those of small businesses? The arbitration clause in the American Express contract that all of its customers were required to sign, was a take it or leave it proposition. I think that type of take or leave it contract was referred to in law school as an “adhesion contract”.
Prior to reaching the Supreme Court, the Second Circuit Court of Appeals heard the Italian Colors case three times and each time it found for the merchants based on the expense involved for each individual business or person to bring an individual arbitration case against the behemoth American Express.
“The small businesses’ claims were pretty small individually, not more than around $5,000 per shop. So, to make their case worth enough for a lawyer to take it, they banded together to file a class action on behalf of all small businesses affected by the practice. In response, Amex invoked the small print in its contract with them: a clause that not only banned the companies from suing individually but also prevented them from bringing a class action. Instead, Amex insisted the contract required each little businesses to submit to the decision of a private arbitrator paid by Amex, and individually press their claims. (Arbitration is heavily stacked in favor of the big companies, as you can read more about here and here.)
The restaurants estimated, with good evidence, that because of the market research required to press an antitrust case, arbitration would cost each of them almost $1 million to collect a possible maximum of $38,000, making it impossible to bring their claims at all. After a lot of litigation, the little guys prevailed in the 2nd Circuit Court of Appeals, which found that the arbitration clause was unconscionable because it prevented the plaintiffs from having their claims heard in any forum. The court said the arbitration contract should be invalidated and that the class action should go forward in a regular courtroom. (Sonia Sotomayor sat on one of the appeals before heading to the high court and is recusing herself from the case as a result.)” Mother Jones
If the negative impact on small businesses and individuals was not great enough, the decision in Italian Colors may allow corporations to avoid other Federal laws by merely including language in any contract that prohibits the aggrieved party from filing suit or joining in a class action suit. In fact, AARP filed an amicus brief with the Supreme Court warning about that very concern.
“In an amicus brief submitted in this case on the side of the small businesses, lawyers for AARP, Public Justice, and the American Association for Justice warned that if the court sided with Amex, “statutes intended by Congress to protect weaker parties against stronger parties will essentially be gutted. Small businesses might as well move to a different country where they no longer enjoy the protection of the antitrust laws. At the whim of an employer, workers could be required to prospectively waive their Title VII [anti-discrimination] rights. Consumer protection laws such as the Truth in Lending Act could be silently, but inescapably, repealed by corporations with the stroke of a pen.”
Indeed, if the court ruled that Amex could use an arbitration clause in a contract with a much less powerful party to escape punishment under the Sherman Antitrust Act, there’s no reason why a big company couldn’t create contracts that prevent people from filing sex discrimination, consumer fraud, or other similar claims in any venue. Laws that Congress passed to protect the public could simply be voided through artfully written arbitration clauses that create expensive hurdles to pressing a claim.” Mother Jones
Of course, the Supreme Court majority is unconcerned with the little guy losing any viable means to attain justice. Justice Scalia merely claimed in his majority decision that the law does not guarantee the average person a cheap method of enforcing the law against big corporations. Once again, does that attitude surprise anyone at this point in the history of the Roberts Court? Justice Elena Kagan pulled no punches in a blunt dissent.
Her closing sums up the damage done by the majority in their politically designed decision. “In the hands of today’s majority, arbitration threatens to become more nearly the opposite—a mechanism easily made to block the vindication of meritorious federal claims and insulate wrongdoers from liability. The Court thus undermines the FAA no less than it does the Sherman Act and other federal statutes providing rights of action. I respectfully dissent” Kagan Dissent
It should be no surprise that the Roberts Court is pro-business, but the road it has traveled to insure that large corporations are sacred cows that are infallible and immune to legal precedents and possibly Federal law is amazing. It is shocking that a case of this importance was so overlooked by the mass media. Even by a corporate owned mass media. Do you think the Roberts majority has gone too far in ignoring precedent? Do you think that the decision will open the flood gates to corporations using arbitration clauses to avoid other Federal laws?
If you agree with the majority in this decision, how can small businesses ever get a reasonable hearing on their legal complaints if they are forced to sign an adhesion contract with a large supplier of services? This decision should concern citizens of any political stripe. What do you think?
Porkchop,
I read and type very fast, but thanks for thinking it’s any of your business how I spend my time. Besides, neither Brian nor davidbluefish are classic trolls.
Gene H
I’m all about the history. 🙂
I recommend sauerkraut.
By the way, you clearly have too much time on your hands, Don’t you have a lawn to mow, a client to represent, laundry to do, errands to run? Something other than responding to massive trolling?
nick,
There is something else we agree on. I use cash whenever possible. I just don’t see the utility of paying a vig for the convenience of plastic unless it’s an over budget purchase that is a necessity or something where deposits/guarantees to the transaction make it necessary (like renting a car).
davidbluefish,
And your point is?
