ThePopTort

Frontier Justice II: Forced Arbitration that Shocks the Conscience

Yesterday, the Center for Justice & Democracy released its newly-updated “Cases Tossed Out of Court Because of Forced Arbitration Clauses and Class Action Bans.” We thought we’d highlight some of the newer cases. If you thought forced arbitration clauses and class action bans couldn’t possibly, legally be used in cases like these, think again. They could. And they were:

• A 90-year-old nursing home resident was thrown against a wall by a nurse’s assistant, dying from injuries. Her death was ruled a homicide and the assistant was criminally charged.  Yet her family’s wrongful death suit was thrown out of court.  A forced arbitration clause had been buried in the nursing home’s admission agreement, which was signed by her daughter.  
• A 12-year-old boy was sexually assaulted and stalked at his boarding school. When his father sued the school, the case was forced into secret arbitration because he had signed a student enrollment agreement containing an arbitration clause.
• An employee suffered repeated sexual harassment and retaliation at a consumer goods refurbishing company. During this time, each employee was told to sign a new employment agreement containing a forced arbitration clause. This employee refused to do so, both orally and in writing. Nonetheless, a court forced her into arbitration.
• Video-game giant Valve allowed underage gambling through its online Steam Marketplace platform and video games like “Counter-Strike: Global Offensive.” A court agreed with the company that children had agreed to arbitrate any disputes when they created their accounts and that their parents, though non-signatories, were also bound by those terms.
• Wells Fargo, the scandal-plagued bank, continues to use forced arbitration clauses and class action bans in customer agreements, and to strong-arm its customers into arbitration.  For example, since 2009, it has been litigating against - and forcing into arbitration - customers that it defrauded, specifically by charging them illegal overdraft fees. . 
• Hertz, which also operates Dollar and Thrifty, uses shady debt-collector Viking Credit Services to bill customers for costly car damage months after they had returned undamaged rental cars.  The court said customers has “agreed” to arbitration because in order to rent the cars, they selected ‘I Agree’ at the automated airport kiosk.
• Washington, D.C.’s Aveda Institute, which charged cosmetology students $26,000 tuition, used students to sell products instead of providing them necessary coursework to prepare for the state board exam. A forced arbitration clause, buried in their enrollment agreement, led a court to throw out their class action, compelling them to privately arbitrate.
• Approximately 57 million customers and 600,000 drivers of Uber, who were victims of the company’s personal identification data breach that the company waited a full year to reveal, were forced to arbitrate all claims because they “agreed to” forced arbitration when signing up with Uber.
• Employees at Fiat Chrysler, including the company’s diversity manager, brought a class action alleging systemic discrimination and retaliation. Six claims were dismissed because of forced arbitration clauses in employment contracts. Two other employees, who joined the company before these clauses were included, were allowed to proceed with a much smaller class action.
• A Red Robin employee brought a class action for illegal wage theft. A class of over 18,500 workers was certified, yet months later more than 2,600 new hires were thrown out of the case because they had “agreed” to arbitration. The court said they could “scroll up or down to review the two arbitration documents before signing,” were able to “download the unsigned Arbitration Agreement as a Word document,” were sent a PDF copy of the signed agreement to their personal email, and then failed to "opt out."

These last two cases show how splitting victims in two can lead to terribly unfair, bizarre results, where victims experiencing the exact same type of wrongdoing but are forced to arbitrate would be unable to benefit from any larger settlement and in fact, could be left with nothing.

It is time for Congress to do something about this!

Forced Arbitration: Frontier Justice in America’s Legal System

Next time you’re talking to a corporate CEO, ask them this: Suppose the company found itself in court for one reason or another.  The judge had no legal training. The process had no real rules. The judge was neither required to follow law nor issue a written legal opinion. Once the judge ruled, their decision was enforceable with the full weight of the law even though it might be legally incorrect. And it all happened in secret. No legal precedent could ever be established to guide the company’s – or any other company’s – future conduct. Would you consider this a system that promotes legal predictability and certainty for businesses, or not?

I think we all know the answer. Yet what I just described are critical elements of “forced arbitration.” We usually talk about forced arbitration as a corporate-designed private, secretive process of dispute resolution rigged against consumers, employees, and small businesses. But for corporations who must rely on a strong, stable civil justice system for guidance on how to act, it’s unpredictable, uncertain, and mostly useless. And that’s exactly the point Rep. Katie Porter made in her questioning last week of the U.S. Chamber of Commerce’s Tom Quaadman, at a U.S. House hearing called, “Putting Investors First: Reviewing Proposals to Hold Executives Accountable.”

