Arbitration and Privatizing Law

I have longed argued that the problem with forced arbitration goes beyond whether it is “fair,” whether the consumer understands it, or whether it is cost efficient, here, here, and here. The real problem with forced arbitration is the affect it has on our system of justice. Recently,  Professor Maria Glover of Georgetown University Law Center wrote an excellent article on the dangers of privatizing law through forced arbitration. Her article, Disappearing Claims and the Erosion of Public Law, will be published in volume 124 of the Yale Law Journal, but a version is now available on SSRN. Here is an abstract of her article:

    The Supreme Court’s arbitration jurisprudence in the last five years represents the culmination of a three-decade long expansion of the use of private arbitration as an alternative to court adjudication in the resolution of disputes of virtually every type of justiciable claim. As scholars have traced, privatizing disputes that would otherwise be public may well erode public confidence in public institutions and the judicial process. Accordingly, many observers have linked this decades-long privatization of dispute resolution to an erosion of the public realm. In this piece I argue that the Court’s recent arbitration jurisprudence undermines the public law itself.

     Indeed, whereas the shift from dispute resolution in courts — the public realm — to dispute resolution in arbitration — the private realm — initially undermined values of adjudication, the shift from public lawsuits to private arbitration now also threatens values of lawmaking. This new threat to the lawmaking function stems from the Court’s authorization of mandatory private arbitration clauses as a way for private parties to construct procedural rules that have the foreseeable — indeed, possibly intended — consequence of rendering those claims a nullity. The Court’s recent arbitration jurisprudence thus threatens the values of public dispute resolution in a fundamentally new and more dramatic way. Through the procedural device of private arbitration, private parties can effectively rewrite substantive law by precluding or severely impeding the assertion of certain types of civil claims. And they can do so almost entirely outside of public view, through commercial (and sometimes) confidential contracts subject to virtually no public scrutiny or regulatory oversight. In short, the Court has handed private parties the power to recalibrate substantive legal obligations, and because this power is largely unchecked, there is currently little to stop this erosion of public law.

The Enforcers & the Great Recession

That is the name of this article by law professor Mark Totten. Here is the abstract:

No one played a more vital role responding to the worst economic crisis since the Great Depression than a small band of state attorneys general (AGs). Yet this story has never been told nor its implications considered. For more than a decade these AGs brought enforcement actions across the residential mortgage lending industry, reaching the origination, servicing, and securitization processes. From roughly 2000 to 2008, they targeted several of the largest subprime lenders for predatory and discriminatory lending. And they moved in the face of federal inaction — at times, even opposition. With the economic crisis everywhere visible by early 2009, they turned toward abuses in mortgage servicing and securitization. While they often collaborated with their federal counterparts during this time period, these AGs continued to lead and shape the enforcement agenda. This narrative demonstrates that states are integral to the task of consumer financial protection. Congress was right to empower states in the Dodd-Frank Act of 2010 by scaling-back preemption and giving the AGs concurrent enforcement powers. The AGs not only serve as a stopgap when federal regulators fail to act, but they alter the quality of enforcement in positive ways not replicated by even engaged federal regulators. The marks of AG enforcement include information advantages; agility; a remedial focus; resistance to capture; and entrepreneurialism. Moreover, these events also suggest a new enforcement model in the area of consumer protection that may sometimes prove more efficient than earlier approaches: the multigovernment, multiagency action. And while these observations concern consumer financial protection in the first instance, they also have implications for ongoing conversations about federalism and enforcement.

Is the Affordable Care Act achieving its goals?

The Affordable Care Act has taken some hits in the courts (but so far has survived the biggest attacks), and it is not terribly popular.

But is it working as it was intended? Yes, according to this piece by Sarah Kliff. An excerpt:

[I]f you look beyond the political fights, the picture looks very different [from what's been reported recently in the press]. Obamacare is, policy-wise, having a great month — maybe even the law's best month ever. Jonathan Chait wrote a piece in New York magazine detailing four recent studies that show Obamacare is working. Some of it has to do with the part of the law that we all know the best — the coverage expansion to millions of Americans. Study after study shows that the Affordable Care Act has increased the number of Americans with health insurance. And this wasn't actually taken as a given at this point last year: there was some speculation that coverage rates might actually drop in 2014, as Obamacare's regulations cancelled millions of individual policies. Then there are the parts of Obamacare that are about improving the health care system not just for the uninsured, but for everyone who goes to the doctor. And here, too, the law seems to be working. Health care costs grew at their slowest rate ever in 2013 — in part due to Obamacare's spending cuts — according to a recent study in Health Affairs. And hospitals have been making fewer deadly medical errors since the Affordable Care Act began cutting Medicare reimbursements for institutions with lots of errors.

