Alabama Consumer Law Blog

The good folks over at Caveat Emptor have a roundup of some recent arbitration news - take a look at it and the good blog here....

We are not fans of arbitration but courts have at least recently made it more tolerable by allowing class actions to proceed within arbitration. This news article is very intriguing, as it shows an arbitrator has certified a class action within arbitration.
Here is an excerpt:

“This ruling is a tremendous victory for Verizon Wireless subscribers,” said Scott Bursor, counsel for the plaintiffs. “After four years of extremely hard-fought litigation in several courts and in arbitration, this ruling ensures that Verizon customers who have been charged illegal early termination fees will have an opportunity to prove their claims on a class-wide basis and to seek a refund of nearly a billion dollars worth of illegal charges."

Bursor said Farber’s 35-page ruling to certify the class action has historical significance. “It is the largest class ever certified in arbitration, with approximately 70 million members of the subscriber class,” he said. “It is also the largest class ever certified on a contested motion in any type of forum, litigation or arbitration."

One somewhat amusing thing we have noticed with arbitration awards and rulings - when they go against companies who demanded arbitration, suddenly the companies cry out for the protection of a federal court judge. We suppose arbitration is only acceptable to companies when the arbitrators rule in favor of the companies. Interesting things are happening in the world of arbitration.....

Ron Burdge has two posts on problems with the 2008 Honda Accord and then with Hyundais in general. We recommend both of these posts to you. In the first, Ron discusses the surprisingly growing problem with the 2008 Honda Accord. We normally think of Hondas as being wonderful cars from a reliability standpoint but there are reports of growing problems that you should be aware of if you are considering buying the new Honda Accord or if you have one.

Secondly, and this is truly a serious problem, Hyundai is requiring that all buyers waive their right to litigation in a court and instead agree to arbitration. We like Ron's simple and direct advice - don't buy a Hyundai. Well said.

If you think you may have bought a lemon, contact us or another good consumer lawyer to get advice on what you should do to resolve the situation.

Update on 2-23-08 - we have some crash videos of Hondas and Hyundais on our sister blog - Birmingham Injury Blog that might be of interest to you.

We have discussed in some detail the problems with mandatory arbitration for Alabama consumers. Paul Bland of Public Justice alerted us to an article in the L.A. Times that we had missed dealing with movement in Congress to protect consumers from having to deal with mandatory arbitration.

Here are some excerpts of this well written and balanced article:

Critics of the provisions say they deny consumers and employees a basic American principle: the right to go to court.

"People from all walks of life -- employees, investors, homeowners, those enrolled in HMOs, credit card holders and other consumers -- often find themselves strong-armed into mandatory arbitration agreements," said Sen. Russell D. Feingold (D-Wis.), who is sponsoring one of the measures aimed at making arbitration voluntary rather than mandatory.

Continue reading "Congress Considers Prohibiting Certain Types of Mandatory Arbitration" »

Here is an important press release related to a recent decision striking down a class action ban in an arbitration provision.

FOR IMMEDIATE RELEASE
Contact: Deborah Mathis, Communications Director, at (202) 797-8600 Ext. 246

PAYDAY LENDER’S CLASS ACTION BAN STRUCK DOWN IN FLORIDA

Public Justice, the Washington-based national public interest law firm, helped score a victory for Floridians this week when a Palm Beach County Circuit Court opened the door to payday loan customers who want to sue usurious lenders on a class action basis.

McKenzie Check Advance, which provides check cashing services and payday loans in more than 200 stores across the country, had attempted to force customers with claims to go into individual arbitration in lieu of a class action in court or class arbitration. But Circuit Court Judge Elizabeth Maass found that enforcement of the class action ban embedded in McKenzie’s loan agreements effectively meant no claims would be brought against the lender because individual claims are typically too expensive for customers to pursue. The court’s ruling voids the class action ban in McKenzie’s arbitration clauses.

“Judge Maass saw through the payday lender's smoke screen to the truth: corporations should not be allowed to gut Florida's consumer protection laws in the fine print of contracts just because a given consumer can read,” said Paul Bland, a Public Justice attorney who argued the case on behalf of plaintiffs Tiffany Kelly and Wendy Betts. “The facts made it obvious that this payday lender's contract would undermine important consumer protection statutes passed by the Florida legislature, and Judge Maass did the right and courageous thing by refusing to enforce the illegal part of the contract."

In addition to Bland, the legal team included Ted Leopold of Ricci~Leopold in Palm Beach; Clay Yates of Port St. Lucie; Christopher Casper of Tampa; Richard A. Fisher of Tennessee; and Public Justice Waters & Kraus Fellow Amy Radon. Leopold is a member of the Public Justice Foundation Executive Committee and Fisher is a member of the Public Justice Foundation Board.

The victory was part of Public Justice's Access to Justice Campaign and Class Action Preservation Project.

###

Public Justice (formerly Trial Lawyers for Public Justice) is America’s public interest law firm. Dedicated to using trial lawyers’ and other attorneys’ skills and resources to advance the public good, Public Justice is supported by – and can call on -- a nationwide network of more than 3,000 of the nation’s top lawyers to pursue precedent-setting and socially significant litigation. It has a wide-ranging litigation docket in the areas of consumer rights, worker safety, civil rights and liberties, toxic torts, environmental protection, and access to the courts. Public Justice is the principal project of The Public Justice Foundation, a not-for-profit membership organization headquartered in Washington, DC, with a West Coast office in Oakland, California. The Public Justice web site address is www.publicjustice.net.

