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Let Consumers Sue Companies (nytimes.com)
Richard Cordray, the director of the Consumer Financial Protection Bureau, writes: When a data breach at Home Depot in 2014 led to losses for banks nationwide, a group of banks filed a class-action lawsuit seeking compensation. Companies have the choice of taking legal action together. Yet consumers are frequently blocked from exercising the same legal right when they believe that companies have wronged them. That's because many contracts for products like credit cards and bank accounts have mandatory arbitration clauses that prevent consumers from joining group lawsuits, forcing them to go it alone. For example, a group lawsuit against Wells Fargo for secretly opening phony bank accounts was blocked by arbitration clauses that pushed individual consumers into closed-door proceedings. In 2010, the Consumer Financial Protection Bureau was authorized to study mandatory arbitration and write rules consistent with the study. After five years of work, we recently finalized a rule to stop companies from denying groups of consumers the option of going to court when they are treated unfairly. Opponents have unleashed attacks to overturn the rule, and the House just passed legislation to that end. Before the Senate decides whether to protect companies or consumers, it's worth correcting the record. First, opponents claim that plaintiffs are better served by acting individually than by joining a group lawsuit. This claim is not supported by facts or common sense. Our study contained revealing data on the results of group lawsuits and individual actions. We found that group lawsuits get more money back to more people. In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total. It is true that the average payouts are higher in individual suits. But that is because very few people go through arbitration, and they generally do so only when thousands of dollars are at stake, whereas the typical group lawsuit seeks to recover small amounts for many people. Almost nobody spends time or money fighting a small fee on their own. As one judge noted, "only a lunatic or a fanatic sues for $30."
I've been a knowing or unknowing party to many consumer class action lawsuits and I usually get coupons, rebates, and the occasional $5 payout. The only ones making millions off this are the attorneys filing the lawsuits.
In the EU / australia / etc Consumers have rights that we don't get in the usa.
I got an email yesterday about class-action lawsuit against Apple for third-party auto-renewing apps purchased through iTunes. What is it about? Beats me. I'll probably get a $5 gift card to spend at the iTunes Store sometimes next year.
The difference seems to be that a class action you just sign up and don't do anything, but in arbitration you have to take time to collect evidence.
that Congress passed recently making arbitration legally binding. I'm sure Congress will get right on that right after they're done ending the 7 wars we're fighting in, reforming our healthcare system for the better, solving our student loan crisis and working out that pesky cold fusion problem.
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Consumers should be able to sue, without lawyers on either side, for unlimited amount for a nominal fee. The impartial court should decide the law.
While the legal system cost so much, to go through it will never be fair. Even with class action suits you have to organize it and the lawyer gets a significant portion of any reward.
People should have the right to justice no matter how wealthy they are.
Contracts should never be allowed to waive legal rights.
That sounds great in theory, but if companies face more lawsuits the costs will be passed on as higher prices.
When I write a contract, I always insert an arbitration clause. If I sign an important contract for work or IP licensing and it doesn't have an arbitration clause, I will ask to have one inserted. Going to arbitration is almost always better than going to court.
Let's say Home Depot used point-of-sale software from Vendor X, which uses a Linux distribution and relied upon a network driver from Manufacturer Y.
A hacker is able to penetrate their network by exploiting the combination of driver and linux, which was also misconfigured by Vendor X.
Who is to blame here? Home Depot for not completely investigating their entire stack ? Vendor X for sloppy configuration? Manufacturer Y for having a bug in their software?
It's so hard to ascribe blame in these situations. Data security is incredibly hard (and in fact, to date, nearly all software in the past 20 years has been exploited in one way or another). Would it be fair to hit Home Depot with a $50 billion settlement? So many companies have been hacked (Verizon, Gawker, voter registration systems, credit card companies, Target, etc). Would fining each of them tens of billions really make things better if data security is so hard that no one has pulled it off?
The flip answer would be: "Hey, once that first company gets hit with a $50 billion settlement, everyone else will start taking this seriously!" That might be true: It might also be true that you end up destroying businesses with nothing to show for it because Home Depot / Target / Verizon / etc are at the mercy of their vendors and 3rd party systems with vulnerabilities out of their control.
How can the court hold that these people who never authorized, let alone agreed to the terms, of the credit card or account should have to follow the rest of the contract they never agreed to? That doesn't make any sense, legally or otherwise!
