Corporate Rescindment of Legal Rights: Business Power Run Amuck

Capitalism requires constant manipulation of its accounts to increase profit margins, stealth in the service of uncontested power over the citizenry, a top-down one-way street of unrelieved abuse if the System is to be made to work exclusively on behalf of its industrial-financial-military elites, themselves constituting an increasingly well-organized ruling group. This means the up-ending and distortion of democratic government: interconnectivity above, a submissive people, facilitated through promoting false consciousness, below. Sound bitter? No, realistic, as peoples’ rights recede further into the background, as the mandatory ratifying condition for the sanctification of property and free-market ideology.

America is the trail-blazer in world capitalism, perfecting schemes/techniques large and small for squeezing profits out of transactions of every kind and character, the latest to come to light being the legal assault on class-action suits, to be supplanted by a stacked deck of compulsory arbitration—in the case at hand, the nickel-and-diming of economic tyranny for the profits at stake, but also, more importantly, for confirmation of the absolutism of business power, as in America, in the advanced stage of capitalist development. Nothing must be conceded, all holes in the dike plugged, lest the system loses its grip over the people and begins—as is already happening—its downward trajectory (if not plummeting, in light of the desperation implied by the Big Squeeze).

Never mind the larger picture: counterrevolutionary America on the world scene, in which financial-business consolidation at home is simultaneous with war, intervention, covert action, regime change, drone assassination, embargoes, all as patterns of confrontation, market penetration, aggrandizement, military and diplomatic, abroad. Never mind, because this is well-worn ground, gradually unfolding for over a century with few bright spots, that we’re all used to. Instead, here in legal specifics is something comparatively new, and for once I can commend the New York Times on a job well done, exposure across the wide swath of American business of self-immunizing itself from legal challenges to destructive and illegal practices for which those on the receiving end have little or no recourse in fighting back. The consumer is a cipher to be kicked, raped, reduced to obedience.

I refer to Jessica Silver-Greenberg and Robert Gebeloff’s article in The Times, “In the Fine Print: Arbitration Stacks the Deck of Justice,” (Nov. 1), which, in the opening sentences, illustrates what the archetypal consumer (i.e., the American public) is up against—a slow death through the obscurantism of minutia: “On Page 5 of a credit card contract used by American Express, beneath an explainer on interest rates and late fees, past the details about annual membership, is a clause that most customers probably miss. If cardholders have a problem with their account, American Express explains, the company ‘may elect to resolve any claim by individual arbitration.’” The reporters rightly call these words as “at the center of a far-reaching power play orchestrated by American corporations,” in other words, nailing the coffin of business dominance over the people with yet another device of exploitation, one seemingly more gentle because enjoying the protection of the law and, as noted in the title, part of the small print few take the trouble to read, still fewer able to penetrate the gobbledy-gook to understand. They explain further: “By inserting INDIVIDUAL arbitration clauses into a soaring number of consumer and employment [equally important because defining the wages and conditions of work] contracts, companies like American Express devised a way to CIRCUMVENT the courts and bar people from joining together in class-action lawsuits, realistically the only tool citizens have to fight illegal or deceitful business practices.” (emphasis, mine)

We see here the commodification of the legal profession, perhaps now more than ever, so that, despite the work of public-interest lawyers on behalf of the poor and neglected and in the areas of civil liberties, civil rights, consumer protection, antiwar and other forms of dissent, lawyerly acumen/trickery in the service of wealth and power sets the pace in the higher reaches, to the erosion if not defeat of the rule of law itself. (Naomi Klein’s book, “This Changes Everything: Capitalism vs. The Climate,” discusses how many of the most prestigious green foundations, with lawyers prominent in their organization, have accommodated to the climate-destruction policies of their adversaries, a perfect illustration of capitalist pressures—not confined to our topic—to achieve iron-clad security in business operations and the pursuit of profit.) David and Goliath, the individual against the megacorporation, defines, and has for some time, an uneven battleground under which the majesty of the law confers differential rights to the detriment of the people. Interconnectivity: the negation of class-action suits befits a nation whose citizenry, too, has been disadvantaged in halting the carbon-emissions practices of industry and business.

