Let Consumers Sue Companies (nytimes.com) 110
Richard Cordray, the director of the Consumer Financial Protection Bureau, writes: When a data breach at Home Depot in 2014 led to losses for banks nationwide, a group of banks filed a class-action lawsuit seeking compensation. Companies have the choice of taking legal action together. Yet consumers are frequently blocked from exercising the same legal right when they believe that companies have wronged them. That's because many contracts for products like credit cards and bank accounts have mandatory arbitration clauses that prevent consumers from joining group lawsuits, forcing them to go it alone. For example, a group lawsuit against Wells Fargo for secretly opening phony bank accounts was blocked by arbitration clauses that pushed individual consumers into closed-door proceedings. In 2010, the Consumer Financial Protection Bureau was authorized to study mandatory arbitration and write rules consistent with the study. After five years of work, we recently finalized a rule to stop companies from denying groups of consumers the option of going to court when they are treated unfairly. Opponents have unleashed attacks to overturn the rule, and the House just passed legislation to that end. Before the Senate decides whether to protect companies or consumers, it's worth correcting the record. First, opponents claim that plaintiffs are better served by acting individually than by joining a group lawsuit. This claim is not supported by facts or common sense. Our study contained revealing data on the results of group lawsuits and individual actions. We found that group lawsuits get more money back to more people. In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total. It is true that the average payouts are higher in individual suits. But that is because very few people go through arbitration, and they generally do so only when thousands of dollars are at stake, whereas the typical group lawsuit seeks to recover small amounts for many people. Almost nobody spends time or money fighting a small fee on their own. As one judge noted, "only a lunatic or a fanatic sues for $30."
Feeding the tort lawyers (Score:4)
Re:Feeding the tort lawyers (Score:5, Insightful)
Even if class action lawsuits fail to compensate consumers, they still act as a deterrent against bad corporate behavior. You are not rewarded, but the company is still punished.
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Very true. The only thing that will really get the attention of large companies is large monetary payouts that the top execs then have to explain to the shareholders who end up paying the settlement fee.
I will also add that, while IANAL, to say that the lawyers on those class action suits don't earn their fees is not really fair. Being a lawyer involves a lot of really boring and tedious work that would drive most people insane. Plus a lot of these expenses are paid up front by the lawyers with no guarantee
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... Plus a lot of these expenses are paid up front by the lawyers with no guarantee of being reimbursed later.
That's why lawyers/law firms will assess the success of any class law suit case before they act. If they don't see a chance or the reward is not worth doing, then they won't accept to do the job...
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Yeah. I'm ok with getting $5 deposited into my Wells Fargo account as long as I know that the VP of Sales who greenlit the whole scheme is bankrupt.
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My favorite one was from around 1999 when companies were sued for some arcane bug that might result in lost data on floppies. Yeah, most of these only make money for the lawyers
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Liebeck sought to settle her claim for $20,000, but McDonald's refused.
So not too much... She was hospitalized for 8 days, and that would cost a chunk of money.
McDonald's Attitude
* During discovery, McDonald's produced documents showing more than 700 claims by people burned by its coffee between 1982 and 1992. Some claims involved third-degree burns substantially similar to Liebeck's. This history documented McDonald's knowledge about the extent and nature of this hazard.
* McDonald's also said during discovery that, based on a consultant's advice, it held its coffee at between 180 and 190 degrees Fahrenheit to maintain optimum taste.
o Other establishments sell coffee at substantially lower temperatures than at McDonald's.
o Coffee served at home is generally 135 to 140 degrees
But then we have:
Damaging Testimony
* McDonald's own quality assurance manager testified that a burn hazard exists with any food substance served at 140 degrees or above and that McDonald's coffee was not fit for consumption because it would burn the mouth and throat.
* The quality assurance manager further testified that the company actively enforces a requirement that coffee be held in the pot at 185 degrees, plus or minus five degrees. He also testified that while burns would occur, McDonald's had no intention of reducing the "holding temperature" of its coffee.
* Plaintiff's expert, a scholar in thermodynamics as applied to human skin burns, testified that liquids at 180 degrees will cause a full thickness burn to human skin in two to seven seconds.
