What Is Crony Capitalism's Secret Deadly Weapon Against Our Rights? (updated)

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Crony Capitalists (CCs) never quit trying to entice federal officials into giving them special access or favors and shutting millions of the rest of us out of court, so they have no accountability to a local jury for negligence or shoddy service. They've enlisted scores of Members of Congress, many of them self-proclaimed backers of states' rights, in an effort to to override the Founding Fathers' clear guidance that Congress doesn't have authority over state tort law, specifically with respect to lawsuits over healthcare negligence. True Federalists have had some recent success in persuading conservatives to not accede to the CCs' demands, but the CCs never quit. And while we fight that one big battle, CCs have opened up another front, with enormous success thanks to another arm of an all-powerful Uncle Sam.

Under the nose of the vast majority of Americans, Crony Capitalists have been moving to shut out millions of us from exercising our 7th Amendment rights over bad products or services, based on one rarely read paragraph in consumer contracts. That paragraph, in everything from cell phone and car contracts to employment agreements, requires us to submit to binding arbitration, and to not file a lawsuit, as a condition of even buying the product or service. Forced arbitration clauses eliminate the ability to hold wrongdoers accountable, even in the most egregious cases involving the abuse of children and the elderly, intentional wrongdoing, and gross violations of law.

These clauses force us to give up our God-given, constitutionally protected right to go to court in favor of being relegated into a system of secret arbitration, where the arbitrators and the rules are chosen by the very company against whom the individual has a grievance. There are no due process standards, no guarantees that the applicable laws will be upheld, and no public records of the proceedings.

Let me stress that there's nothing wrong with voluntary arbitration in which both sides have an equal chance before an impartial arbitrator in an open process. That's not what happens in the current arbitration environment. The little guy has almost no shot whatsoever. And the mainstream press never touches the subject.

It's been trending this way for years, but Crony Capitalists have received a huge boost from the supposedly-conservative Supreme Court in the quest to shut courthouse doors over forced arbitration clauses. The Court's recent decisions have turned an almost-80-year-old law, the Federal Arbitration Act, into a giant club with which to crush states' and individual rights. Two Texas state judges summarized the state of forced arbitration and recently wrote the following:

Our Seventh Amendment right to a jury trial is vanishing before our very eyes thanks in large part to an increased reliance upon alternate dispute resolution and mandatory arbitration. While a sound argument can be made for the utility of arbitration in arms-length commercial transactions, the consequences are particularly dire in situations involving consumers and employment consequences... AT&T and Rent-A-Center pushed the FAA's scope to new limits. Courts are now unlikely to find contracts with arbitration provisions unconscionable no matter what state law provides. It is obvious that the application of the FAA has expanded beyond its drafters' intent and in the face of apparent deficiencies.

Last week, a federal securities regulator gave preliminary approval to a plan by the discount brokerage firm Charles Schwab to require all 8+ million accountholders to agree to forced arbitration, even if Schwab violates securities law. POOF! There goes the constitutional rights for over 8 million people. Betcha every stock brokerage firm copies Schwab, basically enabling Wall Street, which already liquidated billions in pension accounts, to throw ethics out the window again and take investors into another financial crash without penalty.

Tomorrow we'll see if the Supreme Court will take forced arbitration another step further and force small businesses with American Express accounts to submit to forced arbitration procedures designed and run by AMEX. If the Supremes are consistent, every small business with a Gold Card will know how individuals feel when the phone company tells us to go to arbitration or enjoy our crummy phone.

WHAT'S NEXT?! Will we see a sign on the grocery store door and on receipts, telling us that the purchase of food there constitutes an agreement to not sue it for spoiled, poorly stored food that makes us sick? Will we see a little paragraph on our car mechanic's bill, telling us that we can't sue for a dangerously negligent care repair, even if we're killed?

When will Congress start taking this seriously and change the Federal Arbitration Act so we can exercise our rights in state courts, as the Founders said we should?

UPDATE, March 4: I Discussed this issue on the What's Up radio program, hosted by Terry Lowry and broadcast on 100.7 FM KKHT, the Word Live stream at www.KKHT.com in Houston, TX, and on KBXD-AM 1480 in Dallas. You can download and listen to the interview in three segments:
Segment One
Segment Two
Segment Three

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This page contains a single entry by Andrew Cochran published on February 26, 2013 4:16 PM.

Jury Should Determine Virginia Tech Shooting Damages, Not Judges was the previous entry in this blog.

Paul Ryan Embraces "Crony Politics," Ditches Constitution in Budget is the next entry in this blog.

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