rise of the corporate court

Supreme Court Considers Class Action Ban

Corporate interests already exercise an inordinate level of control over Americans' daily lives. This morning, in AT&T Mobility v. Concepcion, the Supreme Court heard oral arguments in a case that threatens to give yet another advantage to powerful corporations over individual Americans. AT&T is essentially asking the Court to take a wrecking ball to state consumer protection laws.

At issue is whether states have the right to protect consumers from contracts that are so unfair as to be unconscionable - where one party has so much bargaining power over the other that the weaker one has little choice but to agree to highly disadvantageous terms.

This case started when AT&T offered phone purchasers a "free" second phone, then charged the consumers for the taxes on the undiscounted price of the "free" phone. AT&T allegedly pulled this scam on thousands of its customers. One of its victims, the Concepcions, brought a class action suit against AT&T. However, AT&T had a service contract where consumers had to agree to resolve any future claims against the cell phone company through arbitration, rather than the courts. In addition, customers had to agree not to participate in any class action against AT&T. So AT&T asked the court to enforce the agreement it had imposed upon the Concepcions by throwing out the class action suit and forcing them into arbitration, one lone family against AT&T without the protections of courts of law or neutral judges.

However, the court denied AT&T's motion, determining that the "no class action" contractual provision was unconscionable under California law and, therefore, not enforceable. Moreover, the court rejected AT&T's claim that the Federal Arbitration Act preempts state law in this case, making the contract fully enforceable against the Concepcions. (The Federal Arbitration Act generally encourages courts to compel arbitration in accordance with the terms of arbitration agreements.) The Ninth Circuit upheld the lower court decision. However, hoping to get a different result from the corporate-friendly Roberts Court, AT&T appealed.

As countless Americans can attest, it is not at all uncommon for a giant telecommunications service provider to provide extremely complex monthly bills that are nearly impossible for the average person to understand. It is certainly not unheard of for such bills to hide relatively small charges for services never ordered, or mysterious taxes or fees that the company should not be charging. Unfortunately, the vast majority of consumers who are cheated in these situations don't even realize it. Moreover, because the amounts at issue are relatively little, there is little incentive for consumers to undertake the significant expenses of recovering their loss. Even when the company pays out to the tiny percentage of defrauded customers who go to the trouble to engage in lone arbitration against the company, the overall scheme remains profitable.

Class actions are a tool that allows the entire universe of cheated consumers to recoup their losses, making possible a potentially significant financial loss to the company that sets out to defraud its customers. If the Supreme Court rules for AT&T, it will devastate state-level consumer protections and essentially grant a permission slip for rampant corporate fraud against consumers.

As the Alliance For Justice points out in its excellent analysis of this case, it is not only consumer protections that are at risk should AT&T win this case. Class action suits have often been the only way for employees experiencing illegal discrimination to contest it without spending vast amounts of money and risking retaliation. Depending on how the Roberts Court rules, it may enable employers to easily cut off this avenue of anti-discrimination enforcement by simply refusing to hire anyone who does not agree to resolve future conflicts through arbitration, with a ban on class action.

As described in People For the American Way Foundation’s Rise of the Corporate Court report, the Roberts Court has not been shy in twisting the law in order to rule in favor of corporations and against average Americans. AT&T Mobility v. Concepcion may turn out to be another gift of power to the already-powerful.

PFAW

Survey Shows Obstacles to Justice in U.S. Courts

Dan Froomkin is reporting on a depressing new report that paints a frightening picture of just how difficult it is for ordinary Americans to receive justice in our courts. He discusses:

the finding[s] of a world-wide survey unveiled Thursday morning that ranks the United States lowest among 11 developed nations when it comes to providing access to justice to its citizens -- and lower than some third-world nations in some categories.

The results are from the World Justice Project's new "Rule of Law Index", which assesses how laws are implemented and enforced in practice around the globe. Countries are rated on such factors as whether government officials are accountable, whether legal institutions protect fundamental rights, and how ordinary people fare in the system. ...

But the most striking findings related to access to justice for ordinary people. ...

[The study] found a significant gap between the rich and the poor in terms of their use and satisfaction with the civil courts system.

