SANTA MONICA, Calif., April 27, 2011 /PRNewswire-USNewswire/ -- Today's U.S. Supreme Court decision in AT&T Mobility, LLC v. Concepcion, invalidating California's protections against unfair provisions in contracts effectively eliminates the right of consumers to join together to fight powerful corporations in court and will lead to enormous abuses of consumers by corporations, Consumer Watchdog, a California non-profit consumer advocacy organization, said today.
----------------
You can read the opinion in AT&T Mobility v. Concepcion by following this link to SCOTUSBLOG.
Here's what happened and why it matters. The Concepcions were entitled to "free" cell phones under their contract. Then AT&T charged them thirty bucks for "sales tax." They joined a class action with others who got shafted the same way. Everybody's claim was too small to litigate alone, but together they had something worth a lawyer's time.
But their contract contained a clause saying disputes had to go to arbitration, and could not be joined with a class action.
Under California case law that term in the contract was unenforceable because it is unconscionable. The Discover Bank case, decided by the California Supreme Court, held that such class action waivers contained in adhesion contacts are unenforceable.
AT&T argued that the Discover Bank ruling was pre-empted by the Federal Arbitration Act, which provides that arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." The conservative voting bloc of the US Supreme Court (Scalia, Roberts, Alito, Thomas, and Kennedy) agreed with the big corporation and screwed the little consumer (what a surprise!)
Why does this matter? I expect to see such arbitration clauses and class action waivers in every single contract we get in our hands, from now on. The Supreme Court just gave corporate America a way to slam the door to the courthouse in our faces. No lawyer will litigate a thirty dollar case against a giant corporation. Now orporations can strip us of our class action rights just by inserting a term in a non-negotiable adhesion contract.
Will this include condominium or HOA declarations? I am sure it will be tried.
19 comments:
Of course it will be tried and certain vendor trade groups have been actively lobbying to make ADR mandatory - well only if the HOA corporation wants ADR.
Note CAI's Public Policies here (pg 11, see 2nd paragraph in particular)
CAI's Public Policies
ADR "in appropriate cases" is second only to "aesthetics as an economic issue" (i.e., anything can be rationalized under the pretext of beauty)
As a result, the LAC arms of CAI have lobbied in state after state to empower the HOA corporation to require ADR when the HOA corporation wants it rather than by mutual agreement. See, e.g., Colorado's CRS § 38-33.3-124 by which purports to empower HOA boards with the ability to unilaterally obligate owners (by virtue of involuntary membership) to have to submit to ADR instead of the court in order for relief in accordance with whatever ADR policies the board adopts.
The way things are going in our land under the rule of people, I'm reminded of the ending in the 1950's movie, The Forbin Project.
After the US and Russian global supercomputers unite and work together, they address the peoples of the world. They say that they are only following their directive to maintain peace, and man is his own worst enemy. The unified computer ends its speech with, "In time you will learn to love me."
Whatever CAI has done on ADR may turn out to be small potatoes. Big law firms working for big developers may just start putting binding arbitration in CC&Rs along with waivers of your class action rights.
I'm sure Walter Olson and Ted Frank are breaking out the champagne. See Ted Frank's Nov. 9, 2010 blog post. That whole 7th amendment thing was a mistake anyway.
It is, as the Professor described it several years ago:
"repressive libertarianism," where certain people who call themselves libertarians invariably side with property owners who want to limit other people's liberties through the use of contract law. Property rights (usually held by somebody with a whole lot of economic clout) trump every other liberty...As private corporations take over more functions of government, this position could lead to gradual elimination of constitutional liberties.
While the "tort reform" movement has become a sick joke (or maybe it always was and I just didn't notice), George Carlin [ www.youtube.com/watch?v=4jQT7_rVxAE warning: not safe for work or kids ] and Trent Schlictmann [scroll down] are looking more like prophets every day.
> big developers may just start putting binding arbitration in CC&Rs
> along with waivers of your class action rights
and other rights, such as freedom of speech.