The context of her questioning was the concern that the Securities and Exchange Commission might be willing to succumb to extremist pressure and, for the first time, allow public companies to force defrauded investors into private arbitration to resolve securities disputes. Such a process would not only harm investors, but also would undermine “the crucial role shareholder lawsuits play in deterring financial fraud and protecting the integrity of U.S. capital markets.” 

Getting directly at the arbitration problems described above, Rep. Porter asked Mr. Quaadman, “Do you think the certainty of law is important to companies?” and “Is legal uncertainty positive?” Immediately he knew where she was going. As she tried to nail him, he did his best to slither out of it, ultimately pivoting the discussion to a completely different system, called FINRA (the Financial Industry Regulatory Authority). She wasn’t asking about FINRA. FINRA rules would not apply to shareholder arbitration. But she let it go.  

Huge props to her, however, for starting this conversation. Clarity. Predictability. Certainty. These are recurrent themes coursing through the business community’s arguments for “tort reform.” “Business certainty” is the reason states cap punitive damages and enact a myriad of liability limits. It’s the reason Congress sometimes considers federalizing state tort laws. It’s the reason corporate groups seek to establish uniform legal standards, curtail federal agency power, preempt state tort remedies, or otherwise block plaintiffs’ access to the courts. Corporations make this argument to legislators. They argue it to judges. They argue it to federal agencies. No branch or level of government has been exempt.

Please, take their word for it:

• Sponsors of 2011 Tennessee legislation capping damages: “This new law will provide certainty and predictability for businesses.”
• The American Legislative Exchange Council’s Civil Justice Task Force:  [We] are at the fore-front of efforts to restore fairness and predictability to state civil justice systems … that treats defendants in a consistent manner.”
• U.S. Chamber of Commerce: “[A]bsence of uniformity [in the law] creates damaging uncertainty for businesses in this sector.… [U]ncertainty about the scope of a federal statute has harmful consequences for any national business whose conduct is regulated by that statute.” 
• National Association of Manufacturers: State tort claims should be preempted because they subject businesses to “uncertain, unpredictable” liability. 
• U.S. Chamber of Commerce and the National Association of Manufacturers: Venue and personal jurisdiction rules “give[] a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.…" This “[p]redictability is valuable to corporations making business and investment decisions.”
• Coalition to Save Local Businesses (U.S. Chamber of Commerce, the National Retail Federation, and the International Franchise Association): Expanding liability under labor laws “would cause uncertainty for businesses.”
• National Small Business Association: State by state products liability laws “create uncertainty for businesses selling in a national marketplace.”
• George Mason University School of Law: Competition is harmed “[i]f businesses are unsure about where the line between legal and illegal behavior is drawn.”

Even when it comes to investor protection, they make the argument.  Here’s the U.S. Chamber, again: To foreign investors, the legal system can be “a source of significant investor uncertainty” and “international investors are not alone in that concern. It is a concern that is shared by U.S. businesses in general.” And while we generally agree with none of that, one thing is clearly true: the last thing the U.S. Chamber should support now is a legal system for investors that’s secret, with no trained judges, no rules, no record, no decisions with any precedential value and which actually might be legally wrong, and provide basically nothing to help companies establish what’s legal and what’s not. 

Big business lobbyists like to complain about the unpredictability of jury awards even though data show them to be generally consistent and conservative. But when it comes to unqualified legal uncertainty for defendants, forced arbitration wins that contest by orders of magnitude. It’s about as uncertain, unpredictable and unclear as a legal system could be.  

Purdue and Sackler’s Rat Pack

I hesitate to rely on “rat” analogies because, as PopTort fans know, we’re based in New York City and no one here likes to be reminded of that little problem. But when I think of the creators of the opioid epidemic and their “tort reform” apologists – including OxyContin makers Purdue Pharma and its generic cousin Rhodes, the Sackler family which controls Purdue, and groups like the American Tort Reform Association (ATRA) and the U.S. Chamber of Commerce – “cornered rat” is one image that seems appropriate. 

