Unite and Conquer
In a big win for consumers, the Supreme Court of California has ruled that arbitration clauses prohibiting class action lawsuits are unenforceable under state law.
Arbitration agreements in credit agreements often lead consumers into David v. Goliath-type battles in an arena where the odds are stacked against the little guy. For example, credit lenders provide big business for arbitrators, and when the lenders are repeat players in a system where fees are paid by the arbitrating parties on a per-case basis, one can't help but worry about biased outcomes.
In a struggle to find a way back into the courtroom and to seek out the protections of traditional legal remedies, any court decision that weakens a credit company's arbitration armor is a big victory for the rest of us.
Let's keep up the fight...
Arbitration agreements in credit agreements often lead consumers into David v. Goliath-type battles in an arena where the odds are stacked against the little guy. For example, credit lenders provide big business for arbitrators, and when the lenders are repeat players in a system where fees are paid by the arbitrating parties on a per-case basis, one can't help but worry about biased outcomes.
In a struggle to find a way back into the courtroom and to seek out the protections of traditional legal remedies, any court decision that weakens a credit company's arbitration armor is a big victory for the rest of us.
Let's keep up the fight...
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To hear a judge say this, as quoted from the article linked:
Justice Carlos R. Moreno wrote that when a consumer contract involves "a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money, then … the [class action] waiver becomes in practice exemption of the party ‘from responsibility for [its] own fraud, or willful injury to the person or property of another,’ " quoting the state civil code. "Under these circumstances," the majority concluded, "such waivers are unconscionable under California law and should not be enforced."
This gives me a glimmer of hope that our legal system is not completely corrupted. It recognizes the tactics used by financial institutions to get around the law, and rob from the poor and middle class. Lets hope this gets recognized at the Federal level.
July 16, 2005 9:17 PM | Reply | Permalink
"Lets hope this gets recognized at the Federal level."
Indeed. However, recent SCOTUS jurisprudence has already been highly favorable to standard form contracts and arbitration clauses, and much deference has been shown to credit lenders.
We have already witnessed the demise of "unconscionability" as a legal argument. If it's going to be resurrected, perhaps it's best to let it happen slow and somewhat out of view.
As the Court seems poised to move even more to the right, I can't help but wonder if it's better that these cases never make it to the Court. Many small victories is certainly preferable to one giant, crushing death blow for consumers.
July 17, 2005 1:48 AM | Reply | Permalink