A Big Step for Civil Justice

Good news last week about protecting consumer rights. As spelled out by PopTort.com, the civil justice website, a large study supported by the federal government concluded that forcing individual credit card, bank and other financial/product services customers to agree to arbitration and forgo their class-action rights in the event of a dispute prevents righteous lawsuits from being filed.

The Consumer Financial Protection Board’s study was 700+ pages of evidence that these forced “agreements” amount to a system rigged to benefit corporations. At the expense, of course, of real people. (See our blog, “Arbitration Agreements: Bad for Consumers, Good for Nursing Homes.”)

As PopTort explains, because “most cases are too expensive and difficult to bring individually, these clauses plus class action waivers result in the disappearance of claims and immunity for the wrongdoer.”

Study highlights include:

  • Forcing people to sign repugnant contracts is widespread. For example, almost 9 in 10 mobile wireless providers who authorize third parties to charge consumers for services have arbitration clauses. Such providers cover nearly 100% of the market.
  • Most people who are forced into arbitration or prevented from filing as a class give up their claims. Of tens of millions of consumer financial contracts, only about 600 arbitration cases and 1,200 individual federal lawsuits happen every year versus, on average, about 32 million consumers eligible for relief through class-action settlements in federal court.
  • Contrary to widespread misinformation that class actions benefit only attorneys, the CFPB found that “settlements totaled $2.7 billion in cash, in-kind relief, expenses and fees,” and that only about “18% of that [went] to attorneys’ fees and expenses.”
  • The CFPB also noted that those figures don’t reflect the potential value to consumers of companies changing their behavior. In the cases for which data was available, at least $1.1 billion was paid or scheduled to be paid to at least 34 million consumers.

As PopTort summarized, the misguided and unfair movement for “tort reform” has raged for decades. And its claims that such “reform” is necessary to prevent frivolous lawsuits, and enriching lawyers at the expense of just folks, have been proved wrong.

“Look at the area of medical negligence,” PopTort advised, “where preventable errors are at epidemic levels – the third leading cause of death in America. Ninety-nine percent of the time, there is no claim or legal accountability. If jury verdicts are severely limited by law, lawyers paid on contingency cannot afford to take many of the most serious and costly cases. And as any trial lawyer who has to turn away 100 cases for every 1 they take knows, most people have no idea that lawmakers have stripped away their rights – or even that they may have voted to give up their own rights, convinced by fabrications and fear-mongering by industries seeking immunity.”

The CFPB study is a big first step in the right direction of banning forced arbitration clauses and class-action waivers. Another positive development occurred last week, when a judge in Tennessee ruled that that state’s cap on economic damages in personal injury cases is unconstitutional.

As reported in the Insurance Journal, in 2011, the Tennessee Legislature limited the amount of money for a personal injury judgment. Noneconomic damages include pain and suffering, disfigurement or scarring and loss of enjoyment of life. In most cases, the cap for noneconomic damages is $750,000.

If you’d like to contribute to the effort to protect your rights as a consumer sign the Change.org petition, and as a potentially harmed patient, hope that tort reform laws get the same kind of attention as financial services contracts.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
Washingtonian Top Lawyer 2011
Avvo Rating 10.0 Superb Top Attorney Best Lawyers Firm
Contact Information