CJAC: Civil Justice Association of California

Proposed Arbitration Ruling Comments Due August 22, 2016

Posted on 07/26/2016 @ 09:00 AM

The Consumer Financial Protection Bureau (CFPB) has proposed new regulations limiting arbitration. The CFPB rule, CFPB-2016-0020-0001, would prohibit pre-dispute arbitration clauses in new contracts that prevent class actions lawsuits against providers of consumer financial products and services. It would also require providers that use pre-dispute arbitration agreements to submit records to CFPB regarding claims and awards in arbitration cases. The deadline for comment submission is August 22, 2016.

CJAC urges everyone who cares about arbitration to submit comments in defense of arbitration. Here are some helpful talking points for crafting your comments to CFPB:

  • Plaintiffs lawyers dislike arbitration because they make more money in a lawsuit, particularly in a class action lawsuit.
  • Arbitration agreements are not necessarily anti-consumer.
  • Arbitration is fair.
  • Arbitration is faster than going to court.
  • In many cases, you don’t need a lawyer to use arbitration.
  • Arbitration is more convenient for the consumer.

As an example, below are the comments submitted on behalf of CJAC by Kim Stone:

On behalf of the Civil Justice Association of California, a not for profit association of businesses, insurers, pharmaceutical companies, and others, I urge the Consumer Financial Protection Bureau not to enact the proposed anti-arbitration regulations.

Arbitration is a fair and efficient means of resolving disputes. When most consumers have a problem, they want to resolve the problem – not to have a lawsuit. Fair and reasonable arbitration agreements -- even those with class action waivers – allow consumers to get their problems solved without having to resort to the time and expense of filing a lawsuit.

The class action waiver prohibition in these regulations will lead to additional lawsuits that do more to enrich the plaintiff’s lawyers than to compensate the supposedly aggrieved consumer. We already have an abundance of lawyer-generated class action lawsuits that are driven by the attorney’s desire for fees rather than by consumers who have actually been harmed. Recent headlines tell the story in a ridiculous way: Subway sued because some foot-long sandwiches are really only 11 inches; Starbucks sued because its iced coffee has too much ice; Ticketmaster settles a huge class action lawsuit where the lawyers get millions and the class members get a coupon for $2.50. We should not change the rules to allow more of these lawyer-driven lawsuits.

Arbitration provisions provide consumers and citizens with a meaningful way to resolve their problem with a company – which is what consumers actually want. Sure, the lawyers want to sue – but if I’m a consumer with a problem I’d much rather get my problem solved than have to sue. And I certainly don’t want to be part of a class action lawsuit where the lawyer gets millions and I get pennies, or worse, a coupon for pennies.

Arbitration is not anti-consumer. It is anti-lawyer. Many arbitration provisions are in fact pro-consumer. In the arbitration agreement at issue in the seminal AT&T v. Concepcion case that went to the US Supreme Court, the contract provided that the customer could complain by completing a one-page form on the AT&T website. If AT&T did not offer to settle the claim, the customer could invoke arbitration by completing a Demand for Arbitration, also on the website. If the parties proceeded to arbitration, AT&T had to pay for all non –frivolous claims. The customer could also choose to instead sue in small claims court. AT&T was prohibited from seeking attorney’s fees from the customer. If the customer received an award greater than what AT&T had offered, AT&T would have to pay at least $7,500 to the customer and pay double their attorney’s fees. Those contract provisions are very pro-consumer.

Of course plaintiff’s attorneys dislike arbitration agreements. The AT&T agreement was good for consumers; for lawyers, not so much. Arbitration can have better outcomes for consumers than class action lawsuits do. Please do not enact these proposed regulations.

To read a summary of the proposed rule, click here.

To submit comments, click here.

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State Supreme Court has a chance to rein in PAGA abuse

Posted on 07/25/2016 @ 09:00 AM

In a recent op-ed featured in the Daily Journal, CJAC President Kim Stone writes that the State Supreme Court has a chance to rein in PAGA lawsuit abuse. In it she writes:

“California has been a hotbed for highly speculative employment litigation, which is threatening the very jobs the lawsuits say they are trying to protect. For many companies, when the cost of employment litigation abuse is subtracted from the bottom line, they may not be able to hire new workers, may be forced to leave the state, or may not set up shop here in the first place. The impact is being felt across the state's economy, from retailers to manufacturers.”