First to refresh, evidence gathered from state opioid litigation and recently reported in the New York Times can be summarized as follows:

• As the country’s addiction crisis worsened, the billionaire Sackler family decided to “increase their profits by selling treatments for the very problem their company had helped to create: addiction to opioids.” It was “named Project Tango.”
• By then, the company had already pled “guilty to a federal felony and paying more than $600 million in criminal and civil penalties.”
• The pharmaceutical industry developed “a multipronged approach” to “reshape public perceptions about pain and chip away at physicians’ reluctance to prescribe opioids, long known to be addictive, by describing an 'epidemic' of untreated pain affecting 100 million Americans.”
• Manufacturers funded “front groups” that were “disguised as ‘unbiased’ sources of cutting-edge medical research and information” and trained “sales representatives focused on doctors who were high-volume opioid prescribers, as well as inexperienced providers and primary care physicians who knew little about pain management, encouraging them to prescribe higher and higher doses for longer stretches of time.” These “sales representatives could earn tens of thousands of dollars in bonuses and were rewarded with trips to tropical islands.”
• As reports of overdoses grew, Richard Sackler urged the company to blame the patients. “We have to hammer on abusers in every way possible,” he wrote in a 2001 email disclosed in documents filed in the Massachusetts case. “They are the culprits and the problem. They are reckless criminals.”

Like all cornered rats, Purdue and the Sackler’s are trying to fight their way out of this, and “tort reform” groups are right by their side, lashing out at the principal way the industry is now being held to account – litigation. Importantly, this is public enforcement litigation brought by state and local public officials, who in addition to trying to uncover the truth (all the above information comes from evidence in state AG lawsuits), are trying to re-coup the extraordinary costs of responding to a crisis that was deliberately dumped in their lap.

In December 2018, 60 Minutes did a feature story on Mississippi’s former Attorney General Mike Moore, one of the attorneys who “engineered the historic 1998 settlement under which Big Tobacco paid billions to address smoking-related health issues.” He happens now to be one of the attorneys suing opioid manufacturers and distributors, “coordinating with 30-plus states that have filed suit, and with many of the local governments, nearly 1,500 cities and counties that also are suing.”

Back in 2017, a PR firm that works with ATRA pitched the following campaign strategy to Purdue (information uncovered in the Oklahoma AG’s lawsuit against the company):

CAMPAIGN GOALS AND OBJECTIVES

Our goal is to make state attorneys general think twice about joining the litigation and establish a credible watch-dog organization to monitor the use of contingency fee counsel should other state attorneys general join the suit. While specific strategies and tactics would be tailored to each Individual state attorney general, our initial program recommendations include the following objectives:

Leverage existing legal reform platforms-especially groups focused on outside use of contingency fee counsel-to promote our message and apply pressure.

Shine a spotlight on the plaintiff's attorneys involved in the cases to call into question their credibility and personal profit motive.

STRATEGY

To accomplish these goals and objectives, we recommend a three-track strategy:

Track One: Identify and conduct research on the primary plaintiff's attorneys involved in the suits, including Mike Moore, and demonstrate their methods and personal monetary motivations.

It goes on. The campaign was partly successful, taking credit for at least one early Wall Street Journal editorial attacking Moore and these lawsuits, bragging that “team ATRA worked with this writer over the last couple of weeks on this using research we produced.”

No doubt. But what they couldn’t do is stop state and local governments from moving forward, and not only against Purdue, but also against the Sackler's. Right now, the Attorneys General of New York, Massachusetts, Connecticut, Rhode Island and Utah “have filed suit against members of the [Sackler] family [while] last month, a coalition of more than 500 counties, cities and Native American tribes named the Sackler’s in a case in the Southern District of New York, bringing the family into a bundle of 1,600 opioids cases being overseen by a federal court judge in Cleveland.”

So now there’s a new corporate strategy brewing. The U.S. Chamber of Commerce – the nation’s largest lobby force which represents the drug industry among many others - has stepped in. The Chamber wants new state-based legislation with a very targeted goal: wiping out all the city and county lawsuits.  And just like ATRA, the Chamber is starting this by planting stories in major publications. In this case, it has produced a “study” fabricating urgent reasons to end these lawsuits, and trying to get reporters to bite.  Bloomberg unfortunately did, for one.

This effort is boosting at least a couple different Chamber goals. The first is obviously to try to weaken the opioid litigation.  The Chamber can’t defend the reprehensible conduct of Purdue and other opioid manufacturers, so it is trying to weaken the litigation against them. Pretty classic.

The second strategy, which seems also part of a larger one, was revealed in today’s extraordinary new investigation by USA TODAY, The Arizona Republic and the Center for Public Integrity. The articles discuss, among many things, how corporate and conservative interests are lobbying for state "preemption" bills. Writes the investigative team:

These laws, in effect, allow state legislators to dictate to city councils and county governing boards what they can and cannot do within their jurisdiction….  