Froomkin quotes from a World Justice Project news release:

[O]nly 40% of low-income respondents who used the court system in the past three years reported that the process was fair, compared to 71% of wealthy respondents. This 31% gap between poor and rich litigants in the USA is the widest among all developed countries sampled. In France this gap is only 5%, in South Korea it is 4% and in Spain it is nonexistent.

Unfortunately, it is no surprise that the wealthy and powerful are happier with our court system than are the rest of the American people. This is consistent with the analysis contained in a People For the American Way Foundation report released earlier this year. Citing Citizens United and numerous other cases, The Rise of the Corporate Court: How the Supreme Court is Putting Business First exposed the undue deference the Supreme Court has too often paid to corporations at the expense of the legal rights of individuals.

Making it even harder for average Americans victimized by powerful corporations to seek justice, one in eight seats on the federal bench is vacant. In fact, the Administrative Office of the U.S. Courts has declared judicial emergencies in numerous circuits and districts where the vacancies have reached the crisis point. Yet Senate Republicans refuse to allow floor votes on qualified and unopposed judicial nominees to help relieve the overburdened federal judiciary.

The integrity of the entire judicial branch of the United States government is at risk.

PFAW

New Term for the Supreme Court, New Opportunities for Corporations

As detailed in PFAW Foundation’s report Rise of the Corporate Court, the Roberts Court has been routinely and consistently bending the law and the Constitution to elevate the rights of corporations over the rights of individuals. To borrow a metaphor from Chief Justice Roberts, when corporate power over employees, consumers, and the American population at large is at risk, the umpire is biased. Corporations win, people lose.

In January, this judicial tilting of the scales of justice to favor corporate America reached a new height with Citizens United.

So what’s in store for the Supreme Court term that begins next Monday? While we will not know for sure until the opinions are issued, we are beginning to see some of the cases that may become important. For instance, the Court earlier today added a number of new cases to its docket, including three focusing on the rights of corporations in what the New York Times characterizes as “unusual settings.”

In two of the cases, the justices will consider how the state secrets privilege, which can allow the government to shut down litigation by invoking national security, applies in a contract dispute between the Navy and military contractors hired to create a stealth aircraft.

In the third case, the justices agreed to decide whether corporations have privacy rights for purposes of the Freedom of Information Act. ...

The privacy case [FCC v. AT&T] will consider whether a provision of the Freedom of Information Act concerning "personal privacy" applies to corporations. ...

AT&T seeks to block the release of documents it provided to the FCC, which conducted an investigation into claims of overcharges by the company in a program to provide equipment and services to schools. The documents were sought under the freedom of information law by a trade association representing some of AT&T's competitors.

AT&T relied on an exemption to the law for law enforcement records that could "constitute an unwarranted invasion of personal privacy." ...

The federal government, represented by Solicitor General Kagan, urged the Supreme Court to reject the argument that the exemption "protects the so-called 'privacy' of inanimate corporate entities."

This case will turn on the language and legislative history of the FOIA statute, as well as prior Court rulings. Court watchers will be looking out for any efforts by the Roberts Court to use this case, as it did in Citizens United, to aggrandize corporate power far beyond anything contemplated by the law or even the parties themselves.

PFAW

Come to our Netroots Nation Panel: Undoing Citizens United

Will you be in Las Vegas next week for Netroots Nation? If so, join us on Saturday for a discussion of corporate influence in elections and what we can do about it. We’ve put together a great panel of experts and activists to discuss the Citizens United decision and its aftermath—including Reps. Donna Edwards and Alan Grayson, People For’s Marge Baker, Public Citizen’s Robert Weissman, and Lisa Graves of the Center for Media and Democracy.


For details, visit the Netroots Nation page on the panel: Undoing Citizens United: A Comprehensive Plan to Prevent Corporations from Buying Elections.


And, if you’re an overachiever looking to do some background reading, take a look at our recent poll showing overwhelming opposition to the Citizens United ruling and our report on the Rise of the Corporate Court.
 

PFAW

Fieldtrip to the Heritage Foundation

As a new arrival in DC (I started interning here two weeks ago), I was thrilled to get a chance to visit the Heritage Foundation for the first time on Wednesday. I know everyone here at People For was flattered to learn that the folks on their “Myth of the Conservative Court” panel had been reading our Rise of the Corporate Court report. A lot.

