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Posts Tagged ‘Fairness in Class Action Litigation Act’

Ahead of CFPB Rule, Congress Prepares for a Showdown over the Future of Forced Arbitration and Consumer Class Actions

Tuesday, March 21st, 2017

Last week, lawmakers laid the groundwork for a battle over consumer rights and forced arbitration that likely will play out through the spring.

First, congressional Democrats introduced several bills to restore consumers’ right to hold corporations accountable in court for wrongdoing. Led by U.S. Sen. Al Franken (D-Minn.), lawmakers on March 7 introduced a slate of bills aimed at ending the use of forced arbitration in various sectors. Forced arbitration provisions, also known as “ripoff clauses,” block consumers from challenging illegal corporate behavior.

Lawmakers were joined at a packed press conference by people who had been harmed by forced arbitration: a veteran illegally fired from his job while serving in the military and blocked from suing his employer; a victim of Wells Fargo fraud whose class action was kicked out of court; and former news anchor Gretchen Carlson, barred from speaking out about sexual harassment she had suffered at Fox News.

Among the bills introduced were Franken’s Arbitration Fairness Act, which would prohibit forced arbitration in consumer, employment, civil rights, and antitrust cases and Sen. Sherrod Brown’s (D-Ohio) Justice for Victims of Fraud Act, which would close the “Wells Fargo loophole” by restoring consumers’ right to sue when banks open fraudulent accounts without their knowledge.

However, in stark contrast to this push to strengthen rights and restore corporate accountability, GOP lawmakers began pressing to make it harder for consumers to band together when harmed and take corporations to court.

Two days after the Franken press conference, the House passed H.R. 985, the so-called “Fairness in Class Action Litigation Act” would effectively kill class actions by imposing insurmountable requirements to file group lawsuits. This would make it nearly impossible for consumers to hold corporations accountable for illegal and abusive behavior.

Among other onerous provisions, H.R. 985 would require that each harmed person suffer the “same type and scope of injury.” Under this absurd standard, a Wells Fargo customer with two fake accounts opened in his or her name could be barred from joining together with customers who had three fraudulent accounts. The bill also would build in costly and unnecessary delays and appeals, limit plaintiffs’ choice of counsel, and drastically restrict attorneys’ fees.

Joining together in a class action often is the only chance real people have to fight back against widespread harm, including corporate fraud and scams – particularly when claims involve small amounts of money, where it would be too costly for an individual to pursue a separate claim. Class actions have also been critical vehicles for overcoming race- and gender-based discrimination and have been instrumental in achieving victories as momentous as desegregation of our schools, as was the case in Brown v. Board of Education.

Beyond protecting the rights of the disadvantaged, class actions act as a crucial check on corporate misbehavior by returning money to harmed consumers and workers. Removing the threat of class liability would encourage systemic fraud, as banks and lenders that pad their bottom lines by committing fraud would have a competitive advantage in the marketplace.

In the financial sector, the proposed CFPB arbitration rule is a major target of financial industry lobbyists precisely because it would restore the right of consumers to join class action lawsuits. According to the CFPB’s arbitration study, class actions returned $2.2 billion in cash relief to 34 million consumers from 2008-2012, not including attorneys’ fees and litigation costs. While the CFPB rule is expected to be finalized this spring, it would be rendered largely ineffective should H.R. 985 become law.

You can watch our video against H.R. 985 here and follow developments on Twitter using the hashtag, #RipoffClause.

This article originally appeared at FairArbitrationNow.org on March 17, 2017. Reprinted with permission.

Amanda Werner is Arbitration Campaign Manager with Public Citizen and Americans for Financial Reform, where her work focuses on the Consumer Financial Protection Bureau (CFPB)’s arbitration rulemaking. She represents a broad coalition of consumer, civil rights, labor, and community groups as part of a robust public campaign in support of a strong final rule against the #RipoffClause.

21 Female Senators to Help Decide Fate of Bill That Would Kill Harassment, Discrimination Suits

Monday, March 20th, 2017

Asking female applicants whether they were married and planned to have children in a job interview. Telling female employees how to dress (and show more skin). Overtly and concretely penalizing female employees for taking maternity leave. Promoting low-performing men over the highest-performing women. Asking women employees to have sex with their boss to advance their careers. Penalizing female employees for not taking part in alcohol-fueled corporate partying when they were pregnant or breastfeeding. Bragging about how many female subordinates a male executive had had sex with.