Few things are more expensive than stupidity, and these one-sided 'arbitration clauses' enable a lot more stupidity. Also, keep in mind that arbitration can still happen without an arbitration clause, which is typically preferable for all parties involved.
This is my signature. There are many like it, but this one is mine.
It's super simple. Print out the contract. Cross out the part that gives up your rights. Sign and send back. The big companies always accept.
I don't respond to AC's.
That's because many contracts for products like credit cards and bank accounts have mandatory arbitration clauses that prevent consumers from joining group lawsuits, forcing them to go it alone.
My guess - IANAL - is that if someone had the cash-ola and lawyers *cough* EFF *cough* perhaps they could invalidate these types of arbitration clauses who's sole purpose is to restrict the rights of consumers...
If you want news from today, you have to come back tomorrow.
And amen. Forced arbitration clauses should not be legal in lieu of class-action lawsuits.
It's not fair to allow consumers to sue merchants for payment card data breaches who, due to market forces, are forced to accept payments via the deeply flawed, archaic payment card processing paradigm we have today. Merchants should never have to possess cardholder data, but in most cases, they are required to. Even merchants who use tokenization are required to pass cardholder data to a payment gateway to get back a token. P2PE is not an end-all solution, either. You can't hide from the future with math. The oligopoly that controls that payment card processing paradigm essentially doesn't have any incentive to make it more secure, so they won't.
That sounds great in theory, but if companies face more lawsuits the costs will be passed on as higher prices.
I'm perfectly OK with that.
Going to arbitration is almost always better than going to court.
That all depends on the arbitrator and how the contract is worded. If the contract says that the results of arbitration cannot be appealed in court, then it's an unacceptable risk -- particularly if you're dealing with a major corporation, where the fairness of the arbitrator is very much in doubt.
The way this should work is pretty obvious.
Home Depot would be the party responsible from the customer's point of view -- in other words, Home Depot would be on the hook for making things right (or as right as possible).
If the underlying cause was because a company Home Depot uses messed up, then Home Depot sues them to recover their losses (including whatever they had to pay to customers). And so on and so forth.
In the EU / australia / etc Consumers have rights that we don't get in the usa.
Not only that, but some European countries (some prominent examples: Germany and Switzerland) even have consumer protection groups which can help coordinating and engaging such actions on the behalf of consumers, who regularly scan products for fraud, etc.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
And if the Linux kernel has a vulnerability that was exploited, Home Depot would be on the hook for billions of dollars? Or if the software from a vendor included a unpatched 3rd party library (such as OpenSSL?) It just wouldn't work, and it would be a nightmare of responsibilities and dependencies. The only winners would be lawyers.
Lawsuits should proceed if (and only if) the company responsible was negligent in things under their control: If they used MD5 hashes for passwords, or left default system passwords unchanged, or they were using Windows XP SP1 or if they lost a laptop with critical information. But that's not the case with many of these hacks (like with Target, where the hackers used VPN credentials from a contractor to install hacked firmware on point of sale systems. What could Target have done differently that they weren't already doing?)
They are going to act. They're going to dissolve the CFPB. Problem solved.
There's another option... companies could follow the law... just sayin'...
How about we get arbitration for everything? I kill you, you must agree to arbitration and I get to select the arbiter.
And if the Linux kernel has a vulnerability that was exploited, Home Depot would be on the hook for billions of dollars? Or if the software from a vendor included a unpatched 3rd party library (such as OpenSSL?)
Yes. Home Depot is the one representing that their systems are safe. If that turns out to be untrue, then Home Depot is the one responsible. They can turn around and reclaim damages from whoever it was that put them in that situation.
It may seem unworkable, but it isn't really. It's as close to fair as we can get. What's more fair than holding the party that damaged you responsible for that damage? Otherwise, the situation is that nobody is effectively responsible and these sorts of things will only continue and get worse as time goes on. Nothing will change unless companies are at risk of losing serious money unless they change things.
If you don't pay $30, it's highly unlikely the company will sue. Most likely they'll call and harass you, they put it on your credit report, and eventually send it to collections, but they are highly unlikely to ever take you to court over it, it just costs too much.
Arbitration is a one way street. They can force it on you, you can't force it on them.
There's another option... companies could follow the law... just sayin'...