USA TODAY’s algorithm found more than 100 such bills had been introduced on an expanding array of topics.

Because preemption bills have almost exclusively been advanced by Republicans, many of whom rail against the excessive mandates of Washington, D.C., critics see such legislation as the height of hypocrisy.

"There's real ... hypocrisy in many of these so-called conservative legislators trying to rip away local control when they preached for years that a government that's closest to you ... is most responsive to you," said Dawn Penich-Thacker, who campaigned to overturn Arizona's school-voucher expansion with a public vote.

All I know is, the Bloomberg headline “U.S. Chamber Warns Cities are Litigating Too Much” makes a whole lot more sense now.

Ring around the nosey, a pocketful of cozy

When one set of commercial pilots is unable to stop a Boeing jet’s fatal nose dive, “difficult questions” are raised about the safety of these planes. When a second set of commercial pilots is unable to stop another fatal nose dive of that same model plane, the FBI is called in. Suddenly, it becomes obvious to everyone that the “cozy relationship” that has long infected the relationship between regulators and corporations – not just in aviation but in many areas - can have catastrophic consequences and might be criminal. But it shouldn’t take a catastrophe.

Regulatory capture. Revolving door. These concepts are nothing new. Back in 2005 during the George W. Bush administration, for example, a study from the Revolving Door Working Group showed how federal agencies were then captured by the very industries they were supposed to regulate, and were led by a revolving door of industry figures. According to the study, the appointment of corporate executives and business lobbyists to key posts in federal agencies was a rampant problem. Under Obama, things were maybe a bit better but still not good. Under Trump, it’s a calamity. 

Shortly after he took office, Trump “signed an executive order that bars former lobbyists, lawyers and others from participating in any matter they worked on for private clients within two years of going to work for the government.” But by last year, according to the Associated Press, Trump had already “issued at least 37 ethics waivers to key administration officials at the White House and executive branch agencies.” For example, “[o]f 59 EPA hires tracked by the AP over the last year, about a third worked as registered lobbyists or lawyers for chemical manufacturers, fossil fuel producers or other corporate clients.” Here are some other examples:

Health and Human Services asked for waivers for senior counselor to the secretary Keagan Lenihan, a registered lobbyist who recently worked for a pharmaceutical and health services company, and for HHS chief of staff Lance Leggitt, who recently lobbied on behalf of his law firm’s health law practice group.

Agriculture Department policy adviser Kailee Tzacz is allowed to “participate personally and substantially in matters regarding the Dietary Guidelines for Americans,” a guide that offers nutritional information and recommendations.…

Although [Craig Holman of Public Citizen] was initially optimistic when Trump issued his executive order, Holman said Wednesday, “It is now quite evident that the pledge was little more than campaign rhetoric. Not only are key provisions simply ignored and not enforced, when in cases where obvious conflicts of interest are brought into the limelight, the administration readily issues waivers from the ethics rules.”

Which brings us back to aviation.  To be honest, I naively thought this was one area where the safety interests of regulators, manufacturers and airlines were generally aligned. It couldn’t possibly be in any of their interests to facilitate plane crashes. Airline safety regulation has even been propped up as a model for other industries, like health care.  About a decade ago, Health Affairs wrote: 

The movement to improve quality of care and patient safety has grown, but examples of measurable and sustained progress are rare. The slow progress made in health care contrasts with the success of aviation safety. After a tragic 1995 plane crash, the aviation industry and government created the Commercial Aviation Safety Team [CAST] to reduce fatal accidents. This public-private partnership of safety officials and technical experts is responsible for the decreased average rate of fatal aviation accidents. We propose a similar partnership in the health care community to coordinate national efforts and move patient safety and quality forward.

CAST includes the FAA, airline groups, manufacturers and pilots' associations.  and yup, it still exists. 

Silly us, I guess. As explained by Stephen Mihm, associate professor of history at the University of Georgia, in a Bloomberg piece called “The FAA Has Always Played Cozy With the Aviation Industry”:

The FAA is unusual among federal agencies because it was originally established to regulate and promote an industry. This fostered the unusually cozy relationship between regulators and business that has persisted to the present, even as the agency’s official mandate became exclusively focused on safety beginning in the 1990s.

