Part I of this story, Corporations nailed shut the courtroom door: forced arbitration steals your rights and money, was published on Monday. It presents the history of arbitration laws, how the Supreme Court has invented new history and law in this area, and the risks, drawbacks and increasing pervasiveness of forced arbitration for individuals.
Part II, Forced arbitration (Part II): how corporations steal your money to give to the 1%, was published yesterday. It discusses the types of theft from individuals, by corporations, that are enabled through forced arbitration clauses.
Themis, the Goddess of Justice, is the symbol for justice derived from courts of law, respecting the rights of all and fairly and equally applying the laws duly enacted by the people's representatives. She holds a sword in one hand for good reason: it signifies that she is ready to mete out punishment when needed to restore order, justice and the rule of law. Her scales scrupulously weigh the merits of both sides and she renders her impartial judgment.
If forced arbitration had its own statue, the goddess would appear quite different. Her scales would be weighted heavily to one side with gold coins and she would be using a cudgel to coerce the citizenry to add more lucre to her hoard.
Fairness is what justice really is. – Supreme Court Justice Potter Stewart
Forced arbitration is inherently unfair. It is not justice.
Part III – Fighting back to bring back justice
In the closing section of their report, Gupta and Khan offer hope that the proliferation of forced arbitration, and its negative outcomes, can be lessened if not reversed.
Tactic #1 — A new majority on the Supreme Court
Clearly the demise of Justice Scalia provides an opportunity to change the direction of jurisprudence, in arbitration matters as well as many others. Courts are generally conservative by nature in the sense of being reluctant to overturn established law but that doesn't mean they never do: critical shifts in law and custom have been achieved only because the Supreme Court revisited an issue and changed its opinion.
At the moment, it appears unlikely that any nominee of President Obama will be confirmed so much will depend on the results of the upcoming election. A new Democratic president, and possibly a Democratic majority in the Senate, would allow seating a justice who is attuned to the corrosive effects on society of wealth inequality and the consolidation of power in boardrooms which represent the interests of a tiny fraction of the populace.
Conversely, a Republican president with a Republican Senate would likely result in a Supreme Court appointment that would affirm the trends of the past three decades and accelerate the rise of the corporate aristocracy at the expense of the 99%.
A progressive jurist on the Court could cut the corporations off at the knees, given the right case and the support of what has frequently been a 4-person minority in previous cases. The mighty titans of the corporatocracy would fall to earth.
Tactic #2 — Congress can legislate but it can also publicize
New legislation to amend the Federal Arbitration Act is an option that is not viable at this point in time. As we all know, Congress has been able to achieve little of substance due to obstructionism, especially in the House.
We can elect more and better Democrats and keep the pressure on them to enact better legislation, or at least try to do so in order to fix attention on the problem. The ACS authors note that some proposed bills have been introduced and likely will not be passed but still serve a purpose.
Although these broad bills have little chance of enactment in the foreseeable future, they do help generate attention and lay down a marker for future progress. They may also help lead to more targeted legislation for politically favored groups—such as nursing home patients, farmers, or veterans. [1]
That presents a strategy for seeking unnatural allies, conservatives who object to Wall Street using the power of the governments' courts to enforce decisions; others may object to private arbitrators deciding statutory law in secretive tribunals in unpublished opinions; and others may want to extend protections to particular groups they favor or fear.
The legislative approach will be a long slog but ultimately could let us sweep away the abuses in one grand motion. In the meantime, legislators can propose bills and hold hearings just to keep pressure and publicity on corporations about this matter.
Tactic #3 — An array of agencies to rein in arbitration
For the present, administrative regulation offers a great deal of possibility and hope. The Consumer Financial Protection Bureau (CFPB) has already begun work on new rules which would prohibit bans on class actions in consumer agreements. The rulemaking process is slow so no concrete action should be expected until much later this year, at the earliest. [1]
Again, Republican obstruction could jeopardize the CFPB's plans. We have already seen how conservatives in Congress have tried to subvert and cripple the agency, by threatening funding cuts, blocking confirmation of its director and so on. A Republican president and Congress could easily throw the CFPB under the bus entirely, leaving consumers without any advocate in top echelon of federal government.