The panelists – Todd Gaziano, Hans von Spakovsky, and Manuel Miranda -- took umbrage at progressive groups like PFAW using the term “judicial activism” because, well, it belongs to them. And they like the decisions being handed down!

Spakovsky argued that progressives have called the Citizens United decision judicial activism merely because we didn’t like the outcome. He’s certainly right that we don’t like it—and neither do 80% of Americans—but we agree that our dislike doesn’t make it judicial activism. What makes it judicial activism is that the Court based its decision on utterly specious Constitutional grounds, overturning over a hundred years of settled law and its own precedent in the process. John Roberts promised to be a baseball umpire, just calling balls and strikes, but as PFAW President Michael B. Keegan pointed out, “in baseball terms, Citizens United was the equivalent of grabbing the bat and using it to beat the pitcher.”

Much to my shock, Gaziano admitted during the panel that the conservatives on the Court had exhibited pro-corporate judicial activism in one case, Exxon Shipping Co. v. Baker, deciding in Exxon’s favor for subjective rather than purely Constitutional or statutory reasons. So what makes him think that the Conservative judges weren’t influenced by their corporate bias in the other cases outlined in our Corporate Court report?

What was most remarkable about the panel, though, probably wasn’t the contortions that conservatives are willing to go through in order to deny “judicial activism” by conservatives on the Court—it’s that they’re still clearly trying to use it against progressives. That and the lunch they served afterwards. It was delicious.

PFAW

The Roberts Court’s Pro-Corporate Batting Average

The Constitutional Accountability Center has just released a statistical study of the current Supreme Court’s pro-corporate voting patterns. And guess what? The numbers back the trend that’s anecdotally hard to miss.

CAC’s statistical study tests empirically the idea that the conservatives on the Roberts Court tend to side with corporate interests. Our study examined every opinion released by the Roberts Court since Justice Samuel Alito began participating in decisions, and in which the U.S. Chamber of Commerce was either a party or an amicus curiae — a universe of 53 cases. This study reveals an overall success rate for the Chamber of 64% (34 victories in 53 cases), and a success rate of 71% in cases decided by a narrow (five-Justice) majority. The Court’s conservatives (Chief Justice Roberts and Justices Antonin Scalia, Samuel Alito, Clarence Thomas, and Anthony Kennedy) tend to vote together in their support for the Chamber, while the Court’s moderate/liberal bloc (including former Justice David Souter, who was on the Court for most of these rulings) was more centrist, casting only 41% of its votes in favor of the Chamber.

These data strongly support the proposition that there is a strong ideological component to the Justices’ rulings in business cases, with the Court’s conservatives frequently adopting the Chamber’s position. In one particularly startling finding, Justice Alito, since joining the Court, has never cast a vote against the Chamber of Commerce’s position in a closely divided case. This statistical evidence supports the charge by President Obama and Chairman Leahy that the Court’s conservative majority has a disturbing pro-corporate tilt, and this reality should provide an important frame for General Kagan’s upcoming confirmation hearing.

You can find CAC’s full report and analysis here. And check out People For’s extensive report on the Rise of the Corporate Court from earlier this year.
 

PFAW

Oil and the Courts: Will History Repeat Itself?

As BP begins a risky attempt to stem its still-leaking oil rig in the Gulf of Mexico, and oil starts to lap against the shores of the Gulf Coast, lawsuits against the oil giant have begun. The devastating oil spill has already surpassed the size of the 1989 Exxon Valdez disaster, and the litigation that follows it is sure to be just as contentious and lengthy. Two years ago, 19 years after the Valdez spill, the tens of thousands of victims of the disaster saw their case end up before the Supreme Court…and the Court gave Exxon Mobil a huge handout. While the facts this time are different and the legal issues won’t be exactly the same, if their case ends up before the high court, victims of the BP spill will have a legitimate reason to worry –the Roberts Court has displayed a clear willingness to go out of its way to keep individual citizens from holding big oil accountable.

In 1989, an Exxon oil tanker carrying over a million barrels of crude oil crashed off the coast of Alaska, spilling at least ten million gallons of oil into the Prince William Sound. The spill destroyed wildlife habitats and the livelihoods of fishermen up and down the Northwest coast. Those affected by the spill entered into years of litigation to try to recover from Exxon some of what they had lost. In 1994, a jury awarded the 32,677 plaintiffs in the case $5 billion in punitive damages. An appeals court judge halved the amount to $2.5 billion.