Yet even then, actual fixes to the law and to the FAA’s mandate were largely cosmetic, with the “FAA’s reluctance to act until planes fell from the sky earned it an unfortunate nickname: the ‘tombstone agency’.… [T]he House Transportation and Infrastructure Committee described in 2008 a 'culture of coziness' between industry and regulators that had led to 'malfeasance, bordering on corruption.'"

For example, in the case of Boeing,

[T]he FAA began allowing Boeing and other manufacturers to certify that their systems comply with federal safety regulations. In effect, Boeing employees assumed the role that FAA regulators had once performed. This has undoubtedly lightened the regulatory load on companies, and it certainly comports with the FAA’s original mandate to encourage domestic aviation. But the recent crashes suggest that this ambition may ultimately undercut the safety of airline passengers.

“Miracle on the Hudson” hero-pilot, Captain Chelsey "Sully" Sullenberger was more blunt In a scathing op ed. He first explained that some of the problems are budgetary:  

For too many years, the FAA has not been provided budgets sufficient to ensure appropriate oversight of a rapidly growing global aviation industry. Staffing has not been adequate for FAA employees to oversee much of the critically important work of validating and approving aircraft certification. Instead, much of the work has been outsourced by designating aircraft manufacturer employees to do the work on behalf of the FAA. This, of course, has created inherent conflicts of interest, when employees working for the company whose products must be certified to meet safety standards are the ones doing much of the work of certifying them. There simply are not nearly enough FAA employees to do this important work in-house.…

To make matters worse, there is too cozy a relationship between the industry and the regulators. And in too many cases, FAA employees who rightly called for stricter compliance with safety standards and more rigorous design choices have been overruled by FAA management, often under corporate or political pressure.

In the case of the Boeing 737 Max, in 2015, “Boeing was particularly eager to get the plane into service quickly, so it could compete with Airbus’s new A320neo,” writes John Cassidy at the New Yorker:

Early on, employees of the F.A.A. and Boeing decided how to divide up the certification work. But, partway through the process, a former F.A.A. safety engineer told the Seattle Times, “we were asked by management to re-evaluate what would be delegated. Management thought we had retained too much at the FAA.” The engineer said that “there was constant pressure to re-evaluate our initial decisions,” and “even after we had reassessed it … there was continued discussion by management about delegating even more items down to the Boeing Company.”

Even the work that was retained, such as reviewing technical documents provided by Boeing, was sometimes curtailed. “There wasn’t a complete and proper review of the documents,” the former engineer added. “Review was rushed to reach certain certification dates.”

The new revelations don’t stop there. “Federal prosecutors and Department of Transportation officials are scrutinizing the development of Boeing Co.’s 737 MAX jetliners,” the Wall Street Journal reported on Monday. “A grand jury in Washington, D.C., issued a broad subpoena dated March 11 to at least one person involved in the 737 MAX’s development, seeking related documents, including correspondence, emails and other messages,” a source told the paper. (The Justice Department and Department of Transportation declined to comment on the Journal’s reporting.)

Sully concludes his op ed by making what seems like an utterly obvious point: “there is a strong business case for quality and safety, that it is always better and cheaper to do it right instead of doing it wrong and trying to repair the damage after the fact, and when lives are lost, there is no way to repair the damage.”

Sexual Assault and Civil Justice, Except for Servicemembers

In the Center for Justice & Democracy’s new report, The Importance of Civil Justice to Sexual Assault Survivors and the Devastating Consequences of “Tort Reform,” you will learn about recent civil cases filed after sexual violence by all types of assailants: Boy Scout leaders, clergy and religious instructors, doctors, Uber drivers, entertainment moguls, massage therapists, restaurant employees, school employees and students, security guards, and sports coaches.

But here’s what you won’t find in that 50-page report: a single case brought by a servicemember. That would include the nearly 15,000 (women and men) members of the military who are sexually assaulted each year, sometimes more than once. 

In every other instance of sexual violence, civil cases can be filed to help ease the financial burdens of an assault, expose abusers and provide a forum to hold perpetrators directly accountable. But if you are a servicemember, who pledged to die for your country and was raped while doing so, there is almost nothing you can do about it.

We have written about this before, but there are good reasons to remind us of the issue again, not the least of which is the change in Congress. It is up to Congress to fix this, and by “this,” we mean the Feres doctrine.

Feres is a 69-year-old policy – created out of whole cloth by the U.S. Supreme Court in 1950 – which bars U.S. military personnel from suing the government for personal injuries suffered while they are in the armed forces. It applies even in the case of a sexual assault. Read more about Feres here and in this great new article, Rethinking Feres, by Professor Andrew F. Popper of American University’s Washington College of Law. 