Arbitration is rarely about violating the law. That is criminal law, not civil, and contracts do not protect anyone from illegal acts.
TINSTAAFL
Yes, consumers in Europe and Australia get consumer protections. But do you know what their biggest complaint is? Everything costs more! Everyone complains how a $500 item in s the US costs around $750US after conversion or more in Europe or Australia. Hell, Australia even encouraged consumers to bypass their local distributors and import stuff from the US.
Of course, part of it is gouging, but another part of it is the law. When the law says you must give 3 years of warranty to a product, that's the same as buying an extended warranty. So your $500 item will probably be dinged another $100 for the extended warranty, just like you could choose to pay Best Buy $100 to purchase the same extended warranty. Other sources include taxes (EU/AU prices include sales tax in the price itself, while US prices do not, which in our example can be another 20%)'
The good news is that most companies have not priced in the cost of arbitration versus a lawsuit so that has little to no impact on price of a product. This is especially true in a country like Canada, where the courts have ruled that despite arbitration clauses, you never give up your right to seek redress through the judicial system. So you may go through the process, and if you are unhappy, you are free to file a lawsuit and a company cannot hide behind arbitration clauses. You are also free to appeal your arbitration ruling in court
Not for a customer, arbitration favors the corporation.
Sorry, teleporters just kill you and then make a copy. A perfect, soul-less copy.
You can always challenge the arbitration clause as unconscionable. Such challenged do sometimes succeed.
Filing a lawsuit that goes to trial will cost at least $100,000 in legal fees. If there's an appeal, it can top $1,000,000.
In some states, there is a functional small claims court system that eliminates a lot of that, but generally, a company cannot be represented by a lawyer, or an employee whose job is to represent the company in small claims court. In short, someone who may or may not be able to string words together into complete sentences. And while they're at small claims court, they're not doing their actual job, which costs a lot in productivity.
So no, companies do not sue for $30. They might make a few harassing phone calls, they might ding your credit score, they might even turn it over to a collection agency (who will immediately relieve you of any responsibility to pay it by breaking the Fair Debt Collections Practices Act literally every time they contact you, usually more than once per contact), but they won't sue.
Civil litigation also protects consumers from illegal acts. ANY standing to bring suit does. As much as they are maligned, masses of bottom feeding lawyers are much better at keeping companies in line then government regulation.
Government regulation often times is so meagre as to be no deterrent to a company at all.
Civil litigation is much more painful. One also must show actual damages. Despite propaganda to the contrary, jury awards represent real harm done to people.
You have to piss off a jury that's been conditioned to view lawsuits as scams. If you did that, chances are you are guilty of something and need punished.
A Pirate and a Puritan look the same on a balance sheet.
If you wish to claim consumer protection agencies and regulation for consumer protection is a major contributor to higher prices in the EU, you'll need to cite sources for that?
:)
EU has a lot less litigation than the US, this makes it easier to be a business and to be a consumers... Unless you want to claim that litigation is efficient
If it wasn't about violating the law, then you wouldn't have to remove courts as an option. Remember, courts only make findings of law. So if you follow the law, then you don't need to worry about what the courts are going to say.
Liebeck sought to settle her claim for $20,000, but McDonald's refused.
So not too much... She was hospitalized for 8 days, and that would cost a chunk of money.
McDonald's Attitude
* During discovery, McDonald's produced documents showing more than 700 claims by people burned by its coffee between 1982 and 1992. Some claims involved third-degree burns substantially similar to Liebeck's. This history documented McDonald's knowledge about the extent and nature of this hazard.
* McDonald's also said during discovery that, based on a consultant's advice, it held its coffee at between 180 and 190 degrees Fahrenheit to maintain optimum taste.
o Other establishments sell coffee at substantially lower temperatures than at McDonald's.
o Coffee served at home is generally 135 to 140 degrees
But then we have:
Damaging Testimony
* McDonald's own quality assurance manager testified that a burn hazard exists with any food substance served at 140 degrees or above and that McDonald's coffee was not fit for consumption because it would burn the mouth and throat.
* The quality assurance manager further testified that the company actively enforces a requirement that coffee be held in the pot at 185 degrees, plus or minus five degrees. He also testified that while burns would occur, McDonald's had no intention of reducing the "holding temperature" of its coffee.
