Karon Law Blog

Corporations Want Courts All to Themselves: Trump Administration and U.S. House Agree

By Jonathan A. Karon

In the course of his business career and even on the campaign trail, President Trump made a habit of threatening to sue people who offended him. According to a U.S.A. Today Report, he and his businesses filed approximately 1600 lawsuits just to collect debts allegedly owed to his casinos. Yet his administration apparently believes that the rest of us don’t deserve the same rights he has to go to Court. The Center for Medicare and Medicaid Services (CMS), a Federal agency, is proposing to take away the rights of nursing home residents to go to Court if they’ve been injured or abused. Instead they would be forced into binding arbitration, a secret proceeding, where their claims would be decided by a private judge, not necessarily even an attorney, selected by the other side and not required to follow the law.

The Obama adminstration enacted a rule prohibiting nursing homes from requiring that residents agree to binding arbitration, instead of going to court, as a condition of admission. Now CMS proposes to reverse its own rule and allow nursing homes to require binding arbitration. In a letter protesting this proposed change, the Attorneys General of sixteen states (including Massachusetts) stated, “Pre-dispute binding arbitration agreements in general can be procedurally unfair to consumers, and can jeopardize one of the fundamental rights of Americans; the right to be heard and seek judicial redress for our claims.”

This is part of a continued assault on the right of average Americans to be heard in Court.  According to the New York Times, the Department of Education is planning on eliminating a rule prohibiting for profit colleges from enforcing arbitration agreements in disputes over student loans. https://www.nytimes.com/2017/08/10/opinion/republicans-class-action-sue-banks.html Meanwhile, House Republicans recently passed a bill revoking a Consumer Financial Protection Bureau rule prohibiting the use of forced arbitration clauses in consumer banking and credit contracts. The bill is now in the Senate, where, if it passes, it is expected to be signed by President Trump.

In a previous post, I discussed how a series of unfortunate 5-4 Supreme Court decisions interpreting the Federal Arbitration Act allowed corporations to impose one sided arbitration agreements on their customers and prevented state governments from prohibiting them.  http://www.karonlaw.net/blog?id=314  As a result, corporations are insisting that customers agree to arbitration clauses as a condition for receiving goods or services. Absent strong public pressure, this is unlikely to change.

What is striking is the hypocrisy of these corporations. Although they wish to impose binding arbitration on their customers, they very aggressively use the Court system to further their own interests. For example, according to reports, Hobby Lobby, which sued the Obama administration claiming that the Affordable Care Act infringed on it’s (the corporation’s) freedom of religion, forces its employees to agree to arbitration of any employment discrimination claims.

Apparently these corporations, the Trump administration, and House Republicans believe that the right to go to Court is a weapon reserved for the wealthy and powerful. They want the rest of us to be left with a private rigged system of justice. You can fight back. Spread the word about what is going on. Tell your Senators and Representatives that the right to go to Court belongs to everyone and you want to keep it.