Dwight Stirling, the CEO of the Center for Law and Military Policy (CLMP) wrote about the injustice of this law shortly after Senator Martha McSally (AZ-R), the first female pilot to see combat, recently said she had been raped by her commanding officer. Noted Stirling,

Fearing career retaliation, some estimates say 90 percent of sex assault victims, like McSally, don't even bother to report.…

It is outrageous that sexual assault is characterized as an occupational hazard of military service. …The only way to fix the system is to empower the victims of military sexual assault to hold their assailants accountable in civil court …It is absolutely the only way.

In January, Rep. Jackie Speier, D-Calif., new chair of the House Armed Services personnel subcommittee, said this would be a priority issue for her. Writes Military Times,

[T]he panel’s guiding focus will be to tackle “critical issues that impact not only our service members but their families who also bear the burden of sacrifice and commitment to our country.”…

[T]he Feres Doctrine debate could lead to some of the most dramatic military policy changes to come out of Congress this year. Speier has been following a handful of court challenges to the legal precedent in recent months, and is planning a hearing on the issue early this session.

This couldn’t come soon enough!

Civil Justice – The Next Big Shiny Object?

Some may wonder why we write about issues that seem so obscure considering the tweeting mob boss in the White House, his allied dictators and fake national emergencies, the obsessions of cable news hosts (“can a sitting president be indicted after all?"). or pick whatever shiny “objet du jour” you like.

Indeed, while news-followers were fixated on Michael Cohen or maybe even Kim Jong-un this week, we watched as Congressperson and Senator after Congressperson and Senator introduced major new legislation – literally bill after bill - to ban the insidious use of forced arbitration clauses and class action waivers in consumer, employment and small business contracts.

Here's the coalition letter in support of the main piece of legislation, H.R. 1423/S. 610, the "Forced Arbitration Injustice Repeal (FAIR) Act." It has 147 House co-sponsors and 32 Senate co-sponsors, and counting. Wow! (See some coverage of the major news conference here, here, here.)

But being in such great company is not the only reason why we stay focused on the civil justice system. Here’s why we really do it.

In 2018, the U.S. Chamber of Commerce spend $95 million lobbying (far more than anyone else), a third of which was spent by the their “tort reform” branch (Institute for Legal Reform); the Chamber’s #1 issue in terms of lobbying reports was “torts;” the Chamber’s #1 bill was H.R. 985, the anti-class action bill, and Mayer Brown (their pro-forced arbitration law firm), led their outside lobbying expenditures. Liability and tort issues may not be shiny but they sure are big in Congress. We need to keep talking about them and hope someone hears.

That’s why we are proud to tell you about the new Loyola Consumer Law Review article from the Center for Justice & Democracy, which discusses the Chamber's push to pass that terrible class action bill in the last Congress, H.R. 985, showing it to be a corrupt and ultimately failed effort. The article shows how the forces actually running things in Congress, like the U.S. Chamber of Commerce, hope you never pay attention to us. They’d prefer to bulldoze over your legal rights with as little notice as possible, thank you very much. 

Not this time, suckas!

Our Love but Mostly Hate for Tech Companies

Have you noticed the latest TV craze? No, not sitcom reboots. Shows are trying to stick into their titles the most “scatological” of the “seven dirty words.” Schitt’s Creek, for example. Or the latest hilarious episode of Documentary Now, "Batshit Valley."

But when I think of that word, I think about how many tech giants really don’t give a “that word” about their customers. Now you might say “hey, didn’t Google just end their practice of forcing their employees to arbitrate all disputes in private, rigged arbitration systems?” Yes they did - after an vigorous and perilous effort by their employees. Writes Bloomberg:

The shift is a victory for Google employees who’ve been organizing on several fronts, including workplace harassment, the treatment of contract workers and what kind of work the company does for government and military groups. The Mountain View, California-based company won’t require third-parties that employ sub-contracted staff for Google to institute the same changes, though. About half of those in Google’s total workforce aren’t official employees of the company.

But it’s something, and it’s something the rest of the tech industry has not yet done (not to mention every other industry.)