Then, in 2008, the Supreme Court gave Exxon Mobil a $2 billion gift. As our Rise of the Corporate Court report explains:

[E]ven this pared-down judgment was way too much for Justices Roberts, Kennedy, Thomas, Souter and Scalia. In 2008, this bloc reduced the punitive damage award from $2.5 billion to $507.5 million. Indeed, the only thing that stopped them from deleting the award altogether was that they were one vote short of being able to find that a corporation is not responsible for the reckless acts of its own managers acting in the scope of their employment.

What the 5-justice majority found, over the objections of dissenting liberal justices who accused them of legislating from the bench, was that it would impose in maritime tort cases a 1-1 ratio between compensatory and punitive damages—a formula found nowhere in the statute and essentially pulled out of a hat made by a big corporation. In dissent, Justice Stevens chastised the majority for interpreting the "congressional choice not to limit the availability of punitive damages under maritime law" as "an invitation to make policy judgments on the basis of evidence in the public domain that Congress is better able to evaluate than is this Court."

But Exxon, which amazingly ended up making money on the spill because of the resulting increase in oil prices, got its way with a corporate-leaning Court and ended up paying punitive damages equal to a day or two of company profits.

The Exxon Valdez spill was the largest oil spill ever in U.S. waters. Until now, that is.

As oil keeps leaking from a BP oil rig into the Gulf of Mexico, the Gulf Coast has started to feel the impact of what the White House yesterday declared to be the worst oil spill in U.S. history.

President Obama called the spill a "potentially unprecedented environmental disaster." 11 people died in the rig’s explosion, and the resulting spill has already begun to destroy Gulf Coast ecosystems and has started a devastating ripple effect through the economy.

An early estimate put the economic impact of the spill at $12.5 billion. And the damage could continue for decades.

Not surprisingly, the lawsuits from those who are losing their livelihoods have begun. As of May 21, more than 130 had been filed.

Lawsuits against BP will no doubt involve millions, and probably billions of dollars in both compensatory and punitive damages. While compensatory damages are essential to helping victims recover from a disaster of this size, punitive damages serve to dissuade the company and others like it from acting recklessly in the future. The Roberts Court’s willingness to invent a rule capping punitive damages against Exxon doesn’t bode well for anyone hoping to hold BP accountable for this disaster and to make sure it doesn’t happen again.

The Court has a responsibility to ensure that ordinary people get treated fairly, even when pitted against big corporations—but the current Supreme Court has made it clear that we can’t always count on that.

This disaster is a tragic reminder of why we need Justices who won’t favor the interests of the powerful over the rights of ordinary citizens.

 UPDATE (May 28, 2:30 PM):

For a sense of the scale of the disaster, take a look at NASA's stunning time-lapse video of the spill unfolding (via Mother Jones):

PFAW

New People For Report Tracks the Rise of the Corporate Court

When the Supreme Court decided this year to open the electoral process to floods of money from corporate interests, it provoked a vehement public backlash. But Citizens United v. FEC was just the tip of the iceberg of a decade of rulings—some high-profile and some less noticed— made by a Court that has been disturbingly deferential to corporate interests. A new People For the American Way Foundation report outlines the rise of the corporate court under Chief Justice Rehnquist and the new life it has taken on in the Roberts court.

Americans across the spectrum have been startled and appalled by the Citizens United decision, which will "open the floodgates for special interests—including foreign companies—to spend without limit in our elections," as President Obama said in his 2010 State of the Union Address. According to a Washington Post nationwide poll, more than 80% of the American people reject the Court's conclusion that a business corporation is a member of the political community entitled to the same free speech rights as citizens.

Yet, the Court's watershed ruling is the logical expression of an activist pro-corporatist jurisprudence that has been bubbling up for many decades on the Court but has gained tremendous momentum over the last generation. Since the Rehnquist Court, there have been at least five justices—and sometimes more—who tilt hard to the right when it comes to a direct showdown between corporate power and the public interest. During the Roberts Court, this trend has continued and intensified. Although there is still some fluidity among the players, it is reasonable to think of a reliable "corporate bloc" as having emerged on the Court.

Take a look at the full report here.
 

PFAW