This sounds like the bad old days but, unfortunately, it isn’t. Just a few years ago, current and former female sales representatives at a medical cosmetics company, Medicis Pharmaceutical (now owned by Valeant Pharmaceuticals), banded together to bring a class action against their employer for regularly doing all of these things, and more, including unequal pay and retaliation for reporting discrimination and harassment. Each of the approximately one hundred women in the class who filed claims received an average of $44,000 in back pay and damages, and the attorney’s fees were not taken out of that compensation. That’s not small change.

But there’s more. In theory, an individual woman could have brought the case and gotten back pay and damages. What an individual woman could almost certainly not have done was force Medicis to change its practices – Medicis could have paid her money and washed its hands. Here, though, the class was able to use its leverage to get Medicis to agree to, among other things, create anti-discrimination policies and training; establish systems for investigating reports of discrimination and harassment; be transparent about how it set and measured sales goals; eliminate penalties for taking parental leave; and establish policies about alcohol at corporate events and intra-office romantic and sexual relationships. In other words, it took a class action to ensure that Medicis follows the law not just with regard to the women who sued, but with regard to all the women who come after.

In the minefield of workplace discrimination and harassment, there’s another advantage to class actions, too. One woman bringing these types of claims may (unfortunately and wrongly) be easily dismissed as too sensitive, as not qualified for the promotion she sought, or as subject to one-off comments from a single troublesome executive. She may also be retaliated against for speaking out – as many of the women in this suit were. But where woman after woman after woman tells the same story, she cannot be so easily dismissed.

And yet Congress is on the verge of wiping away the ability for women to band together and challenge such discrimination and harassment in the workplace. Last week, the House GOP narrowly approved the so-called “Fairness in Class Action Litigation Act.” The bill would drastically roll back the ability to bring class action lawsuits like the one against Medicis. Fourteen Republicans opposed the bill, along with every single Democrat in the House, but that wasn’t enough to defeat it. After being pushed through the House Judiciary Committee – without a hearing, and with a nighttime vote – the bill now makes its way to the Senate, where a record 21 female Senators will be among those deciding its ultimate fate. While the Senate has not yet scheduled any action on the issue, civil rights groups and their allies are mobilizing to ensure the House proposal never becomes law.

There are a lot of big, important and downright frightening ideas making the rounds on Capitol Hill these days, from taking away Americans’ health insurance to eliminating Meals on Wheels and turning the Environmental Protection Agency over to oil and gas lobbyists. But it’s imperative that voters insist their Senators give proper attention to this all-out assault on the courts. Unless they do so, a key tool in battling discrimination could quickly disappear. That threat is too real, too serious and has too many dire consequences for too many Americans for Senators to do anything other than give it the deliberative attention – and debate – that it deserves.

This article originally appeared at DailyKOS.com on March 19, 2017. Reprinted with permission.

Paul Bland, Jr., Executive Director, has been a senior attorney at Public Justice since 1997. As Executive Director, Paul manages and leads a staff of nearly 30 attorneys and other staff, guiding the organization’s litigation docket and other advocacy. Follow him on Twitter: .

Leah Nicholls joined Public Justice’s D.C. office in September 2012 as the Kazan-Budd Attorney. She was previously senior staff attorney for civil rights and general public interest at the Georgetown University Law Center’s Institute for Public Representation. Leah had also been a teaching fellow and adjunct law professor at the Law Center.

THINK YOUR RIGHTS ARE SAFE? THINK AGAIN...

Friday, March 3rd, 2017
Julia Roberts has delivered a lot of great lines. One of my favorites is from Erin Brockovich: “By the way, we had that water brought in specially for you folks. Came from a well in Hinkley,” she tells the alarmed corporate lawyer about to take a sip.In the movie, Roberts’ character meets with moms, dads, and children who’ve become sick after the local utility let poisons leak into their small town’s drinking water. “You want their diseases?” she asks after rattling off a list of people affected by the spill.

Roberts’ character helps the people of the town band together to sue the company. This type of lawsuit—called a class action—has been used by Americans of all stripes for the past 50 years to fight back when an unethical business or unjust government policy is making them sick, cheating them of their money, or otherwise screwing them over.

But now, because of corporate special interests and their influence over some members of Congress, class actions are in grave danger of becoming a thing of the past.