It is not just Republicans who pose a threat to consumer-positive regulation, either. For example, Debbie Wasserman Schultz, chair of the Democratic National Committee, is pressuring the CFPB on behalf of predatory lenders, seeking to undercut any restrictions the agency might impose on them. She is cosponsoring legislation that would permit weak state regulations to override federal rules, with a model bill for states that seems like a product of ALEC.
The bill, which is contradictingly titled the “Consumer Protection and Choice Act,” would push back the bureau’s payday lending regulations by two years. It would also let state laws on payday lending trump the federal regulations, falling back on so-called “states’ rights.” [2]
Wasserman Schultz is hardly the only Democrat to work against consumer interests. Many others are in thrall to Wall Street and powerful financial institutions.
The CFPB has jurisdiction only in consumer finance matters so other agencies could be called upon to issue their own remedies. For example, the Federal Communications Commission could mandate that internet and cell phone service not be subject to forced arbitration; chairman Tom Wheeler has already proven to be a surprisingly positive leader on behalf of consumers.
Federal agencies have responsibility for a wide range of products and services. That means there are many, many possible venues to roll back the gains that corporations have made in inflicting their rigged extra-judicial system on the public; it also means that citizens and public interest groups have to fight the same battle over and over again, from agency to agency.
It would take hard work and determination over the long haul but it can be done. A coordinated effort, uniting various public interest groups and consumer advocacy organizations, could bring a lot of public pressure to bear on a given federal agency, letting us select one fruit at a time to ripen and then pluck, so to speak.
Tactic #4 —Resistance is not futile
Sometimes less is more. Each and every one of us has at least some ability to refuse participation in the rigged game of arbitration. The slogan “Think global, buy local” has application in this arena. Whenever we patronize big box stores, international restaurant chains, or open accounts at big banks, we're often buying into the system without even knowing.
We can shop at small local businesses, eat at Mom's Diner, and put our money into the community credit union. We can't safely assume that local small businesses haven't been absorbed into the arbitrative Borg collective so we need to ask about their policies, then support them if merited. Let them know why you are choosing to do business with them or why you are refusing.
The same is true for those big businesses. Ask and verify. You might be surprised when a natural suspect turns out to be innocent, untainted by the arbitration infection. If not, speak to the manager and explain why you will have nothing to do with the business; the manager can't change policy but enough voices may cause him or her to pass word of the rebellion up the food chain to those who can. If the business does not force arbitration, speak up to congratulate management and specify that is a critical reason you will be a customer.
Whenever and wherever possible, we can resist and avoid. Where it is not possible to find alternative providers of goods or services without forced arbitration clauses in contracts and agreements, we can voice our dissatisfaction. Where it is deserved, we can voice our compliments and reward the good actors.
We can educate our friends, neighbors and co-workers about the injustice that masquerades as quick-and-easy justice and enlist their participation in boycotts. Speak to your employer, your church, your Elks Club: inform them about forced arbitration and see if they'll address it with the companies that sell them products and services. Your PTA, gardening club or community chorus might be outraged when you tell them how corporations legally pick their pockets and spend an hour firing off letters and emails to offending companies.
Make it easy for other people to participate. When you or others you know do the homework and know which companies in your area are good actors or bad actors, make a list. Give a copy to people so they have a tool for taking action. Ask them to share it with others and join your efforts to communicate approval or criticism to the businesses, as appropriate.
Remember, passivity is one of the key conditions that lets forced arbitration steal from the 99%: as individual claimants we are overwhelmed and just give up. Working together as activists, not waiting until we are victims of corporate thievery, we can support each other and attack the system at every opportunity. In time we might be able to bring the entire corrupt edifice tumbling down.
