In a landmark decision that has gotten astonishing little news coverage the US Supreme Court ruled yesterday that the federal arbitration act trumps state consumer protection statutes and case law. The practical effect of this ruling is that consumer class actions are now dead, dead, dead!!!
State courts have repeatedly found the arbitration clauses and anti-class-action clauses in consumer contracts unenforceable -- that they are in legalese unconscionable adhesion contracts (i.e. unfairly gave all the power to the more powerful party who drafted the contract without giving the consumer any real chance to negotiate the clauses). Well the Supreme Court just told all those state courts who were concerned about the welfare of their citizens that they had it all wrong -- the welfare of corporations is now according the the Supremes more important.
http://www.huffingtonpost.com/david-arkush/us-supreme-court-to-major_b_854714.html
So now if a bank overcharges a million customers $30 each the customers only recourse is to individually -- each one of the one million -- invoke their remedies under the arbitration clause the bank wrote itself to protect it self. Of course its not worth it for customers to waste time and effort trying to get their $30 back. This of course is exactly the reason corporations like arbitration clauses. Without access to the courts -- the one place where ordinary citizens are at least facially treated as the equals of corporations -- the only thing ordinary Americans can do when confronted with corporate malfeasance is to bend over and grab their ankles.
Corporate American can now contractually write their own laws. One way to get rid of big government. I doubt ordinary Americans will think this is an improvement.
http://www.latimes.com/business/la-fi-court-class-action-20110428,0,4701430.story
State courts have repeatedly found the arbitration clauses and anti-class-action clauses in consumer contracts unenforceable -- that they are in legalese unconscionable adhesion contracts (i.e. unfairly gave all the power to the more powerful party who drafted the contract without giving the consumer any real chance to negotiate the clauses). Well the Supreme Court just told all those state courts who were concerned about the welfare of their citizens that they had it all wrong -- the welfare of corporations is now according the the Supremes more important.
http://www.huffingtonpost.com/david-arkush/us-supreme-court-to-major_b_854714.html
So now if a bank overcharges a million customers $30 each the customers only recourse is to individually -- each one of the one million -- invoke their remedies under the arbitration clause the bank wrote itself to protect it self. Of course its not worth it for customers to waste time and effort trying to get their $30 back. This of course is exactly the reason corporations like arbitration clauses. Without access to the courts -- the one place where ordinary citizens are at least facially treated as the equals of corporations -- the only thing ordinary Americans can do when confronted with corporate malfeasance is to bend over and grab their ankles.
Corporate American can now contractually write their own laws. One way to get rid of big government. I doubt ordinary Americans will think this is an improvement.
http://www.latimes.com/business/la-fi-court-class-action-20110428,0,4701430.story
