Consumerist
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lawsuits
Class Action Against Credit Card Companies Conspiring To Make Us All Accept Mandatory Arbitration Revived
Ross vs Bank of America is a class action suit against a pile of banks alleging that they conspired to make all consumers accept mandatory binding arbitration clauses. It got a boost on Friday when the Second Circuit remanded it back to lower courts for further consideration (read the 15 page decision here). The previous court had dismissed the case because it felt plaintiffs couldn't prove actual injury. The Second Circuit reversed, saying, "A card that limits the holder to arbitration is less valuable (all other factors being equal) than a card that offers the holder a choice between court action or arbitration." What did these banks do that was so bad? The plaintiffs claim a broad conspiracy between all the credit card players to institute mandatory arbitration agreements and kill off all non-arbitration agreement cards on the market, a gross violation of antitrust laws. Here's the breakdown:[b]eginning before late 1998 or early 1999, Defendants began communicating with each other and their co conspirators concerning the imposition and use of mandatory arbitration clauses.” After preliminary meetings and communications, the banks formed an “Arbitration Coalition” to recruit other credit card issuers into using mandatory arbitration clauses. Over the next four years, the Arbitration Coalition held more meetings, shared plans for the adoption of arbitration clauses, and spun off additional working groups. Ultimately, “Defendants jointly forced unwilling and unaware cardholders to accept arbitration clauses and class action prohibitions on a ‘take-it-or-leave-it basis’ through the joint exercise of immense market power.”
Docket No. 06-4755-cv
The cardholders argue that the banks’ collusion violated the antitrust laws. According to Plaintiffs-Appellants, the banks conspired in order “to immunize themselves from economic responsibility for antitrust and consumer protection violations, and to reap supra-competitive profits from their cardholders.” The cardholders also contend that the alleged collusion produced several market effects, including the creation of a “non-price trade advantage over cardholders” and the removal of any economic incentive for the banks to comply with antitrust and other laws, thereby shifting the risk and cost of their non-compliance to cardholders. The collusion is also alleged to have resulted in an increase in dispute related costs to individual cardholders (including monitoring the banks’ conduct and seeking relief through costly individual arbitrations), the removal of all non-arbitration credit cards from the market, thereby depriving the cardholders of meaningful choice in the area of credit card services, and a diminution in the overall quality of credit services offered to consumers.
The Complaint sets forth two antitrust claims against the banks. The first claim alleges a conspiracy to impose mandatory arbitration clauses in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. The second claim alleges that the banks participated in a group boycott by refusing to issue cards to individuals who did not agree to arbitration, also in violation of Section 1 -
contracts
Sex Assault Suit Vs. Halliburton Goes To Arbitration
A woman who says she was sexually assaulted by co-workers while working for a contracting company in Iraq, KBR, affiliated with Halliburton, lost her chance to get her case heard in a real court of law. A judge ruled yesterday that the mandatory binding arbitration clause in her contract holds firm and so its off to kangaroo court she goes. The unfortunate court decisions is a rape of justice, this is an instance where the arbitration clause should have been ruled unconscionable. More » -
photos
The Burger Of Mandatory Binding Arbitration
If you step into this Whataburger in Kilgore, Texas, you automatically agree to the burger joint's mandatory arbitration clause. At least that's what the sign on the door says. According to Mother Jones:
Sorey says when he went in, he told a befuddled cashier that he didn't think that the arbitration notice was enforceable, that anyway he wasn't agreeing to it, and, "I need a taquito and a coffee." He says he sat down, watched some traffic, and ate his taquito. "I didn't choke, I didn't burn myself, and I didn't sue 'em," he reports.
That's one burger that's hard to swallow. Might choke on your after you read this sign. That's one raw burger. Etc.Eat Burger, Waive Right to Sue [Mother Jones]
(Photo: Dan Sorey) -
consumer action
Jordan Fogal Responds To Your Comments About The Rotten Lemon Tremont Homes Sold Her
Jordan Fogal was heartened to see our post on her story and read your comments. Here's her response to some of your questions.
Thank you Ben! Now how do I respond to these comments ... they are the ones I usually get.
More »
First: We did use a licensed realtor.
Two: We did not understand the true ramifications of arbitration, or it's unfairness. No one who has not been caught in this snare does. We did not know that almost always big business wins. We thought it was like, OK kids lets sit down and not argue and fix this situation. We did not know the system was rigged. We did not understand the builders were repeat clients and the arbitrators meal tickets. No one understands arbitration companies are just the middle men. You still have to put on a trial and have all the costs associated: witnesses, subpoenas, expert testimony you even have to pay for the room to hold the arbitration in... We would not have had to pay a judge as we did an arbitrator or room rent or the astronomical fees charged by arbitration companies. Our arbitration fees alone were $9300. dollars. That does not include going to the kangaroo court where the rules of law no longer apply behind close doors. That was nearly $30,000 dollars... -
complaints
Tremont Homes Sells Rotten Lemon, Provokes Victimized Homebuyer Into Five-Year Consumer Crusade
UPDATE: Jordan Fogal Responds To Your Comments
"We always wondered what life would be like in our sixties, our credit is ruined; we have stored, sold, and given away years of our memories; and for the last three years we have been holed up in a third story apartment.My husband Bob and I are senior citizens. Like so many others, we lost our home to foreclosure... not because of sub-prime loans... but because of defective, substandard housing - protected by an arbitration clause. We bought a new house so we wouldn't have to worry about repairs. The first night my husband decided to try out the Jacuzzi tub on the third floor. When he pulled out the stopper, 100 gallons of water crashed though the ceiling. We had been in our new home all of six hours... all I could do was scream as I watched the ceiling fall on our dining room table, water pouring down the walls, filling up the chandelier, and splashing on the new hardwood floors, then finally flooding the garage below..." More »
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victories
Cingular's Class Arbitration Waiver Ruled "Unconscionable" By 9th Circuit Court Of Appeals
Like many many companies, Cingular has a little thing in their contracts saying that if you use their service, you void your right to a class action lawsuit and instead have to go through "mandatory binding arbitration," which is basically an extra-judicial corporate court exempt from many of the basic rules and laws and procedures and rights of real court. Well, today, that clause was ruled "unconscionable" by the 9th Circuit Court Of Appeals. Therefore, lawsuits can proceed against Cingular and go to real court, not monkey court. Hooray!
Shroyer v. New Cingular Wireless Docket No. 06-55964 [PDF] (Thanks to Fred!)
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class action suits
9th Circuit Court Says Companies Can't Change Contract Terms Simply By Posting Changes On A Website
Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side. Indeed, a party can't unilaterally change the terms of a contract; it must obtain the other party's consent before doing so....
- Ninth Circuit Court ruling (PDF) that that Talk America couldn't just post contract changes on its company website and compel customer acceptance without otherwise notifying customers....Nor would a party know when to check the website for possible changes to the contract terms without being notified that the contract has been changed and how. Douglas would have had to check the contract every day for possible changes. Without notice, an examination would be fairly cumbersome, as Douglas would have had to compare every word of the posted contract with his existing contract in order to detect whether it had changed.
[via CL&P Blog]
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news from the swamp
Are Aribitrators Punished By Credit Card Companies For Ruling In Favor Of The Consumer?
According to a study by the Christian Science Monitor, the top 10 most used arbitrators ruled for consumers only 1.6% of the time, as opposed to 38% for those who were not dependent on arbitration fees. More » -
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1-8 of 8 for "mandatory arbitration"