Back in 2003, Rick Casey of the Houston Chronicle wrote "Buy a House and Shut Up!":
Moreover, no Owner may use any public medium such as the `internet' or any broadcast or print medium or advertising to similarly malign or disparage the building quality or practices of any homebuilder, it being acknowledged by all Owners that any complaints or actions against a homebuilder or Declarant are to be resolved in a private manner and any action that creates controversy or publicity for the Subdivision or the quality of construction of any homes within the Subdivision will diminish the quality and value of the Subdivision."
So it's not just those unsightly lawn signs. You may not give a television interview, write a letter to the editor, post a message on a Web site or go on a radio talk show to discuss any problems you may have had with a homebuilder.
And you may not use any of those media to discuss the practices of any homebuilder. A spokeswoman at KB's Los Angeles headquarters said Friday afternoon such language has become something of an "industry standard."
...
But the KB spokeswoman stressed that the provision is not to protect KB Home from bad publicity. It's to protect neighbors from damaged property values. And she says it is the homeowners' associations, not KB Home, that enforce the restrictions.
There have been rulings in California finding that developers' inclusion of mandatory ADR clauses in CC&Rs re construction disputes unconscionable and that CC&Rs are not the appropriate place for such terms and conditions.
In regards to Fred's comment, I thought that those rulings might relate to whether the HOA corporation could be bound rather than the members. However, I would be happy to hear otherwise.
Fred, I expect to see a renewed effort by developers to kick construction defect and other cases right out of court. The royal road out of court is the Concepcion decision.
The ATT Mobility case found that binding arb clauses in consumer contracts were not pre-empted by decisions like those in California because the Federal Arbitration Act supercedes state law holding such clauses unconscionable. This will effect class actions based on consumer contracts.
Other California cases have recently ruled that binding arbitration clauses inserted into CCRs by developers are also unenforceable, but mainly because there is no contract between the developer and the association--in other words, those clauses were placed in the document unilaterally with no opportunity for negotiation.
This may prove to be a distinction with a difference when it comes to the enforceability of binding arbitration clauses inserted by developers into CCRs. You are not bound if you weren't present at the negotiation.
Didn't you get the memo?
According to the conservatarian^w corporatist Overlawyered.com, Anti-arbitration is anti-consumer".
According to the conservative American Spectator, "Consumers Win in Allegedly Anti-Consumer Supreme Court Ruling".
In other news, East Germany was the German Democratic Republic, communist China is the People's Republic of China, North Korea is the Democratic People's Republic of Korea, and Michael Moore is a documentary film maker.
I'm not a fan of Al Franken -- I think he's a ****** who stole an election -- but putting aside my partisan feelings about him, he's absolutely right on here:
www.youtube.com/watch?v=XIKo-vy4010
www.youtube.com/watch?v=Y6kiZIlMFto
(videos via HomeOwners For Better Building)
If corporations could get away with it, not only would they take away our 7th amendment rights, but our 13th amendment rights as well. I'm sure the ghost of Ayn Rand is smiling in approval right now at that prospect.
This decision by the Supreme Court represents another milestone down The Privatized Toll Road To Serfdom.
When a judge makes a mistake, it becomes the law of the land.
Corporations have no social duty
Except to those who own their stock
…
Corporations are amoral
Corporate conscience is impossible
The corporation really has no choice
...
So if you want your freedom
Let the corporate seize the day
There really is no better way
-The Milton Friedman Choir *
Conservatives, libertarians, and Ayn Randians celebrate corporations as a thing of beauty because they have no moral obligations to anyone other than their shareholders.
But if corporations are legal persons, then they exhibit characteristics of being sociopaths; "Sociopaths are people without a conscience. They don't have the normal empathy the rest of us take for granted. They don't feel affection. They don't care about others."
As regular readers of this blog are all too aware, HOAs are corporations that often exhibit antisocial behavior lacking morality and conscience.
