Consumers and the Supreme Court: Arbitration Just One Piece of the Puzzle
For years, one of the biggest threats to consumers has flown under the radar. Now, thanks to a series of in-depth articles in The New York Times, the arcane-sounding legal stratagem called “mandatory binding arbitration,” buried in the fine print of millions of consumer, employment, and other agreements, is finally exposed as “the center of a far-reaching power-play orchestrated by American corporations,” by which they have “essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination.” However, arbitration is just the tip of the iceberg when it comes to corporate-driven threats to consumer, worker, retiree, patient, and other protections that make it harder for everyday Americans to preserve and protect their interests. And nowhere is this threat more real than in the Roberts Court.
Let’s start with mandatory binding arbitration and the procedural and legal problems so deftly highlighted in the Times series. Most consumers are unaware that they have agreed to these clauses or, in the best case scenario, are aware of what they have signed, but have no meaningful capacity to opt out or alter terms. These clauses lie hidden in the fine print of just about every contractual agreement that Americans are obligated to sign, including employment contracts, cell phone contracts, nursing homes contracts, financial services, emergency rooms, and home building contracts. Just by signing up for a service or buying a product, Americans are forced to forego court enforcement for arbitration proceedings that are too often skewed to favor companies against the interests of consumers, employees, or other individual victims of law violations.
Consumer advocates have been aware of the problems for years, as the Supreme Court has slowly expanded the use of arbitration and limited access to the courts by elevating the arcane Federal Arbitration Act, passed in 1925 to resolve business-to-business disputes, over all else. The Court majority has badly interpreted the law and overridden the will of Congress. In fact, nearly two decades ago, Justice O’Connor correctly described the Court’s arbitration jurisprudence as “an edifice of its own creation.”
Constitutional Accountability Center’s research demonstrates that the Chamber of Commerce has played a leading role in shaping the Roberts Court’s arbitration rulings. Indeed, the Chamber has filed amicus briefs in every major arbitration case decided by the Roberts Court, including American Express v. Italian Colors Restaurant, AT&T Mobility LLC v. Concepcion, and Rent-A-Center v. Jackson. The Chamber has also been on the winning side in the vast majority of these cases. Since Justice Alito joined the Court, the Chamber has compiled a record of 8 wins and 2 losses in its arbitration cases — an 80% winning percentage. Interestingly, six of these cases were decided by 5-to-4 or 5-to-3 majorities, with the Chamber winning five of them and the Court’s conservatives siding with the Chamber’s position 90% of the time.
The Supreme Court’s arbitration decisions have sanctioned a system that is biased in favor of corporate repeat players who can choose their preferred arbitrator and arbitral forum, and that prevents consumers and small businesses from even being able to arbitrate their claims as a group, instead forcing consumers to take on the time and expense of arbitration individually.
Arbitration is only one piece of the current threat to consumer rights at the Supreme Court. Take this Term. There are currently three cases before the Court that could limit consumers, workers, and small business’ rights if the corporations succeed in creating new restrictions on class actions. In Spokeo, Inc. v. Robins, corporations argue that Congress does not have the power to authorize consumers to seek court redress for dissemination of false financial information about them by credit reporting agencies, or, more generally to provide individuals with a remedy for the violation of credit information accuracy, product safety, privacy protection, and other laws designed to redress and to prevent well-documented harms with widespread impact. Indeed, an adverse ruling could cripple Congress’ ability to prevent future such harm of any kind. In Campbell-Ewald v. Gomez, the Court is considering whether corporations can avoid liability by offering to settle only with the named class representative, even when the plaintiff rejects that offer. The claims of the rest of the potential class could go wholly ignored and unredressed. Finally, in Tyson Foods v. Bouaphakeo, businesses are arguing that use of statistical evidence is illegal because it is “trial by formula.” A pro-business decision will mean that, despite the fact that courts — and decision-makers of all kinds in the private and public sectors — have of necessity relied upon statistical evidence for decades, corporations will be able to avoid liability for class-wide injuries. This has implications for the legal viability of claims on a host of issues ranging from gender pay discrimination to antitrust enforcement.
Across a wide array of legal issue areas, ordinary people’s capacity to get justice from our legal system is being progressively narrowed by the Supreme Court. The New York Times arbitration series highlights the risks to consumers, workers, and small business from these pro-business decisions, but this should be only the beginning. It is time to keep shining a light on and fighting back against the efforts of big business to radically change the law in their favor.
Elisabeth M. Stein is Policy Counsel at Constitutional Accountability Center.
