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The Supreme Court of the United States issued a terrible decision yesterday.  It disallowed a class action based on a consumer complaint of fraud based on a California statute that disallowed most if not all binding arbitration in consumer cases.  Here is the Washington Post’s take on the decision:

Deepak Gupta, who argued the case on behalf of cellphone customers Vincent and Liza Concepcion, called the ruling a “crushing blow to American consumers and employees” and said it leaves consumers powerless against arbitration agreements buried in fine print.

“Whenever you sign a contract to get a cell phone, open a bank account or take a job, you may be giving up your right to hold companies accountable for fraud, discrimination or other illegal practices,” Gupta, a lawyer with the public interest group Public Citizen, said in a statement.

It’s not often I agree with Public Citizen but I do this time.  Binding arbitration is a private court system with little if any of the due process rights associated with the court system.  The private system cannot be reviewed by the actual courts absent significant structural issues with the arbitration hearing.  There is no jury; there is usually no right to appeal; the rules of evidence may or may not apply.

I think binding arbitration is poorly suited for consumer complaints.  These contracts – the infamous “fine print” in consumer contracts for virtually every item – cable services, rental cars, cell phones, credit cards and services of many kinds we rely on every day – will be imposed on us with binding arbitration.  You will waive the right to go to court.

I suggest the Arbitration Act ought to be struck down as unconstitutional violation of due process and also a direct regulation of state law in violation of the Tenth Amendment.  But the Court is not likely to do that.  But Congress can change the Act.  I think the Tea Party/liberty and states rights activists ought to make common cause with liberals to change the Act to exempt consumer transactions.  If two giant corporations want to arbitrate, let them.  But no more imposing a private, unaccountable court system on consumers!  It’s outrageous.  Time to change it!


About Elwood Sanders

Elwood "Sandy" Sanders is a Hanover attorney who is an Appellate Procedure Consultant for Lantagne Legal Printing and has written ten scholarly legal articles. Sandy was also Virginia's first Appellate Defender and also helped bring curling in VA! (None of these titles imply any endorsement of Sanders’ views)

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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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