To those whose belief systems are based in social Darwinism, the sociopathy of corporations, including HOAs, is a virtue. This may explain why:
* the "support the troops" crowd ignored the story of Michael Clauer. The left-wing Mother Jones was the only national media outlet to run the story, just before Memorial Day weekend 2010, followed a few weeks later by the liberal NPR. It was never reported about on Fox News or any other right-of-center media
* every time John Stossel produces a TV program about parasitic lawyers, the villains are rarely (if ever) corporate lawyers, including HOA lawyers, bullying lower- and middle-class Americans
* Republicans want to outlaw mandatory membership in a labor union as a condition of employment ("right to work" is in the party platform), but have never opposed mandatory membership in an HOA union as a condition of home ownership. John Carona will never be excommunicated from the GOP
* the "private property rights" crowd who were rightfully upset at the Heller decision in 2005 have been silent about foreclosures by HOA lawyers (including the paid-for home of Michael Clauer while he was deployed to Iraq)
Over the next few days, expect to see conservative and libertarian writers -- those who claim to base their belief systems on the Constitution -- celebrate the death of the 7th Amendment. Next thing you know, the HOA will require that we quarter the King's soldiers, because some clause in an adhesion contract waived our 3rd Amendment rights, and the "consent of the Owner" will be a "publicly posted" document filed with the county.
"If the consumer does not have the choice to pre-commit to not bringing an extortionate lawsuit, the vendor cannot provide the consumer the lower costs available for making that promise. The trial lawyers and Public Citizen want to forbid honest consumers like me from making that choice."
-Ted Frank
"A reminder: anti-arbitration is anti-consumer"
Overlawyered.com (August 10, 2010)
Putting aside what I feel are the dishonest motives of someone who claims to be active against "extortionist lawsuits" on behalf of consumers, yet can never find the time to merely mention extortion rackets perpetrated by HOA attorneys, reader Steve at The Volokh Conspiracy thread about this case has offered a challenge to those who think that lawsuits are responsible for inflating the price of goods:
If consumer prices are, in fact, materially inflated as a result of frivolous class actions, then I’m sure you’ll agree we should see a material decline in consumer prices across the board as a result of today’s decision.
So why don’t you suggest a range of consumer products and a time frame and we can observe and see whether your hypothesis is correct. I’m sure you really meant it and weren’t engaging in idle hyperbole when you said today’s decision is great news for consumers’ bottom line, so you would be doing your position a disservice if you missed an opportunity to prove it with empirical evidence.
According to Ted Frank, one of the editors of Overlawyered.com, at the Manhattan Institute's Point of Law blog:
"the typical media coverage of the 5-4 decision gives a loud megaphone to the ludicrous claim that the Supreme Court opened the way for consumers to be raped with impunity....The only thing it does is to preclude a class action that would rip off the vast majority of consumers for the benefit of attorneys. The Supreme Court decision permits consumers to see cheaper prices...The only losers are attorneys."
Prediction: consumers won't see lower prices, nor will legions of no-longer-needed corporate attorneys be losing their jobs.
Today's "Dilbert" comic strip seems somewhat relevant.
If you're the victim of a company whose business model is "intentional billing errors" (or, in the case of HOAs, arbitrary fines and fees), you will no longer have recourse in the courts.
And some people think this is a good thing.
"the ludicrous claim that the Supreme Court opened the way for consumers to be raped with impunity"
By definition, rape implies lack of consent on the part of the victim. According to the theories of capitalism, consumers are not a victims.
It is impossible for a corporation rape a consumer, because the consumer consented to to be abused.
If the consumer can't relax and enjoy it, they should just grit their teeth and think of the adhesion contract they agreed to.
Kenneth Anderson at "The Volokh Conspiracy" (a right-leaning legal blog) has a post about erotic fiction/porn based on student loan debt, which -- like housing -- is a bubble that's going to burst (if it hasn't started to already).