* Plaintiff's expert, a scholar in thermodynamics as applied to human skin burns, testified that liquids at 180 degrees will cause a full thickness burn to human skin in two to seven seconds.
* Other testimony showed that as the temperature decreases toward 155 degrees, the extent of the burn relative to that temperature decreases exponentially. Thus, if Liebeck's spill had involved coffee at 155 degrees, the liquid would have cooled and given her time to avoid a serious burn.
* McDonald's asserted that customers buy coffee on their way to work or home, intending to consume it there. However, the company's own research showed that customers intend to consume the coffee immediately while driving.
* McDonald's also argued that consumers know coffee is hot and that its customers want it that way. The company admitted its customers were unaware that they could suffer third-degree burns from the coffee and that a statement on the side of the cup was not a "warning" but a "reminder" since the location of the writing would not warn customers of the hazard.
And the actual verdict
The Verdict
* The jury awarded Liebeck $200,000 in compensatory damages. This amount was reduced to $160,000 because the jury found Liebeck 20 percent at fault in the spill. The jury also awarded Liebeck $2.7 million in punitive damages, which equals about two days of McDonald's coffee sales.
* Post-verdict investigation found that the temperature of coffee at the local Albuquerque McDonald's had dropped to 158 degrees Fahrenheit.
* The trial court subsequently reduced the punitive award to $480,000—or three times compensatory damages—even though the judge called McDonald's conduct reckless, callous and willful. Subsequent to remittitur, the parties entered a post-verdict settlement.
I would say that this not at all frivolous.. From their own testimony the coffee they sold was too warm for direct consumption since it would have caused burns to the mouth and throat.
This is identity theft; not a consumer complaint. It's a crime in the legal statutes, yet the criminals can demand arbitration? I should be saying 'corporations don't choose what laws they obey' but obviously, in neo-liberal USA, they can.
And if the Linux kernel has a vulnerability that was exploited, Home Depot would be on the hook for billions of dollars? Or if the software from a vendor included a unpatched 3rd party library (such as OpenSSL?) It just wouldn't work, and it would be a nightmare of responsibilities and dependencies. The only winners would be lawyers.
Lawsuits should proceed if (and only if) the company responsible was negligent in things under their control:
Then you'd have the case that companies outsource everything to a sister company with no assets purely to ensure that they cannot be sued.
They way it is now is fine, thanks - the company is responsible for ensuring that its vendors are diligent. No one else can be responsible for that except the company who made the decision to go with a negligent vendor.
I'm a minority race. Save your vitriol for white people.
Corporations wanted to be considered people and that means they can sue or be sued.
We'll make great pets
as everyone else.
Damping absorbs vibrations. Dampening is caused by moisture.
Maybe you could try this site for price comparison. Or maybe you could check this one for another overall comparison. To me, price of goods only doesn't mean anything much if it doesn't affect the local "cost of living".
Contracts should never be allowed to waive legal rights.
The entire point of a contract is to waive legal rights. A contract says that I agree to be bound from exercising certain of my legal rights, and in exchange, you agree to be bound from exercising certain of your legal rights.
For example, if I own a house, I usually have the legal right to walk into that house at any time. However, if I sign a contract with you by which you lease the house from me, I no longer have that right. Similarly, before the contract, you had the legal right to the money in your bank account, and to spend your money however you choose. However, after the contract, you've now waived that right: I can demand that you pay me the agreed-upon rent every month, and if you don't, I can get an order to have the money taken directly from your bank account.
Obviously, there are some legal rights that cannot and should not be waivable. We as a society agree that each person has a basic right not to be enslaved, and therefore we won't enforce a contract for slavery, even one voluntarily entered into by both sides. But it always comes down to which legal rights are waivable, and under which circumstances, and not whether rights are waivable at all.
The entire point of a contract is to waive legal rights.
I disagree. While contract often do this, the real point of a contract is not to waive legal rights.
The whole point of a contract is to make an agreement as clear to all parties concerned as possible, with some sort of legal recourse available if someone doesn't keep to the agreement.
I would say that this not at all frivolous.. From their own testimony the coffee they sold was too warm for direct consumption since it would have caused burns to the mouth and throat.
Then you're as much of an idiot as those who made the award. Everyone knows coffee is served hot, frequently too hot for direct consumption. Fire is hot, don't stick your fucking hands in it.
Just another day in Paradise