* Other testimony showed that as the temperature decreases toward 155 degrees, the extent of the burn relative to that temperature decreases exponentially. Thus, if Liebeck's spill had involved coffee at 155 degrees, the liquid would have cooled and given her time to avoid a serious burn.
* McDonald's asserted that customers buy coffee on their way to work or home, intending to consume it there. However, the company's own research showed that customers intend to consume the coffee immediately while driving.
* McDonald's also argued that consumers know coffee is hot and that its customers want it that way. The company admitted its customers were unaware that they could suffer third-degree burns from the coffee and that a statement on the side of the cup was not a "warning" but a "reminder" since the location of the writing would not warn customers of the hazard.
And the actual verdict
The Verdict
* The jury awarded Liebeck $200,000 in compensatory damages. This amount was reduced to $160,000 because the jury found Liebeck 20 percent at fault in the spill. The jury also awarded Liebeck $2.7 million in punitive damages, which equals about two days of McDonald's coffee sales.
* Post-verdict investigation found that the temperature of coffee at the local Albuquerque McDonald's had dropped to 158 degrees Fahrenheit.
* The trial court subsequently reduced the punitive award to $480,000—or three times compensatory damages—even though the judge called McDonald's conduct reckless, callous and willful. Subsequent to remittitur, the parties entered a post-verdict settlement.
I would say that this not at all frivolous.. From their own testimony the coffee they sold was too warm for direct consumption since it would have caused burns to the mouth and throat.
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I would say that this not at all frivolous.. From their own testimony the coffee they sold was too warm for direct consumption since it would have caused burns to the mouth and throat.
Then you're as much of an idiot as those who made the award. Everyone knows coffee is served hot, frequently too hot for direct consumption. Fire is hot, don't stick your fucking hands in it.
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My favorite one was from around 1999 when companies were sued for some arcane bug that might result in lost data on floppies. Yeah, most of these only make money for the lawyers
What was the problem with that one? If there was a known bug that resulted in data loss from a device designed to store data, shouldn't it be fixed? Sure, floppies suffer from bit rot and lose data on their own, but that doesn't mean that data should be purposely lost due to a know bug. Even in 1999, floppies were still in wide use, though they were definitely on their way out by then.
Re:Feeding the tort lawyers (Score:5, Interesting)
That's not the point.
Business-to-consumer contracts are legal documents, the understanding of which requires a high degree of technical knowledge. Likewise, there are few businesses with whom to do business in many cases--banks are abundant, yet most banks have these clauses, and so consumers are essentially locked into such agreements or locked out of the market. Searching for a bank without such a clause takes time and skill; and if the bank doesn't have the products (online banking with MFA, interest rates, fast wire transfers) of other banks, it's not equivalent in the market.
The Consumer Financial Protection Bureau was chartered by the President to execute legislation by Congress to provide for a certain regulatory need in the interest of the people of the United States. They have made a decision, and Congress seeks to countermand that decision. What great reasoning does Congress have for taking the legal right of due process in civil disagreements away from the Consumer?
Class-action lawsuits allow consumer to sanction a business, to hold a legal threat over its head if it acts in a way legally liable in a civil context. It's the stick that comes behind the carrot in encouraging ethical business. Without a class-action suit, each individual must take their own time, money, and risk to address these behaviors--which means fewer individuals will achieve representation, and so the risk of harm to a business for acting in an unethical manner harmful to its customers is fractional. Even if all customers did come to self-represent, they would sink an enormous amount of time and effort into seeking redress, instead of into any more-useful pursuit.
Arbitration is an ineffective and inefficient method of encouraging or enforcing fair and ethical business behavior.
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To be fair, it reduces the total scope, as far as I can tell. Arbitration is generally a fair system, as the arbiter is a neutral third-party; the problem is you can't arbitrate en-masse, so a lot of people have to expend time they might have and bring a lack of legal expertise to the table. Unless you're getting the same arbiter again and again and his familiarity weighs in on repeat decisions, your company lawyers are going to be able to improve the outcome over trials--and that's not even considering
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Arbitration is generally a fair system, as the arbiter is a neutral third-party
This is often untrue, and when it's untrue, you're simply screwed with no recourse.