Emily’s Student Loan Bondage and Discipline
Kenneth Anderson • June 12, 2011 10:50 am
A publisher of erotic e-titles for Kindle has sent me the following book blurb for a new offering on Kindle, Emily’s Debt. It’s addressed to self with a bcc list, so it appears to be a marketing blurb possibly addressed to bloggers who have written about student loan debt:
"In the very near future, where failing to pay student loan debts is a crime, Emily is in big trouble. She has a large student loan and no job. She’s heard, of course, that student loan debtors weren’t sent to jail. Instead, they’re rented by the government to corporations and businesses so that their work can help pay off their student debts. But renting becomes purchasing, and crafty lawyers and greedy companies turn student debt bondage into slavery with hardly anyone paying attention. Now, sold to a former classmate, a sadistic lawyer eager to test the boundaries of the law, Emily is a non-person, purchased property. And if her owner wants her to be nude in public, wants to walk her on all fours on a leash, well, it’s not like she’s a person any more. Not according to the law for defaulters on student loans. And if he wants to whip her in public, well that’s all right, too."
I’m hesitant about opening this up to comments, but am going to do so because, well, it does strike me as a telling small detail on contemporary cultural life that student loans — specifically student debt — has managed to become an au courant device for an erotic bondage-and-discipline girl-enslaved novel.
# # #
Since the authors and readers of The Volokh Conspiracy tend to be conservatives or libertarians, the comments are worth reading. "Isn’t this a contract issue?" asks one commenter?
On March 14, 2007, Professor McKenzie wrote:
Here's how I think CAI wants things to end up: The BODs would have nearly absolute power over homeowners whose only options, if they feel they have been mistreated, would be to elect a new board or sell their home and move somewhere else. The association attorney and property manager would (and do) control the BODs. CAI trains and organizes the attorneys and property managers. The states would require certification of property managers. CAI would provide that certification.
(Also OnTheCommons.net April 27, 2007 at 17 min 20 sec).
If our 7th Amendment rights are now null and void by contract, what is to stop our 13th Amendment rights from being voided by some document called a contract?
This is not hypothetical.
The Company Store system was a method which 18th and 19th century industrialists kept their employees enslaved by means of private contract. The HOA industry has found a similar means via the "priority of payments" scam accounting system, in which extortionist and unreasonable and unconscionable fees are imposed on homeowners by CAI-trained vendors, to ensure that the homeowners cannot escape the "debt" bondage created by HOAs.
"What’s interesting is to see the same higher-education bubble critique coming from a different political slant. The notion of student loans as debt-slavery has really taken off."
-Glenn Reynolds
Instapundit.com
June 14, 2011 at 10:26 PM
Contrast with the conservative and libertarian position on HOA "debt" and "slavery".
Of course, colleges are viewed as "liberal" institutions, whereas HOAs are not. If only we could find a way to link HOAs with Obama, the right-wing would do a a complete about-face regarding these so-called "contracts" that homeowners "agree" to.
According to the libertarian Ludwig Von Mises Institute, in the "Arbitration of Disputes" (July 1, 2011):
It is interesting to note that the advocates of government see initiated force (the legal force of government) as the only solution to social disputes. According to them, if everyone in society were not forced to use the same court system, and particularly the same final court of appeal, disputes would be insoluble. Apparently it doesn't occur to them that disputing parties are capable of freely choosing their own arbiters, including the final arbiter, and that this final arbiter wouldn't need to be the same agency for all disputes which occur in the society.
They have not realized that disputants would, in fact, be far better off if they could choose among competing arbitration agencies so that they could reap the benefits of competition and specialization. It should be obvious that a court system which has a monopoly guaranteed by the force of statutory law will not give as good a quality of service as will free-market arbitration agencies, which must compete for their customers.
...
Because arbitration agencies would be doing business in a free market, they would have to attract customers in order to make profits. This means that they would find it in their interest to treat all disputants who came to them with every courtesy and consideration possible.
Post a Comment