That statement is gibberish and thus unconvincing.
Let me break it down for you.
“If the Anglo-American Adversarial System of Law and Jurisprudence did not attempt to impose its religion onto me and to other people who understand, with profound biological accuracy, that no avoidable mistake or avoidable accident can ever actually occur, and stopped imposing its belief system on me and on other people about whom I care deeply, I would contentedly ignore the brain damage associated with the belief that decency is adversarial in nature.”
It starts with a false equivalence. “The Anglo-American Adversarial System of Law and Jurisprudence” is not a religion. It is also important to distinguish between “law”, “jurisprudence” and “the adversarial system”. They are not the same thing. A religion is a set of beliefs concerning the cause, nature, and purpose of the universe and usually supernatural in nature. The law is a system of rules and guidelines which are enforced through social institutions to govern behavior, define crimes and civil wrongs (torts), and provide for a method of dispute resolution. Jurisprudence is the study of the theory and history of law.
The big question driving religion is “why” and filling in the “when, where, what and how” with a story of some sort that is accepted as true even though it cannot be proven – a mythological belief structure. The big questions driving law are “when, where, what, how and what is the quality of the evidence in support of the answers to these questions” – it is an empirical inquiry based on finding facts. Sorting out the actus reus – the guilty act. The only time “why” factors into the law is in those instances where individual motive – mens rea, the guilty mind – are either a factor in punishment and charging (such as the difference between premeditated murder and manslaughter) or an actual element of the crime (like conspiracy where knowledge in furtherance of the conspiracy is required in addition to action to make one a co-conspirator).
The adversarial system is so named because there are two (or more) parties in dispute. They are “adverse”. One side says the contract was breached, the other side says it wasn’t. Both want satisfaction in one form or another. The State says a crime was committed. The defendant says none was committed. Both want satisfaction in one form or another. In the modern adversarial system, both side meet before a third party – a judge and sometimes a judge and jury – who hears the evidence of the facts asserted, applies the laws to find a remedy appropriate to the situation, and renders a judgement (optimally both just and equitable) that both sides get to deal with. It is a form of a function and it is done in public (or it’s supposed to be anyway) to give enough transparency to the public to assure just and equitable outcomes are reached by an impartial finding of facts and the impartial application of the laws.
The primary alternative is the inquisitorial systems of dispute resolution where the courts act as an active investigator of fact instead of an impartial referee between prosecution and defense, but one doesn’t need to be a legal scholar to recognize that presents a much greater chance for bias toward the state in any given scenario. These kinds of courts have also historically been used to make rulings based simply upon imperial fiat, not an equal application of laws to all parties. The other methods to dispute resolution are all equally bad. Trial by combat, trial by ordeal, and secret trials? Are any of these preferable to the public adversarial system? Are they more likely to produce a just outcome? No. So as I stated, the adversarial system of dispute resolution is the worst form of dispute resolution we’ve ever tried except for all the rest.
“[P]eople who understand, with profound biological accuracy, that no avoidable mistake or avoidable accident can ever actually occur” are people who believe in determinism. This may be an understanding of a belief, but it is not an understanding of fact. It’s an assertion of “why/how” in the theological sense. The law in the modern world and as it relates to dispute resolution does not have a foundation based in determinism. It shares the same basis as scientific inquiry: causality.
“Alas, those who relentlessly believe in the dogma of avoidable accidents and mistakes actually happening tend to threaten me severely for not being capable of internalizing their dogmas and doctrines.”
“It is because the “Adversarial System” insists on its Divine Right”
Full stop. The adversarial system in this country does not assert its power to adjudicate based on “divine” anything. Those would be ecclesiastical courts or courts servicing some form of theocracy. Our courts power to adjudicate is based on a formalized document creating a form of government by mutual agreement – a Constitution – and this therefor constitutional in asserting its powers. And because our form of government is secular by the terms of the 1st Amendment, it is a secular constitutional basis for judicial power, not the “Divine Right” granted by some god. It’s an agreement among men.
“to torture me without relent that I raise this protest, not only for myself, but for every other person of the autism spectrum, each one individually neither more nor less than for me.”
This sounds like simply a personal beef after being on the “wrong end” of a ruling. The adversarial system, like any system made by humans, is not perfect. It often renders solutions that neither adverse party likes. While the stated role of our courts is to promote justice and equity, these are aspirations, not guarantees of outcome. Some situations simply have no “winner”. Of all the possible answers to “a game” (-1, zero, 1), the hardest to accept are -1 and zero.
