Bank of America, the nation’s largest bank, made a watershed change this month in how its millions of customers resolve their disputes, when it eliminated arbitration clauses from their credit card contracts.
BofA’s announcement came on the heels of a legal settlement reached between the Minnesota attorney general and the National Arbitration Forum, one of the largest arbitration firms in the nation. The NAF agreed to cease all consumer arbitrations as a result of the lawsuit.
Just days later, the American Arbitration Association halted consumer debt collection arbitrations, pending a review of their practices and procedures.
These events will make arbitration less available for consumers. You would think trial lawyers and consumer groups who have long opposed arbitration would be joyful. But instead of popping champagne corks, the opponents are grousing. And this is more telling than the rhetoric employed in all the years of their so-called “principled” fight on behalf of the consumer.
A recent opinion piece by David Lazarus in the Los Angeles Times (“Got a Complaint against BofA? You’re on your own” August 23, 2009) sheds light upon, and calls into question whether the self-proclaimed advocates for consumers actually speak in their interest. Mr. Lazarus writes, “Most media outlets characterized BofA’s move as good for consumers and bad for the bank’s lawyers, who now face a deluge of lawsuits.”
But far from proclaiming the consumers’ victory over arbitration clauses, Mr. Lazarus’ piece presents the recent events as a battle won but with the war still in the balance.
He quotes Gail Hillebrand of Consumers Union, a major opponent of consumer arbitration: “Dropping the arbitration requirement is a useful step, but it’s only half a step.”
For arbitration’s opponents, ensuring that consumers can go to court is not the end goal. It is actually the first of a two-step dance at the plaintiffs’ lawyer prom.
The second step is to allow these consumer cases to become large class actions—the kind that are famous for making a relatively few plaintiffs’ lawyers rich while giving the consumer masses pennies on the dollar, or even coupons, for their trouble.
To understand the plaintiffs’ lawyers’ true class-action-enabling motive, one need look no further than Representative Hank Johnson (D-Ga.), the primary sponsor of the House version of the Arbitration Fairness Act and a plaintiffs’ lawyer.
Lisa A. Rickard serves as president of the U.S. Chamber Institute for Legal Reform (ILR), where she provides strategic leadership to ILR's comprehensive program aimed at changing the legal culture that has resulted in our nation's litigation explosion.