Several times in the recent weeks courts have limited the ability of companies to forbid class actions in arbitration agreements. You can read about one a few days ago here which discusses the recent opinion by the First Circuit Court of Appeals.

Finally, you can read a great article by the Consumer Law & Policy Blog (Scott Nelson) about the Eleventh Circuit (which covers Alabama) decision in Dale v. Comcast. As Scott Nelson opens his post,

The United States Court of Appeals for the Eleventh Circuit has become the latest court to hold that an arbitration clause that contains a waiver of a consumer's right to bring a class action may be unconscionable if its application would effectively prevent consumers from vindicating their rights.

It may be that the tide is turning so that if consumers are required to arbitrate, at least we will have all of our rights including the right to potentially bring class actions within arbitration.

We had an earlier post describing a decision back in August - you can read it by clicking here.

A serious problem for Alabama consumers and consumers around the country is the wide spread practice of forcing consumers to "accept" arbitration agreements. These often say that the consumer can not file or participate in any class action. Thus, times where an Alabama consumer is cheated out of $50 has to be filed individually which, as a practical matter, means most cases are not filed and consumers are left frustrated.

The Ninth circuit recently ruled that these class action waivers are unconscionable under California law. Read this short post by the Consumer Law & Policy blog for more information and the direct link to the case.

This is an excellent decision as it is important for Alabama consumers and consumers around the nation to have the option to pursue the bad guys in a class action. While the Ninth circuit does not have authority over Alabama, any good law is helpful to get more and more appellate courts making the right decision.

We are not big fans of arbitration as it is often very unfair for Alabama consumers. We recently read a post in Credit Slips which is so typical of what Alabama consumers face when they are hit with an arbitration claim, particularly arbitration claims in the National Arbitration Forum (NAF). Here is the guts of the story but also read the entire post:

Had a very interesting experience today. Responded to an arbitration claim by FIA Card Services f/k/a MBNA denying client agreed to arbitration and disputing amount owing. Requested an in-person hearing and client paid $250 fee for the hearing. Originally the hearing was scheduled at a location more than 3 hours away from my office. I objected and it was rescheduled about an hour away. The arbitration was Harold Curry. I showed up at 12 noon. At 12:45 no one from FIA appeared or called. The arbitrator called NAF to find out what he should do and left a message that was not answered. Mr. Curry and I went into an office and talked a while. I pointed out to him that the claim was based on breach of contract, but no contract was ever produced, so he could not possibly determine the parties' obligations or damages. He asked me what my client owed MBNA. I told him I did not know and that it was not my job to help MBNA establish damages. If they were so concerned, they could have shown up for the arbitration hearing. He admitted that they never show up and he has never had an attorney show up before. Just before I left, he suggested that we might reschedule. I told him I would not agree to rescheduling and that I believed he had no choice but to find an award in favor of my client. This made him extremely uncomfortable and he indicated he would need to talk to someone at NAF first. I reminded him that he was supposed to be impartial and he told me he would give me his decision in a few days.

We are seeing more and more Alabama consumers who have been nailed with arbitration awards and they never received notice of the arbitration or they could not seem to get a hearing. We will be posting more on this growing issue facing Alabama consumers.

Arbitration is harming more and more Alabama consumers. Many things we buy come with arbitration agreements and we have no choice if we want the product. For example, it is difficult to find a new car dealer who does not require arbitration but yet the auto dealer association begged Congress to prohibit arbitration agreements with manufacturers. Virtually all credit card agreements require arbitration. The list goes on and on.

Is this bad for consumers? To help you gain the facts to make your own decision, please read the entire post from the Consumerist - we have provided a small sample of the post:

What started as a way for peers to come to a sort of expedited gentleman's agreement has evolved into a extra-judicial system for corporations to enforce their will and protect themselves from censor. The Christian Science Monitor found that the top 10 arbitration firms decide in favor of companies 98.4% of the time. This seems hardly representative of a system between parties "of generally similar sophistication and bargaining power."

We also recommend that you go to this site and find out more about how troubling the problem of mandatory arbitration has become and what you can do about it.

We read an interesting post by a well respected consumer and bankruptcy lawyer Jay Fleischman where he argues that he can help his bankruptcy clients by avoiding arbitration of claims with creditors after bankruptcy. Here's the gist of what he does:

I typically put a clause in my Chapter 13 plans that specifically rejects the arbitration provisions contained in any consumer credit agreements.

We are not sure if this will work but bankruptcy lawyers should consider trying this - no downside and lots of upside for the clients.

Read the full post here in Jay's blog.

An excellent resource for anyone interested in consumer law is http://pubcit.typepad.com/clpblog/ which is the Consumer Law and Policy Blog. A recent article addressed the amazing question of whether the victim of Identity Theft can be forced by the credit card company to arbitrate disputes - when the victim never agreed to arbtiration or anything else about the account.

The bottom line from this excellent article by Jeff Sovern is that the courts are somewhat split on this issue. Read the article in its entirety here - http://pubcit.typepad.com/clpblog/2007/04/arbitration_and.html