Sunday, November 20, 2016

3.1 - Good News: pushback against forced arbitration

Good News: pushback against forced arbitration

We'll start quickly with something just for the sheer fun of it.

Among those who are to receive the Presidential Medal of Freedom on November 22 is Vin Scully, honored for his 67-year career as a baseball announcer, which I mention here because I can still in my head hear him do radio play-by-play for the Brooklyn Dodgers in the 1950s.

Okay, on to more serious things.

First under that category is something that was actually done a bit ago; the first week of October, in fact, but I'm bringing it up now both because it's a federal regulation that is going into effect on November 28, which makes it time relevant, and because it's on a topic I've been meaning to talk about, one which happily is getting some more attention.

The issue is what's called forced arbitration. Arbitration is described as an alternative method of resolving disputes in which instead of going to court, two parties present their sides of a complaint to an arbitrator. Ideally, the arbitrator decides the rules, weighs the facts and arguments, and impartially resolves the dispute. Think Judge Judy without the snide condescension and the chosen-for-TV melodrama.

Arbitration was initially intended for use by businesses looking to avoid the possibility of a long and expensive legal battle. It was a mechanism to resolve disputes between forces that were at least more or less equal and one to which both parties had to freely agree.

Increasingly, however, it's being used by corporations to force consumers and employees to surrender some of their legal rights as a condition of buying a product, using a service, or getting or keeping a job. Increasingly, purchase agreements for things such as insurance, home-building, car loans, car leases, credit cards, retirement accounts, investment accounts, computer software, and more as well as employee contracts contain provisions - usually buried in the small print in the hope no one will notice - requiring that the consumer or employee submit any dispute to binding arbitration and waive their right to sue or join a class action suit or to appeal the results of the arbitration, arbitration which occurs at a place of the corporation's choosing using an arbitration firm acceptable to the corporation - that is, one likely to rule in its favor, as they do 93% of the time.

What's more, unlike a court decision, the results are not public, so there is no public record that a complaint against the corporation even arose - and consumers can even wind up under gag orders banning them from discussing the case publicly.

Put simply, instead of being a tool for use between equals, arbitration, as forced arbitration, has been twisted into a weapon for use by the powerful against the non-powerful, for use by the corporations against the rest of us, to keep us silenced and subservient in the face of their power.

If you want a particular and recent example, here's one: Wells Fargo, one of the nation's largest banks, committed systematic and deliberate fraud against account holders. At least 3,500 Wells Fargo employees, at the instigation of senior management, opened approximately 1.5 million bank accounts and approximately 565,000 credit cards without the consent of their customers and then charged them fees for the fraudulently-opened accounts. Since 2013, customers have been trying to sue Wells Fargo, both through class action and as individuals only to have the corporation used the forced arbitration provisions for the original, legitimate accounts to force them all of those people into individual, private, forced arbitration on each of the fraudulent accounts.

So what's the good news? There is some pushback.

In August, the Obama administration completed a two-year rule-making process that declares that federal government contractors with contracts of $1 million or more cannot impose forced arbitration on employees if the dispute arises under Title VII of the Civil Rights Act or over claims of sexual assault or sexual harassment. That regulation is now in force.

Next, the CFPB, the Consumer Financial Protection Bureau, is in the midst of a rule-making that would ban forced arbitration provisions from blocking participation in class-action suits, a move that has gotten widespread support, with much of that support arguing that the rule should have gone further.

Finally and most recently, and the one that brought all this up, as part of a comprehensive review of the the requirements that Long-Term Care facilities must meet to participate in the Medicare and Medicaid programs, the Centers for Medicare and Medicaid announced final a rule barring forced arbitration requirements at nursing homes that accept federal funds.

The rule was announced on October 4 and goes into effect on November 28.

And all that is Good News.

This doesn't mean that this won't come under the baleful glare of those surrounding The Great Orange One as they "review the regulations" and of course he himself is even more a product of the corporate world than many of the entourage. But forced arbitration is enormously unpopular among that segment of the public that is aware of it to the point that even TheRump and his cronies may be hesitant to so obviously flout their base.

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