But then again, how many times have you clicked “I have read and agreed to the Terms of Service” before conducting your latest online transaction, without any idea that the company just forced you, their loyal customer, into these same kind of "forced arbitration" agreements? That means you can’t sue them in court if, say, they use your personal data illegally or otherwise violate your privacy. Public Citizen put together this “Forced Arbitration Rogues Gallery,” so you can see some of the companies that make you "agree" to this. (Check out this article too, which cites a 2011 class action lawsuit that might be far more difficult to bring today over Google’s current products. The case, In re Google Buzz Privacy Litigation, led to an $8 million settlement with Gmail users “arising out of Google’s disclosure of personally identifiable information without authorization through the defunct site, Google Buzz.”)

We all know that tech companies do a terrible job protecting your privacy and can’t be trusted to self-regulate. That’s why last year, California enacted the California Consumer Protection Act, the strongest privacy law in the nation. As described by Consumer Watchdog:

It would, for instance, allow a private right of action – though with some limits -- in data breach cases.  No such right currently exists. The law ensures:

• The right of Californians to know what personal information is being collected about them.

• The right of Californians to know whether their personal information is sold or disclosed and to whom.

• The right of Californians to say no to the sharing or sale of personal information.

• The right of Californians to access their personal information.

• The right of Californians to equal service and price, even if they exercise their privacy rights.

• That businesses cannot sell personal information of consumers under the age of 16 without explicit consent.

Tech companies like Google fought this law, but they lost. And they are likely to lose again when California moves to close up certain loopholes in last year’s legislation, problems made clear by the recent massive Starwoods/Marriott hack.  Specifically, the bill would “expand[] the requirements for companies to notify users or customers if their passport and government ID numbers, along with biometric data, such as fingerprints, and iris and facial recognition scans, have been stolen.”

As Neema Singh Guliani, senior legislative counsel at the American Civil Liberties Union, pointed out in the Washington Post,

It has often been state legislatures — not Congress — that have led efforts to protect consumer privacy. California was the first in the nation to require that companies notify consumers of a data breach (other states have since followed suit), the first to mandate that companies disclose through a conspicuous privacy policy the types of information they collect and share with third parties, and among the first to recognize data privacy rights for children. Illinois set important limits on the commercial collection and storage of biometric information, such as fingerprints and face prints. Idaho, West Virginia, Oklahoma and other states have passed laws to protect student privacy.

But now, “companies like Amazon, Apple, Facebook and Google are pushing hard for federal digital privacy legislation in 2019, and not quite out of the goodness of their hearts. … Central to all these proposals is the notion that a federal bill should preempt any statewide legislation—like, say, California's—from taking effect.”  Some bills have already been floated.

As Guliani put it, “This seeming willingness to subject themselves to federal regulation is, in fact, an effort to enlist the Trump administration and Congress in companies’ efforts to weaken state-level consumer privacy protections."

And not only that. Imitating the (failed) strategy of Big Tobacco, tech companies are now pressuring Congress to pass some sort of “grand bargain” that would not only preempt state laws, but also would repeal:

…every other existing piece of federal privacy legislation, including landmark laws like Health Insurance Portability and Accountability Act (HIPAA) and Family Educational Rights and Privacy Act (FERPA). Every sector- or issue-specific privacy law would be removed, and state and local lawmakers would be unable to draft stricter, more specific regulations in the future.…

The Children’s Online Privacy Protection Act (COPPA) would be one of the repealed laws. It was authored by Sen. Ed Markey (D-MA) in the late ‘90s, and IT was one of the first pieces of legislation governing the collection of data. The law imposes requirements on companies when it comes to collecting data on children under 13 years of age, which has become a sticking point for a number of tech companies. Both Google and Facebook have been sued multiple times for violating COPPA, and the law is one of the main reasons many web services cut off at age 13.

“As Congress works to provide the American people with a comprehensive federal privacy law, we should build upon—not dismantle—existing safeguards,” Markey said, responding to ITIF’s proposal. “Getting rid of COPPA is literally like throwing the baby out with the bath water.”

Babies? What in the world does Google care about babies?

Happy President's Day!

Some things just speak for themselves.

When Negligent Hospitals and Doctors Aren’t Accountable, We All Suffer

The late Cornell Law School legal scholar, Theodore Eisenberg, once wrote this about the epidemic of medical errors in this country: 

One possible factor contributing to the continued high rate of errors is that doctors do not expect to bear the full cost of harms caused by their negligence. …and [h]ospitals do not bear the full costs of the harms caused in them even though hospitals directly and indirectly influence patients’ risk of medical error.

In other words, if you know you're not going to be held accountable for causing harm, might you be less careful? Lawmakers are often asked the question this way (if we might paraphrase): “With medical negligence still occurring at alarming rates in this country, is it a good idea or a bad idea to cap compensation to injured patients, and further reduce the accountability of negligent doctors and hospitals?”