Late in the evening on Feb. 17, when the rest of us were distracted by Trump’s latest tweet, a bill got served up in Congress that would sound the death knell for class actions. Through a long list of new rules (that sound almost innocent to the non-lawyer, but are anything but), the bill would make it so class actions essentially become extinct. The House is set to vote on this bill (H.R. 985, the misnamed “Fairness in Class Actions” bill) next week, probably on Wednesday, March 8.

I work at a small nonprofit that supports David v. Goliath type cases like the one in Erin Brockovich. Some of the cases are famous—think the 21st century equivalent of Brown v. Board of Education or the multi-state case against Big Tobacco. Others you’ll probably never hear about, but they fight against injustice (and win!) for groups who too often have no power: foster kids, immigrants, Native Americans, the sick, and seniors.

Without this essential check in place, our delicately balanced system would tip over and land with a heavy thud onto the side of corporate special interests. Sure, the vast majority of businesses are ethical and most government policies are fair—but what about when they aren’t? What about when the poisons in the groundwater give us cancer, or when our employer refuses to promote women because they have this annoying habit of getting pregnant, or when our bank creates a bunch of fake accounts or cooks the books or destroys our retirement in some other new way they’ve dreamt up? What would we do then, if class actions were impossible?

We could still sue individually, but that assumes anyone could afford to foot the legal bill. Do you know how much it costs to hire your own lawyer for a lawsuit like this? $10,000? That barely gets you started. $100,000? Maybe. But if your case stretches on for a decade, as some cases do, try over $1,000,000—what with depositions and electronic discovery to conduct, motions to dismiss to fight off, and appeals on top of appeals on top of appeals.

I don’t know about you, but I don’t have a million dollars (or even one-tenth that) to devote to suing anybody. Right now there is no line item in my family’s budget for “lawsuits.” So basically, in a no-class-action future scenario, if I get screwed over by a company or the government, there will be absolutely nothing I can do about it. This would be a huge win for anyone itching to start their own Ponzi scheme, but a terrifying disaster for the rest of us.

Listen, I understand. There are a lot of crazy things going on right now, and we’ve all got a lot to worry about. But this is important. We all need to stop reading this article and immediately call/email/fax our Congressional representatives and tell them to vote NO on H.R. 985.

Otherwise, when the excrement hits the air conditioning (thanks to Kurt Vonnegut for that delicate phrasing), we regular Americans will have no power to fight back. And call me cynical, but there sure does seem to be a lot of excrement flying around these days. This is no time to allow our elected officials to take away one of our most significant tools of self-protection.

I hope I never have to band together with thousands of my fellow Americans to sue a corporate giant or branch of government, but I most definitely want to retain the right to do so.

Click here to find out more about H.R. 985 and what you can do to stop it.

This blog originally appeared on impactfund.org on March 2, 2017. Reprinted with permission.

Amy Daniewicz is the Grant Program Administrator at the Impact Fund. Prior to working at the Impact Fund, Amy worked in a similar capacity for the Michael & Susan Dell Foundation, where she managed grants supporting children in the Austin community. Prior to that, Amy worked as a non-profit communications director, an entrepreneur, and a blogger. Amy holds a master’s degree in social work from the University of Texas at Austin and a bachelor’s degree in English from Trinity University. Amy’s favorite joys in life are spending time with her husband and three children, making and eating good food with friends and family, and enjoying the beauty of nature.

House GOP’s Bill to Eliminate Nearly All Class Actions Would Encourage More Ponzi Schemes & Other Corporate Cheating

Thursday, March 2nd, 2017

There was a lot of national attention when Bernie Madoff’s Ponzi scheme collapsed and it became clear that he had stolen hundreds of millions of dollars from investors around the country. Many thousands of stories were written about how he went to prison, the SEC investigated both the scheme and how the scheme had been able to go on so long, and a number of private lawsuits tried to recover money for investors from various people who enabled his scheme.

But in all of the coverage of Madoff’s Ponzi scheme, I never saw a single story that said “this is actually good for the free market; what we really need is for Congress to try to block lawsuits that would let investors recover their money from the crooks and discourage these schemes.”

A couple of years later, enter Congressman Bob Goodlatte (R-Corporate Lobbyist Heaven), with his ironically titled “Fairness in Class Action Litigation Act,” which passed through the House Judiciary Committee two weeks ago. Its passage was a remarkable feat of avoiding public notice or debate, with Goodlatte ramming through the legislation in the middle of the night, voting down all amendments along party lines, and refusing to even hold a hearing on the bill, which had at least ten new provisions never included in the previous version passed by the Committee.

Now, the bill is expected to be voted on by the full House next Tuesday.