Brian is free to disbelieve in the law or the power of the courts all he likes based on either determinism or fairy dust, it makes no difference. He’s free to state this disbelief how he likes, but in doing so, he invites scrutiny of his assertions and logic. Everyone is entitled to an opinion, but no one is entitled to their own facts. The facts of the matter are that the adversarial system is not a religion and it is better than the alternatives. If he doesn’t like being subject to laws and courts, he has the same options we all do – avoidance or to live in isolation from all of society.
But to be clear, his pronouncements aren’t gibberish because he’s autistic and making a statement. Some autistic people have made not just rational statements but contributed vastly to our knowledge and understanding in part because of their unique perspective (Temple Grandin comes to mind). Brian’s statement are gibberish because they are gibberish on their face. They have no basis in fact and as such what logic they present is unstable for being counterfactual.
Gibberish is never persuasive.
Well.
Almost never.
Stacey, I almost always pay restaurant checks in cash. And if I charge, always tip w/ cash. I love cash. It makes one more frugal. And, the govt. HATES cash, a big bonus. Otherwise we would have larger bills than $100.
Let’s all just quit using credit cards and start paying cash!
AY:
yes it is.
AY:
you just do. nothing negative implied.
Well, thank you Bron…. It’s kinda fun watching and observing…. What will unfold next…
How’s that Bron…
AY:
You amaze me.
ccrider27:
but I bet you were all for Obamacare being just the cats meow according to them.
there have been so many legal decisions over the last 125 years that have gone against the Constitution why do think now is any different?
Like you said… Wow…
We don’t have a Supreme Court anymore. All we have is a Whore Court, in which UP can officially be found to be DOWN at the whim of our ruling corporate class.
And since this Whore Court is now the final arbiter in our 3 part government, along with the fact that all politicians inside the beltway are also a bunch of corporate whores, our laws and everything that goes on there is invalid, and has absolutely no true justification whatsoever.
It is simply the 1% running roughshod over the rest of us. They can only keep their rule in place via the police state that supports and protects them but not us – by using violence whenever necessary.
LAW essentially has no meaning anymore in America. And if the federal government has no respect for the law, i. e. the Constitution, then why the hell should we?
And given the assumption that most of you lawyers first decided to go to law school because you hold (or at least at one time held) our justice system in high esteem and aspired to be a part of that great and esteemed system, I have to pose this question:
How does that make you feel?
Gene H.
Hey Marcus Aurelius take this. …. As expressed by J Brian Harris in a earlier post on a different thread. to you I believe,.. or think.
If the Anglo-American Adversarial System of Law and Jurisprudence did not attempt to impose its religion onto me and to other people who understand, with profound biological accuracy, that no avoidable mistake or avoidable accident can ever actually occur, and stopped imposing its belief system on me and on other people about whom I care deeply, I would contentedly ignore the brain damage associated with the belief that decency is adversarial in nature.
Alas, those who relentlessly believe in the dogma of avoidable accidents and mistakes actually happening tend to threaten me severely for not being capable of internalizing their dogmas and doctrines.
It is because the “Adversarial System” insists on its Divine Right to torture me without relent that I raise this protest, not only for myself, but for every other person of the autism spectrum, each one individually neither more nor less than for me.
OT, Hey Mailman, here’s 12 hours of work, our computers say it’s 10 hours. If you come back late we will fire you. …. Tomorrow will be the same.
Grunt grunt.
Carl Sandburg. 1878–
75. Cool Tombs
WHEN Abraham Lincoln was shoveled into the tombs, he forgot the copperheads and the assassin … in the dust, in the cool tombs.
And Ulysses Grant lost all thought of con men and Wall Street, cash and collateral turned ashes … in the dust, in the cool tombs.
Pocahontas’ body, lovely as a poplar, sweet as a red haw in November or a pawpaw in May, did she wonder? does she remember?… in the dust, in the cool tombs?
Take any streetful of people buying clothes and groceries, cheering a hero or throwing confetti and blowing tin horns … tell me if the lovers are losers … tell me if any get more than the lovers … in the dust … in the cool tombs
Well said lottakatz.
Just because you’ve never changed my mind or taught me anything AY doesn’t mean it hasn’t happened or is impossible. How quickly you forget my prime operational principle found in the words of Marcus Aurelius.
“If any man is able to convince me and show me that I do not think or act right, I will gladly change; for I seek the truth by which no man was ever injured. But he is injured who abides in his error and ignorance.”
It was good advice then. It’s good advice now.
Unless you’d care to try to convince me otherwise.
Porkchop,
I’m impressed….. This is a first…..
The truly salient point, LK.
___________
Porkchop,
The more I think about your argument, the more I like it. In fact, I’ve adjusted my internal historical timeline accordingly. Thanks for giving me another reason to like a good porkchop.