Access to Courts

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A Majority of Voters Support Passage of Legislation to End Forced Arbitration

Late last week, Rep. Hank Johnson (D-GA) and Sen. Richard Blumenthal (D-CT) introduced the Forced Arbitration Injustice Repeal (“FAIR”) Act, a bill that would end the harmful use of forced arbitration against workers, consumers, and small businesses.

Forced arbitration clauses, which are usually hidden in the fine print of “take-it-or-leave-it” agreements, are ubiquitous in contracts governing bank accounts, student loans, cell phones, employment, small business merchant accounts, and even nursing home admissions. These clauses deprive people of their right to seek justice in court before an impartial judge or jury.

The FAIR Act would not eliminate the option of allowing workers, consumers, and small businesses from agreeing to arbitration or other forms of alternative dispute resolution after a dispute has occurred. Rather, it would give them back the power to choose how they want to resolve a dispute.

The FAIR Act would correct a series of recent U.S. Supreme Court decisions that have expanded the reach of the Federal Arbitration Act much farther than Congress intended, and have given corporations greater power to force workers and consumers into arbitration. Arbitration has been used as a tool by big corporations to deprive workers and consumers of their rights and is inherently unfair. The proceedings are generally secret, may be biased in favor of the company because they tend to bring in repeat business, and include few rights to appeal. The arbitration rules could even include “loser pays” provisions, which deter people from bringing valid claims for fear that they will have to pay the opposing party if they lose the case.

Workers across the country are increasingly demanding that their companies remove these clauses from employment contracts. In late 2018, thousands of Google employees protested the company’s forced arbitration policy for sexual harassment and other mistreatment claims. Shortly after the employee walk-outs, Google announced that it would no longer force workers into arbitration for claims related to sexual harassment. Similar companies such as Facebook, Airbnb, and eBay announced similar plans. And, after continued advocacy by a broad coalition of organizations led by Public Citizen, Google announced last month that it would no longer force its workers into arbitration for any type of claim (although it still does require contract workers to bring claims in arbitration).

Public Citizen and dozens of consumer, worker, and civil rights organizations join a majority of both Democrats and Republicans in calling on Congress to quickly pass the FAIR ACT. According to a national survey, 84 % of the public supports federal legislation that ends the practice of forcing consumers and workers into arbitration. Surprisingly, Republicans support the legislation more than Democrats (87% to 83%).

SEC commissioner wrong to support blocking courthouse doors to harmed investors

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In an interview with Politico, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce offered her support to allow companies the ability to prevent investors from banding together in class actions against them if they are victims of securities fraud or abuse. That would mean that investors who were cheated by companies such as Enron and Bank of America would be barred from pressing their claims together, which is a massive deterrence for corporate malfeasance. Public Citizen continues to advocate alone and with coalition partners against actions to force arbitration onto investors.

Forced arbitration is a privatized system of justice that would prevent investors who have been cheated from banding together to seek justice. Not only is forcing investors into arbitration a gross violation of their rights, it is an atrocious way to disempower them from recovering losses against corporate wrongdoers, and removes an important deterrent for corporate fraudsters.

As enforcement agencies under the Trump era continue to slow the pace of enforcement actions against bad actors, the private right of investors to band together is even more important. According to SEC Commissioner Robert Jackson, in the wake of several major securities fraud scandals such as Enron, private investors recovered $19.4 billion in private lawsuits. The SEC recovered just $1.75 billion.

And that’s why senior SEC officials, including Commissioner Jackson and SEC Investor Advocate Rick Fleming, have registered their concerns about any attempt to limit a person’s access to justice through forced arbitration. Even Republican-appointed SEC Chair Jay Clayton has been reticent about stating his support for forced arbitration.

The SEC’s mission is to protect investors. Nothing shows how disconnected Commissioner Peirce is from protecting Main Street than siding with Goliath over every day investors. Commissioner Peirce’s view is out of the mainstream. Public Citizen will continue to fight to protect investors’ access to justice.

 

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The Senate Must Vote Not to Confirm Brian Benczkowski, A Potential Threat to the Mueller Investigation

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If the investigation surrounding “Trump-Russia” has at times seemed like a twisty spy novel, we could be about to enter a disturbing new chapter. The vote on whether or not to confirm Brian Benczkowski’s nomination to head the Department of Justice’s Criminal Division is imminent, and could have profound implications on the investigation.

In the words of our friends at The Loyal Opposition, Benczkowski is “the most dangerous Trump nomination you’ve never heard of.” We’ve written several times in the past about the dangers facing Special Counsel Robert Mueller’s probe into possible collusion between the Trump Campaign and Russian officials during the 2016 election. In the past, the feared threats of major interference into the investigation by President Trump and his loyalists in Congress have ranged from directly firing Mueller, to removing Deputy Attorney General Rod Rosenstein, to the pardoning of key witnesses. But the nomination of Benczkowski could represent a new danger– and it is moving now.