Part IV – So long and thanks for all the fishy (in)justice
Arbitration is not alternative justice
Arbitration's purpose is to reach resolution, theoretically in the form of an equitable solution. In both consumer and employee claims, arbitration by its nature is likely to arrive at a different outcome than court litigation in the event that the individual wins. For a consumer or worker, that means restitution of any loss incurred and, in the greater scheme of things, that would often not be a particularly large sum. For a losing corporation, the amount would be little more than a rounding error.
Judges and juries have a different role and purpose: granting justice and, in the process of doing so, affirming the rule of law and the social guarantee of equality under the law. In practical terms, that means a judge or jury may be motivated to penalize bad actions and bad faith by a corporation with judgment amounts far in excess of actual losses to victims. They may choose to deliver a harsh financial message that will dissuade not only the offending corporation but also warn others who might be tempted that the law will be there to protect the innocent and severely punish the guilty.
An arbitrator will never do that. An arbitrator does not represent us, the people as a whole, in any way. Arbitration does not, and cannot, wield the sword of justice on behalf of the injured and aggrieved.
All the world's a stage set for forced arbitration
We've only examined the proliferation and effects of arbitration domestically, within our own borders and our own legal system. The cancer has already spread globally and is still metastasizing.
Trade agreements between the United States and other nations, such as NAFTA and the proposed TPP, typically include forced arbitration, in a form known as Investor-State Dispute Settlement (ISDS). The treaties include clauses which appear almost familiar to those who read their own consumer agreements, mandating a non-judicial and extra-governmental process for resolving disputes. Like domestic arbitration, ISDS is also a system contrived by corporations for their own benefit.
As one might expect, putting mercenary justice into place on an international scale means it can be used to extract vast sums to fill corporate coffers. The difference is that ISDS preys not on individuals one at a time but on all citizens of a nation at once. Judgments, or “awards” in arbitrative parlance, come out of the country's public treasury, affecting every person who pays taxes, receives state benefits or relies on services and infrastructure of the nation.
It should come as no surprise that ISDS provisions began to be added to trade agreements contemporaneously with the rise of domestic forced arbitration. It's hard to know which was the chicken and which was the egg but the corporatocracy obviously found that similar systems could be used to coerce and fleece both individuals and nations with just a few tweaks.
Although this article is intended to educate and inspire resistance in regard to domestic forced arbitration, we should be aware of the dangers of its international sibling and strive against it as well. In an upcoming series, I will present an article on ISDS that, if anything, will be more exhausting to read than this one: consider yourselves warned and prepare to drink more coffee.
We are a society, not a wholly owned subsidiary
We often hear it said that we are a nation of laws. That we cannot be if the law is little more than sanctioned permission to shove people unwillingly into a Kafkaesque black hole of secretive tribunals and closing off access to centuries of jurisprudence.
By turning justice over to those who focus solely on private interests rather than civic duty and responsibility within society, we weaken our legal system and jeopardize respect for the law. There is a legitimate, but narrowly limited, role for arbitration—between business parties of comparable strength—but it should never replace the nation's courts nor be permitted to usurp the role of magistrates in deciding matters of law.
People should always have the right to hear and to be heard in the only public venue that guarantees their rights, the one that calls out to the citizenry to attend the open manifestation of our social compact with "Oyez, oyez, this honorable court is now in session."
If we do not maintain justice, justice will not maintain us. – Francis Bacon
Thank you for reading the various parts of this series and adding to the discussion with your comments. Also, a big "Thank you!" to our tireless Rescue Rangers who sent Parts I and II to the Community Spotlight, ensuring more exposure for the series.
[1] Arbitration as Wealth Transfer by Deepak Gupta and Lina Khan, American Constitution Society for Law and Policy
[2] DNC Chair Debbie Wasserman Schultz joins hands with GOP in assault on Elizabeth Warren’s consumer protection agency by Ben Norton, Salon