lawsuits

How Trump Could Make It Easier for Corporations to Screw You Over

Do you know what the Seventh Amendment is?

by Aaron Kase
Apr 10 2017, 10:42pm

Image via Getty

The United States is a notoriously litigious society. Suing the crap out of everything that moves is as American as bad comic book movies or defiant ignorance. Distasteful as it can seem, however, our endless appetite for lawsuits can play in favor of the individual. You can't challenge corporations to a duel, or tar and feather executives and ride them out of town on a rail—not legally, anyway—so a lawsuit is often the only option when you get screwed by big business. Fortunately, the Constitution includes the Seventh Amendment in the Bill of Rights, which guarantees Americans the right to civil trials by jury.

The bad news is, it's being eroded.

A rash of corporate-friendly Supreme Court decisions in recent years has erected substantial barriers for those seeking recourse against companies they feel have ripped them off or harmed them in some way. And all signs indicate that the Trump administration will only further entrench the rights of businesses large and small to do whatever they want to people across America.

Perhaps the most glaring threats to Seventh Amendment rights are  arbitration contracts and class-action limitations. Forced arbitration, if you've lucky enough to have never been subject to it, is when people essentially sign away their right to sue in favor of a private hearing, which can be heavily tilted in a company's favor. The concept is particularly common with businesses selling services like nursing home care, credits cards, and cell phones, and those with near-monopoly powers, like cable providers. (Decades of corporate efforts to choke off lawsuits before they can even begin largely flew under the public's radar until a 2015 series in the New York Times enumerated how challenging it is for some consumers to take a business to court. )

The surging popularity of forced arbitration stems from a broad interpretation of a 1925 law aimed at resolving disputes between businesses—courts have consistently said it covers agreements between companies and their customers, too. More recently, Supreme Court rulings in AT&T Mobility v Concepcion in 2011 and American Express v Italian Colors Restaurant in 2013 suggested that arbitration agreements can also prohibit class-actions, forcing wronged consumers to bring action on an individual basis if they want compensation.

"The reach of the law has been dramatically expanded to cover arbitration agreements of any kind," says Richard H. Frankel, a professor at the Drexel University School of Law. "It's essentially an immunity clause for a company."

Under the Obama administration, federal agencies took notice, and began to intervene. For example, the Consumer Financial Protection Bureau (CFPB) was considering a rule to prohibit class action bans in arbitration clauses for financial services products, but implementation looks far less likely under Trump's presidency.  

"In the Obama administration, we thought we would get assistance from federal agencies under a number of statutes, and did," says Scott Nelson, an attorney with Public Citizen, a group that represents plaintiffs in litigation related to arbitration clauses. "Those promptly got challenged in court, and now we're waiting to see whether the new administration will pull the rug from under those things by rescinding rules or taking a dive in litigation."

The most immediate threat to courtroom access is the Fairness in Class Action Litigation Act of 2017, which passed the House of Representatives in March and is under consideration by the Senate. Among other things, the bill would both make it harder to form a class action by narrowing requirements for what plaintiffs must have in common, and more difficult for their lawyers to get paid. Instead of having a jury decide a case on its merits, many lawsuits might never even be filed.

"It's creating harder evidentiary standards for plaintiffs to meet," says Alexandra D. Lahav, a professor at the University of Connecticut School of Law who testified in Congress regarding previous iterations of the bill. "It really cuts victims off at the knees."

The bill is backed by the US Chamber of Commerce and other business groups, who claim frivolous class actions are raging out of control, led by greedy lawyers seeking windfalls at the expense of hard-working corporations (and their executives).  But the legislation, Lahay argues, is a nasty bit of overreach.

"This bill doesn't try to balance interests," she says. "It's trying to limit fees in ways that aren't responsive to the problem but are really aimed at starving plaintiffs' attorneys and not making it financially viable to bring cases."

Looking ahead, the Trump administration's ability to reshape the federal judiciary could spell considerable peril for the Seventh Amendment. In addition to the seat on the Supreme Court just filled by conservative (and corporate-friendly) Neil Gorsuch, there are over 100 vacancies in lower courts around the nation. A mass influx of new conservative judges could serve to cement the sorry state of regular people trying to hold large corporations to account.

In the fall, the Supreme Court will hear three cases related to arbitration provisions banning class actions in employment agreements—the things people sign when they start jobs. Meanwhile, famous employer Donald Trump has proven he believes in arbitration, and has used it in the past to protect his own business interests. Chances are things won't get better for consumers while he's in office, and his luxury remodeling of America's court system could make their lives harder for decades to come.

Aaron Kase on Twitter.