For one, Benczkowski’s lack of qualifications to head the division is concerning. While the Assistant Attorney for the Criminal Division (the position he is nominated for) must oversee and manage wide-ranging criminal prosecution efforts, Benczkowski has never served as a prosecutor nor tried a single case. Instead, his experience lies in his past as a former top aide to then-Senator, and now Attorney General, Jeff Sessions. Benczkowski’s lack of courtroom experience leaves him woefully unprepared to lead a large team of career prosecutors.

But a closer examination of Benczkowski’s past paints an even more troubling picture. For one, Benczkowski has told Congress that he once represented Alfa Bank, a massive financial institution in Russia controlled by Putin-linked oligarchs. Alfa Bank was previously under investigation by the FBI for suspicious communications between servers linked to the Trump Organization and the bank. As a letter to President Trump co-signed by all ten Democrats on the Senate Judicary Committee notes, the Senate (and the public) do not know if the bank is still under federal criminal investigation, nor the full story behind those communications.

Furthermore, Benczkowski’s longstanding ties to Attorney General Sessions raise the concern that, if confirmed, his tenure as Assistant Attorney General could jeopardize the Justice Department’s independence from the Executive or the terms of Sessions’ recusal from the Mueller probe. For instance, by overseeing cases referred by the Special Counsel’s office, such as the Southern District of New York’s criminal investigation of Michael Cohen, Benczkowski would be in a position to suppress or limit these investigations. And while Sessions has not recused himself from the Michael Cohen case, he has recused himself from all matters related to the 2016 election.

The public has no way of knowing what Benczkowski would be able to learn about the probe; despite Senator Sheldon Whitehouse (D-RI)’s repeated requests for Rosenstein to explain who at the Justice Department has access to information about the investigation, no clear information has been disclosed. Should Benczkowski be in a position to learn any details of the Special Counsel’s probe, his past as a Sessions loyalist raises concerns that he could pass along that information to Sessions, who is not supposed to have knowledge of the details of the investigation. Despite his ties to both Sessions and Alfa Bank, Benczkowski has refused to recuse himself from the Russia investigation. Whitehouse worries that, from atop his perch at the Criminal Division, Benczkowski could jeopardize the Mueller probe by “provid[ing] a back channel to his old boss and to the man in the Oval Office who’s declared open war on the Mueller investigation.” Perhaps the strongest statement came from Minority Whip Dick Durbin who said, “I cannot believe that the Republican Party couldn’t find one experienced prosecutor in the United States to take over the Criminal Division of the Department of Justice. … This is the wrong man for this job.”

That last detail relates to one even more troubling possibility: if confirmed as Acting Attorney General, Benczkowski could be in a position to take over the oversight of the Mueller probe. While he would not be the immediate next-in-line to succeed Deputy Attorney General Rosenstein’s role overseeing the investigation should Rosenstein be removed from his post, the Federal Vacancies Reform Act allows the president to temporarily appoint any Senate-confirmed official to another administration job. In other words, Trump would be able to appoint Benczkowski to take over Rosenstein’s role overseeing the probe. This arrangement would give Benczkowski wide berth to limit, hinder, or perhaps even shut down the investigation.

With all of these concerns put together, it is clear that Benczkowski is an unacceptable nominee for this position. His lack of qualifications, connections to Russia through Alfa Bank, and ties to Attorney General Sessions are simply too many red flags to overlook.

We must take action to stop Benczkowski’s confirmation. Call the Capitol switchboard at (202) 224-3121 to be connected to your senators’ offices and urge them to vote not to confirm. This vote is today at 2PM, and could have profound consequences for the integrity of the Mueller investigation. Your immediate action is needed to help protect it.

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Public Citizen Urges the Senate to Vote Against Corporate Lawyer to Join Product Safety Agency

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It may seem counterintuitive to appoint an individual to the U.S. Consumer Product Safety Commission (CPSC) who was spent her professional career defending corporations against consumer safety complaints. Yet, this is exactly what President Donald Trump has done by nominating Dana Baiocco to the CPSC.

The mission of the CPSC is to keep Americans safe from unreasonable risk of injury or death at the hands of consumer products. Unfortunately, Baiocco has spent nearly her entire career defending corporations, not looking out for consumers. As a result, Public Citizen urges the United States Senate to reject her nomination.

As a partner at the corporate law firm Jones Day, Baiocco’s client list included Yamaha, Mattel, and the tobacco company RJ Reynolds, and she has spent her professional career defending corporations from product safety claims. This biography stands in stark contrast to the CPSC mission to protect consumers. Baoicco’s nomination is just one in a long line of administration officials who bring deep corporate ties to their position, more interested in protecting corporate power over the interests of those they are meant to serve.