“Whether employment litigation abuse in California will get better or worse over the next decade is right now in the hands of our state Supreme Court. The lower courts in both cases rejected the lawsuits as being unsupported by the law. These lawsuits were also not helpful for providing workplace protections. Litigation in these cases did not provide the right answer.”

To read the op-ed in its entirety, click here.

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Guv’s Budget Extends PAGA Claim Review Period

Posted on 06/30/2016 @ 09:00 AM

Governor Brown signed the California budget this week and included in it were some amendments to the way the California Labor and Workforce Development Agency (LWDA) handles Private Attorneys General Act (PAGA) claims. PAGA allows private citizens to pursue civil penalties against an employer on behalf of themselves, other employees and the state for violations of the Labor Code. PAGA claims continue to increase year after year, clogging our courts and increasing the costs of doing business in California.

Under PAGA, a civil action can be commenced only after certain requirements are met. Among the requirements, an employee must send a notice of the alleged Labor Code violation to the LWDA and it must determine whether it will or will not investigate the claim. Under the amendments, the LWDA will have more time, 60 days instead of 33, to review PAGA notices and assess if it will investigate the alleged violation(s) or allow the private party to pursue civil action. Extending the review time frame could help reduce the amount of unnecessary litigation in our courts.

While we will have to wait to see the real impact the amendments will have on employers, they are a welcomed step towards a much needed PAGA reform.

To read more about the amendments, click here.

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Case of the Missing $65 Million Pants: Update

Posted on 06/28/2016 @ 09:00 AM

Kevin Underhill, of Lowering the Bar (http://loweringthebar.net/), takes a look back at the $65-million lawsuit Roy Pearson filed in 2005 over a missing pair of pants. As a legal humorist, he notes that the case is “a gift that just keeps giving.” Underhill recounts:

This was a titanic struggle between Roy L. Pearson, Jr., then an administrative-law judge in the District of Columbia, and his neighborhood dry-cleaning establishment. Pearson claimed Custom Cleaners lost a pair of his suit pants. Here they are, the cleaners said. Those aren’t mine, he said. It escalated. The cleaners offered to settle, but Pearson could not be satisfied. He refused settlement offers of $1,150, then $3,000, then $12,000 (for lost pants, remember). He eventually sued, alleging multiple violations of a consumer-protection statute; saying he was entitled to $1,500 per violation per defendant per day, he demanded $65,462,500.

Later Pearson filed a brief changing the focus of his claim from the pants to allegedly misleading signs (“Satisfaction Guaranteed”), but he refused to dismiss the case. See “Judge Drops Pants; Suit Still On” (June 6, 2007). Sans pants, his demand was now a more reasonable $54 million. The case went to trial, and was every bit as ridiculous as I had hoped. See “Live-Blogging the Pants Trial” (June 12, 2007). Pearson called no fewer than nine witnesses, including himself; he wept on the stand; and claimed that he hadn’t wanted to litigate but felt the law “gave him no choice.” Nor did it give him anything else. See “Judge Who Lost Pants Loses Case” (June 25, 2007). He appealed.

The timing of all this was unfortunate, since Pearson was up for another term as an ALJ [Administrative Law Judge]. Some (like the Washington Post) felt the matter called his judgment into some question. Eventually, his employers agreed. Surprise! He then sued them for wrongful termination. (He only wanted $1 million for that.) He lost.

To read the full story, click here.

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Op-Ed: Don't eliminate limitations period for climate change statements

Posted on 05/19/2016 @ 09:00 AM

CJAC President Kim Stone’s op-ed regarding SB 1161 appeared in the May 19, 2016 online edition of the Daily Journal. In it she states:

The California Senate is considering entirely eliminating the statute of limitations for lawsuits that government prosecutors bring against companies for statements relating to climate change science. The bill, Senate Bill 1161 is authored by Democratic Sen. Ben Allen of California Senate District 26 (a coastal district that covers from Pacific Palisades/Santa Monica to Palos Verdes).

As introduced, the bill would have extended the statute of limitations from four years, as allowed by current law, to 30 years. But in the Senate Judiciary Committee the bill was amended to have a four year open season on lawsuits, going back forever. In other words, for a four year period, prosecutors could sue companies over statements related to climate change science made at any time in the past. Lawsuits that would have previously been time barred would be revived by Senate Bill 1161.

The bill is unfair and bad public policy. There are good reasons to support and use statutes of limitation.

To read the op-ed in its entirety, click here (subscription required).

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