The sweeping nature of the concerted effort to deny legal recourse to the abuses people suffer in daily life is evident: “Over the last few years,” the reporters state, “it has become increasingly difficult to apply for a credit card, use a cellphone, get cable or Internet service, or shop online without agreeing to private arbitration. The same applies to getting a job, renting a car or placing a relative in a nursing home.” The very homeliness of the examples drives home both the insatiable desire for gain on the part of capitalism and the need for bringing the masses into acceptance of their economic subjugation. This is nothing new, only more intently pressed and thorough. The account is replete with examples drawn from such disparate contexts/situations as to suggest the mounting of a universal capitalist offensive against the people: class action suits have been thrown out brought by Time Warner customers finding charges “mysteriously appear[ing] on their bills,” or against “a travel booking website accused of conspiring to fix hotel rates,” or black workers at Taco Bells “who said they were denied promotions, forced to work the worst shifts and subjected to degrading comments.” Blocking suits such as these is the mere nitty-gritty of a system that translates into bailing out giant banks, pampering and enriching defense contractors, spying on its own people, and, all-in-all, preserving a hierarchical class system in which business can do no wrong, confident that government has its back.

Law is an instrument of privilege, nowhere more than now. Take this example: “Patricia Rowe of Greenville, S.C., learned this firsthand when she initiated a class action against AT&T. Ms. Rowe, who was challenging a $600 fee for canceling her phone service, was among more than 900 AT&T customers in three states who complained about excessive charges, state records show. When the case was thrown out last year, she was forced to give up and pay the $600. Fighting AT&T on her own in arbitration … would have cost far more.” To which the reporters add, “By banning class actions, companies have essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination, court records show.” The reach of corporate rapacity extends farther and farther afield with the discovery of each new stratagem or misuse of legal precedent. A Reagan-appointee, William G. Young, to the federal bench in Boston, recognizing the gravity of the situation, wrote: “’This [banning class actions] is among the most profound shifts in our legal history. Ominously, business has a good chance of opting out of the legal system altogether and misbehaving without reproach.’”

The words burn on the page. The law, absent its jurisdiction over the most powerful members of the community, mocks democratic principles, Young, a federal judge, taking a position which is against the majority decision of the Supreme Court when cases were brought before it, in 2011 and 2013. I will not trace the preparatory ground for legal action led by “a coalition of credit-card companies and retailers,” culminating in the Court rulings that “enshrined the use of class-action bans in contracts.” Though corporations claimed that arbitration provided greater remedy than class-action suits, it was still the individual against giant firms, even to the point that the corporation often controlled the arbitration process. The Times found that, “based on thousands of court records and interviews with hundreds of lawyers, corporate executives, judges, arbitrators and plaintiffs in 35 states,” recourse to arbitration was practically impossible for most people, who then, because “blocked from going to court as a group,” simply “dropped their claims altogether.” The scorecard, of federal cases from 2010 to 2014: “Of 1,179 class actions that companies sought to push into arbitration, judges ruled in their favor in four out of every five cases.” As for upholding class-action bans in the first place, in 2014, 134 out of 162 cases.

No relenting on the economic front: “Some of the lawsuits involved small banking fees, including one brought by Citibank customers who said they were duped into buying insurance they were never eligible to use.” Why go the extra length? “Fees like this, multiplied over millions of customers, amount to billions of dollars in profits for companies.” The honor roll of abuses might be continued indefinitely; as the reporters note, “The data provides only part of the picture, since it does not capture the people who were dissuaded from filing class-actions.” Indeed, The Times investigation, seeking to correct for deficiencies in arbitration numbers, “since there is no central database of arbitrations, found that nationwide over the 2010-2014 period, “only 505 consumers went to arbitration over a dispute of $2,500 or less.” Examples: Verizon, with more than 125 million customers “faced 65 consumer arbitrations in those five years,” and Time Warner Cable, with 15 million, faced seven. The Times investigation found that one Citibank customer, stubborn about his rights, fought Citibank “in arbitration over a $125 late fee on his credit card,” spending “three years and $35,000” to rectify the situation in which “the erroneous charge ruined his credit score,” and he is vowing to continue the fight. The reporters wryly observe: “The odds are not in his favor. Roughly two-thirds of consumers contesting credit card fraud, fees or costly loans received no monetary awards in arbitration, according to the The Times’s data.”