Baiocco’s Senate hearing did nothing to dispel our fears that she will work in opposition to the goals of the CSPC. In her opening statement, Baiocco listed one of her aims as working “to protect consumers from unreasonable risks while balancing the American public’s right to have access to a range of affordable product choices and recreational activities.” The fact that affordability is a central consideration in Baiocco’s mind is troubling. The Commission is tasked with protecting consumers from risk of injury or death, regardless of the price of a product. If Baiocco does not understand the CPSC’s central goal, and in fact thinks low product cost is an equal aim, then she will not be an effective Commissioner.

We are also concerned about the significant conflicts of interest that Baiocco would bring to the Commission. During her nomination hearing, Baiocco said that she would recuse herself from cases involving companies she previously represented for the duration of a year as required by law. She would not, however, commit to recusing herself from these cases for the duration of her tenure on the Commission. While that is the letter of the law, practically speaking, this means that the companies that she has represented only need to wait a year before she is once again working to protect their bottom line. Thus, Baoicco’s failure to recuse herself for the duration of her time on the Commission raises significant concerns about her ability to make objective judgments as a commissioner. Here are some of the corporations to which Baiocco has connections that could potentially cause conflicts of interest:

  • Yamaha: Baiocco represented Yamaha in lawsuits regarding the safety of its Rhino all-terrain vehicles (ATV). Multiple lawsuits were filed concerning the tendency of the Rhino ATV to tip over, trapping the rider beneath the vehicle. With help from Baiocco, Yamaha was able to keep manufacturing the vehicle until 2013, when pressure from the CSPC helped put an end to the Rhino’s production. The CPSC is currently considering rulemaking to protect consumers from dangerous ATV.
  • Mattel: A team from Jones Day, including Baiocco, represented Mattel in connection with lawsuits surrounding Mattel’s voluntary recall of toys made with paint that contained lead. A priority activity for CSPC in 2018 is to finalize rules related to testing for lead in products under the Commission’s jurisdiction.
  • RJ Reynolds: Baiocco represented RJ Reynolds Tobacco Company in a class-action suit filed on behalf of smokers in Florida. While Baiocco claimed during her hearing that this would not be a conflict of interest because cigarettes are not handled by the CSPC, Senator Richard Blumenthal (D-CT) noted that RJ Reynolds was one of the tobacco companies that advocated for the use of flame retardant chemicals in furniture. The CSPC voted last year to ban the use of organohalogen flame retardants and continues to undertake work regarding these chemicals. Thus, RJ Reynolds still has a significant interest in the work of the Commission.

We have little confidence that Dana Baoicco will make decisions as a commissioner that are in the best for consumers rather than helping to protect the bottom line of corporate wrongdoers. For these reasons, we strongly urge the Senate to vote against her nomination to the Consumer Product Safety Commission.

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Our Open Letter to Amazon

You can sign this letter by going here.

To Amazon’s Board of Directors:

We, the undersigned, urge Amazon to end the use of forced arbitration provisions in your employment contracts so that workers that have suffered from discrimination and harassment, especially sexual harassment, have access to a neutral judicial system when a dispute arises. Your May 30 shareholder meeting is the perfect opportunity for you to stand on the right side of history.

The #MeToo movement has shined light on how systemic discrimination and harassment in the workplace, especially sexual harassment, can be silenced for years because of the insidious practice of forced arbitration. Forced arbitration clauses, also known as “rip-off clauses,” frequently are hidden in the fine print of “take-it-or-leave-it” agreements. These clauses deprive people of their day in court when they are harmed. Because they constitute a corporate Get Out of Jail Free card for wrongdoing, they are ubiquitous in contracts. Forced arbitration is rarely cheap or quick and it is often harmful to employees, especially women, people of color, immigrants or LGBTQ people.

Amazon is being sued by workers with whom you contract. Amazon has asked the court to force those workers into private “courts” of their choosing and to prevent the workers from banding together to defend their rights.

As a service used by millions of people worldwide, Amazon has the power to influence other companies with its actions. Amazon is seeking to build a second corporate headquarters, with one of its criteria that the location must be a diverse and vibrant environment. And as a tech company that prides itself on a progressive work environment, removing forced arbitration provisions for all claims related to the workplace and employees should be no-brainer.

A workplace culture that tolerates ongoing discrimination and harassment must be eliminated. Forced arbitration only serves to enhance this culture by making victims of discrimination and harassment less likely to report the behavior. Ending forced arbitration is just one of the many steps that need to be taken to end this toxic culture, but it is a crucial one. Making these important changes would make Amazon an industry leader in addressing the ills of discrimination, harassment and all insidious forms of workplace wrongdoing. As you narrow the locations for your second corporate headquarters, we urge you to consider the impact that taking away a worker’s access to justice will have on a proposed location’s willingness to have you in their city.

Now is the time to be on the right side of history and set an example as a responsible company in the marketplace by removing forced arbitration provisions for all claims from your employment contracts.

Sincerely,

The undersigned

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