The answer seems so obvious. However, such things are often hard to prove. But no more.

In 2014, we wrote about several just-released empirical studies showing that when a state caps damages for injured patients, the result is more deaths and injuries, and increased health care costs due to a “broad relaxation of care.” These studies, which are not easy to do and in fact take years of data collection, have recently been updated. Damn if they don’t show the same thing. 

Just this week, SSRN published the newly-updated “The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform," and once again, researchers found “that patient safety gradually worsens after cap adoption.” The authors found “strong evidence that a reduction in liability risk leads to a reduction in safety,” which “is consistent with general deterrence, in which lower liability risk leads hospitals to invest less in safety and physicians to be less careful in general.”  

To put it another way, “Liability for harm induces greater care and relaxing liability leads to less care.” Moreover, add the authors, “This paper also contributes to the literature on the deterrent impact of legal liability for personal injury more broadly.”

As to the impact of caps on health care costs, we covered another updated study in our last PopTort PopQuiz. Med Mal True or False Edition!  Here's the quiz question again:

TRUE OR FALSE?

1. After a state caps damages for the purpose of decreasing unnecessary tests and procedures (i.e., reducing "defensive medicine"), common tests like cardiac stress and imaging tests do, in fact, decrease.

False. Instead, such tests appear to increase, as does Medicare Part B lab and radiology spending. Researchers say,“If the policy goal is to limit healthcare spending, damage caps are simply the wrong tool.… [A] core message from our findings is that writ large, the ‘adopt damage caps, reduce spending’ story lacks empirical support. Instead, measures to reduce overtreatment will need to be carefully targeted to particular areas of concern.”

So, we good now? 

Tort Reform: Victimizing Assault Victims a Second Time Around

We are so happy to see that Sen. Rand Paul (R-KY) is enjoying the benefits of Kentucky's state Constitution, which prevents the state from capping non-economic and punitive damages for injured victims. (See Section 54.) Paul, you see, is suing his neighbor for both, for over a million dollars no less “in compensatory and punitive damages for his medical treatment and ongoing discomfort.” (Paul’s neighbor, Rene Boucher, pled guilty to felony assault, having attacked Paul as he hopped off his lawnmower.)(Update: Paul just won over half a million dollars.)

How fortunate that Paul, a leader in the “repeal Obamacare movement” who’s about to travel to socialized-medicine-Canada for hernia surgery (yes, you read that correctly), doesn’t live in neighboring Ohio or Tennessee. Those states cap both kinds of damages, protecting assailants and criminals who commit assault. A few years ago, we showed how devastating caps on damages can be to an Ohio assault victim: 

“Jessica Simpkins was raped at the age of 15 by her church pastor – a man hired by Grace Brethren Church in Sunbury despite the knowledge that he had previously sexually abused two girls. In a civil suit, a jury awarded Simpkins $3.5 million for pain and suffering, but the amount was reduced to $250,000 due to a state law that caps damages.” 

This is one of the dirty little secrets of “tort reform.” When a state caps damages, it usually covers every kind of personal injury case, including when injuries are the result of a criminal assault. That includes situations where your neighbor beats you up. It also includes cases of sexual assault. It also includes the sexual assault of children. Which brings us to our next story.

When it comes to sexual assault especially of children, there is another tort limit that often blocks the ability of survivors to sue: overly-restrictive state statutes of limitations. Most state laws require someone to file a lawsuit within a very short period of time of their assault. Gradually, states are starting to lift those restrictions for sexual assault survivors – particularly for child victims. New York is the big story on this today.

For years, as we’ve covered before, the New York Senate had blocked bills to increase the state’s archaic statute of limitations in these cases. Then the 2018 elections happened, and the clouds parted. So this week, the NY legislature finally passed the Child Victims Act (which the Governor will sign soon): 

The Child Victims Act will allow child victims to seek prosecution against their abuser until the age of 55 in civil cases, a significant increase from the previous limit of age 23. For criminal cases, victims can seek prosecution until they turn 28. The bill also includes a one-year window during which victims of any age or time limit can come forward to prosecute.

"New York has just gone from being one of the worst states in the country to being one of the best," in terms of the statute of limitations for child sex abuse cases, said Marci Hamilton, CEO of Child USA and a professor at the University of Pennsylvania.

Fortunately, New York does not cap damages for injury victims. But too many states do. Time to start changing those laws, too.