Everybody is getting on the bandwagon: “Taking Wall Street’s lead, businesses—including obstetrics practices, private schools and funeral homes—have employed arbitration clauses to shield themselves from liability,” and the thousands of cases that have been brought by “single plaintiffs over fraud, wrongful death and rape are now being decided behind closed doors.” Is this unfair? A violation of due process? A stacked deck against the people? The reporters write: “And the rules of arbitration largely favor companies, which can even steer cases to friendly arbitrators, interviews and records show.” Other examples are cited, like Alan Carson, who has an offbeat restaurant, Italian Colors, in Oakland, and who “sued American Express on behalf of small businesses over steep processing fees [30% higher than Visa’s or MasterCard’s]” but were unable to cut away from American Express corporate cards because this would hurt profits. The case proceeded to trial, Italian Colors v. American Express, moving through the courts over the next ten years—in the same period that “the alliance of corporate interests … had already been strategizing on how to eliminate class actions.” (Toss in the car makers with the others.) Once more the odds are too great; the system is not rigged, so much it contains within itself the outcome favorable to capitalism, and by capitalism I mean, not the Oakland restaurant in a strip mall which features spaghetti Bolognese and has crayons and butcher paper on the tables, but CAPITALISM in its grandiose display of power, contemptuous of all who stand in the way of its mountainous profits, whether critic or small businessperson like Alan Carson, and which finds militarism essential to its progress abroad and conducive to the social discipline of the people at home.

Consumerism is a form of obedience to the ruling groups, a submission to the authority of the dollar. Eliminating class-actions is one more instance providing a glimpse into the underside of the Leviathan, which feeds on eliminating popular rights and the redress of grievances. What is Carson in a match-up with Alan Kaplinsky of Ballard Spahr in representing the banking industry? Or when lawyers of Wilmer Hale get into the act, calling a conference in July 1999 (the date is significant in showing the early start of the campaign to nullify the results of arbitration) to which “representatives from Bank of America, Chase, Citigroup, Discover, Sears, Toyota and General Electric,” and others were invited and attended? Arbitration, the reporters point out, was designed “to kill class actions,” and, I would add, to kill itself. The arbitration clause that became widely adopted by many of these firms banned class-action suits. In passing, John Roberts, who represented Discover in opposing class-action suits, later became Chief Justice of the United States as part of the majority in ruling against these suits.

My New York Times Comment on the Silver-Greenberg and Gebeloff article, same date, follows:

Justice Sottomayer recused herself, Chief Justice Roberts did not, in cases involving class-action bans. How can Roberts profess the rule of law when his own actions endanger it? The Times has here rendered perhaps its best public service in years by following through on the rise of the arbitration clause. It is sickening to see the power-grab, the abuse, mounted by corporations against the American public. Cynicism, the degradation of principle, all done for the sake of profit. Yet, not surprising, as America further descends into the realm of amoral justification of essentially unregulated capitalism and contempt for the social-welfare policies and programs of government.

From unconscionable global warming to massive allocations to the military, the corporate system is running out of control. What is democracy, when legal principles are the plaything of the powerful? The US stands exposed to the world for its hypocrisy, the ban on class-action suits representing but one example of the wider shift away from constitutional observance and moral obligation one expects from the nation.

Norman Pollack Ph.D. Harvard, Guggenheim Fellow, early writings on American Populism as a radical movement, prof., activist.. His interests are social theory and the structural analysis of capitalism and fascism. He can be reached at