Goodlatte’s bill was drafted by corporate lobbyists to eliminate the vast majority of class action lawsuits. It would roll back protections for defrauded investors, cheated consumers, people whose privacy has been violated, small businesses harmed by price fixing, workers cheated by wage theft, and pretty much anyone harmed in any way by corporations that break the law.

The legislation has been opposed by nearly every major civil rights organization in America (including Public Justice, the public interest law firm which I head), nearly every major consumer advocate in the nation, the Committee on Rules of Practice & Procedure of the Judicial Conference of the United States (America’s federal judges see the abuse of separation of powers of this ham handed meddling in the ways courts operate), the normally very business-oriented American Bar Association (business lawyers have joined with lawyers for individuals in seeing the mischief here; after all, many small businesses will be harmed by this bill), and numerous academics (their letter are available here, here and here).

Among other things, the lawsuits it would wipe away include cases against Ponzi schemes. While Madoff may have been the biggest corporate criminal in that field, a number of other crooks have cheated American investors in Ponzi schemes, and class action lawsuits have repeatedly successfully recovered investors’ money.

In McGrew v. Harris Bank, for example, a case pursued in Washington State, a successful class action recovered more than $14 million for investors cheated in a Ponzi scheme. Similarly, in Getty v. Philip Steven Harmon, lawyers for investors identified a key person responsible for this scheme who was affiliated with SunAmerican Securities, Inc. – which knew or should have known that securities laws were being violated. The suit recovered more than $5 million for cheated investors. Under Rep. Goodlatte’s bill, these investors almost certainly would have been out of luck. (The legal explanation is set out in painful detail in the letters attached above in this piece.)

Corporate lobbyists might say this pair of successful class actions taking on Ponzi schemes are anecdotes. For people who like data, though, the Consumer Financial Protection Bureau did a careful study of 400 class actions against banks and payday lenders. In those cases, the CFPB found that more than 13 million customers received more than $2.7 billion in recoveries. One of the many lies that Congressman Goodlatte likes to say about class actions is that they don’t actually help cheated consumers, and instead just enrich the lawyers. But the CFPB study of the actual results in these class actions against lenders found that the total attorneys fees in the cases amounted to 16% of the gross relief received by the consumers.

It’s hard to tell right now whether this bill has any serious chance of becoming law. A much milder, more competently drafted version of the Bill was opposed by 17 House Republicans in the last Congress, and never moved in the Senate. Presumably every, or nearly every, Senate Democrat and some moderate Republicans will vote against a bill that would (among other things) make it impossible to bring most lawsuits that offer relief when corporations pay female employees less than male ones, or protect the public from defective products. But the emboldened corporate lobbyist class has spent a lot more money to try to move the bill in this Congress.

The best way to ensure this terrible bill gets blocked is if a large number of Americans contact their legislators and urge them to vote to defeat it.

This time around, we can’t count on President Obama’s veto pen. President Trump has not said anything about the bill one way or the other. We can only hope he might feel constrained by his often-repeated promises not to side with corporate lobbyists against regular Americans, and decide not to sign this monstrosity if it does make it to his desk. But we can’t rely on that scenario, either, and need to stop this bill before it makes its way to the White House.

Rep. Goodlatte’s timing is less than ideal, too. He’s trying to eliminate class actions just a couple of months after the revelations that Wells Fargo had cheated two million of its customers by creating false and unauthorized credit card and checking accounts in their names. That news came not long after Volkswagen was caught rigging its pollution control devices not to work (after prominently advertising to consumers how environmentally friendly its cars were), and a short time after hundreds of thousands of American consumers got refunds or had their homes repaired as a result of class actions, following the discovery that defective Chinese dry wall was damaging their homes. It’s an odd time for the House Republican leadership to decide that Americans should not be able to pursue their rights against corporations that break basic consumer protection, employment and securities laws.

Battling big business can be a herculean task in today’s Congress. Yet it is essential that every American understand the direct, and damaging, impact this particular legislation will have on countless consumers.

This bill isn’t about “fairness.” It’s about giving a gift to corporate lobbyists on Capitol Hill.

This blog originally appeared in Huffington Post on March 2, 2017. Reprinted with permission.

Paul Bland, Jr., Executive Director, has been a senior attorney at Public Justice since 1997. As Executive Director, Paul manages and leads a staff of nearly 30 attorneys and other staff, guiding the organization’s litigation docket and other advocacy. Follow him on Twitter: .

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