Supreme Court denies cert in BP oil spill case

Today the Supreme Court denied BP's petition seeking review of a case interpreting the company's multi-billion dollar settlement over its 2010 oil spill in the Gulf of Mexico. The company claimed (both in court papers and via a public relations campaign) that it is improperly being forced to compensate losses unrelated to the spill.

Read more from the Washington Post here.

Hockett on Using Eminent Domain to Save Underwater Mortgages in NYC

Robert C. Hockett of Cornell has written 'We Don't Follow, We Lead': How New York City Will Save Mortgage Loans by Condemning Them, 124 Yale Law Journal Forum 131 (2014).  Here is the abstract:

This brief invited essay lays out in summary form the eminent domain plan for securitized underwater mortgage loans that the author has been advocating and helping to implement for some years now.  It does so with particular attention in this case to New York City, which is now actively considering the plan.  The essay's first part addresses the plan's necessity.  Its second part lays out the plan's basic mechanics.  The third part then systematically addresses and dispatches the battery of remarkably weak legal and policy arguments commonly proffered by opponents of the plan.

Arbitration now covers claims for assault?

The state of the law on arbitration is undeniably titled against consumers, workers, and really anyone who is wronged by a corporation (including, sometimes, even smaller corporations). We've discussed on this site for years how arbitration undermines disputants' rights and favors the big repeat players. And we've discussed how far arbitration has extended under recent Supreme Court jurisprudence. (I won't inundate you with links.)

Even in light of all this, a recent case from Missouri still has the power to shock: an arbitration agreement in a refrigerator-rental contract was held to cover an elderly customer's lawsuit against an employee of the rental company for a home invasion and savage beating. Read more here from our friend Paul Bland.

Asset forfeiture reforms in D.C.

As Forbes discusses, the D.C. city council has just passed a law to combat the abuses associated with civil asset forfeiture, the law enforcement practice of taking people's money or property and asking questions (such as whether they had the authority to do it) later.

The Washington Post summarizes what asset forfeiture is:

Civil forfeiture laws permit local and state police to take cash, cars, homes and other property from people suspected of involvement in drug trafficking or other wrongdoing without proving a crime has occurred. Police can make seizures under state or federal laws.

In practice, as this in-depth New Yorker article chronicles, forfeitures can be unjustified, leave victims stranded, and put the burden on innocent owners to recover their money or property. And who benefits? Often the very law enforcement agency taking the property.

To combat these abuses, the D.C. law will "raise the threshold of proof required for a forfeiture, bolster the rights of individuals whose property has been taken and require that proceeds from seizures under federal law go into the city general fund, rather than directly to the police department." The Post's coverage is here.

 

 

NY Adopts New Debt Collection Rules

by Jeff Sovern

The press release is here.  The rules themselves are here.  Law360's Evan Weinberger reports here on whether they might become a model for the CFPB or other states.  I am very curious to see how effective the new rules will be. They will surely help some consumers.  Because the rules require disclosures, and evidence is increasingly calling into question how much consumers take advantage of disclosures, some--perhaps many--consumers who could benefit from the new rules may not avail themselves of the protections they provide.  I hope a way is found to monitor the rules' effectiveness to see if more needs to be done.

In praise of Honda on safety

Our site does its share (we hope!) of calling attention to dangerous and/or exploitative corporate practices, so it's only fair that we also mention when a company seems to be looking out for its consumers.

Brian's post earlier today discussed a looming showdown over airbag recalls, with the manufacturer, Takata, refusing NHTSA's demand to broaden the scope of a previous recall over defective airbags. But Honda decided to act on its own and extend the recall nationwide for its own cars with potentially defective equipment, reports the Associated Press.

Earlier this year, DOT promulgated a safety standard requiring rearview cameras in all new cars by 2018. Even before DOT issued the long-delayed rule, Honda announced it would meet that goal by 2015, reported Auto News.

This is not to endorse every decision Honda makes (to read about a 2012 consumer-unfriendly move in litigation, for instance, see here). But it's worth pointing out these two laudatory examples of a company taking voluntary measures to enhance its customers' safety.

Facebook has a new privacy policy

With Privacy Basics, the social network site provides a sleek, interactive guide to your privacy options. Whatever you think of Facebook's record on privacy, the new policy seems to reflect a recognition on Facebook's part that their users do care about it.

I don't know all the details of how the policy has changed over time so as to be able to analyze whether and to what extent the current options are more privacy-protective than before, or whether it's a lot of graphics and not a lot of substance.

But this much seems clear: Facebook is still going to use your information in ads. Facebook is upfront about this, saying (in an email sent to users): "People sometimes ask how their information is shared with advertisers. Nothing is changing with these updates[.]" And Facebook's page about ads (available here) explains, "Your profile picture or name may be paired with an ad to show your activity on Facebook (ex: if you follow the Starbucks Page). Keep in mind that your name and profile picture will only appear to the people who have permission to view your Page likes." This practice is particularly problematic regarding minors, as we've discussed (litigation on this issue is pending).