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As opposed to live tree books?
As opposed to ebooks, which was covered by a different class action lawsuit. I got $15 out of that one.
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So, just to be clear, given the choice between X dollars going to a company ripped you off, or lawyers who are trying to expose it, your attitude is "fuck it, I'm not getting anything."
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Contracts should never be allowed to waive legal rights.
That sounds great in theory, but if companies face more lawsuits the costs will be passed on as higher prices.
When I write a contract, I always insert an arbitration clause. If I sign an important contract for work or IP licensing and it doesn't have an arbitration clause, I will ask to have one inserted. Going to arbitration is almost always better than going to court.
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That sounds great in theory, but if companies face more lawsuits the costs will be passed on as higher prices.
I'm perfectly OK with that.
Going to arbitration is almost always better than going to court.
That all depends on the arbitrator and how the contract is worded. If the contract says that the results of arbitration cannot be appealed in court, then it's an unacceptable risk -- particularly if you're dealing with a major corporation, where the fairness of the arbitrator is very much in doubt.
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There's another option... companies could follow the law... just sayin'...
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There's another option... companies could follow the law... just sayin'...
Arbitration is rarely about violating the law. That is criminal law, not civil, and contracts do not protect anyone from illegal acts.
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Civil litigation also protects consumers from illegal acts. ANY standing to bring suit does. As much as they are maligned, masses of bottom feeding lawyers are much better at keeping companies in line then government regulation.
Government regulation often times is so meagre as to be no deterrent to a company at all.
Civil litigation is much more painful. One also must show actual damages. Despite propaganda to the contrary, jury awards represent real harm done to people.
You have to piss off a jury that's bee
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If it wasn't about violating the law, then you wouldn't have to remove courts as an option. Remember, courts only make findings of law. So if you follow the law, then you don't need to worry about what the courts are going to say.
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You can always challenge the arbitration clause as unconscionable. Such challenged do sometimes succeed.
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Contracts should never be allowed to waive legal rights.
The entire point of a contract is to waive legal rights. A contract says that I agree to be bound from exercising certain of my legal rights, and in exchange, you agree to be bound from exercising certain of your legal rights.
For example, if I own a house, I usually have the legal right to walk into that house at any time. However, if I sign a contract with you by which you lease the house from me, I no longer have that right. Similarly, before the contract, you had the legal right to the money in your b
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The entire point of a contract is to waive legal rights.
I disagree. While contract often do this, the real point of a contract is not to waive legal rights.
The whole point of a contract is to make an agreement as clear to all parties concerned as possible, with some sort of legal recourse available if someone doesn't keep to the agreement.
In the EU / australia / etc Consumers have rights (Score:3)
In the EU / australia / etc Consumers have rights that we don't get in the usa.
And support (Score:3)
In the EU / australia / etc Consumers have rights that we don't get in the usa.
Not only that, but some European countries (some prominent examples: Germany and Switzerland) even have consumer protection groups which can help coordinating and engaging such actions on the behalf of consumers, who regularly scan products for fraud, etc.
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TINSTAAFL
Yes, consumers in Europe and Australia get consumer protections. But do you know what their biggest complaint is? Everything costs more! Everyone complains how a $500 item in s the US costs around $750US after conversion or more in Europe or Australia. Hell, Australia even encouraged consumers to bypass their local distributors and import stuff from the US.
Of course, part of it is gouging, but another part of it is the
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EU has a lot less litigation than the US, this makes it easier to be a business and to be a consumers... Unless you want to claim that litigation is efficient
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Notice About Lawsuit Regarding... (Score:2)
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Auto-renew subscriptions are supposed to come with information about whether you can get a refund if you're charged for a renewal ("Oops, cancel that"), an easy method by which to cancel a subscription, and instructions on how to cancel. They didn't, so Apple is in trouble for letting you subscribe to third-party apps without providing all of this.
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They didn't, so Apple is in trouble for letting you subscribe to third-party apps without providing all of this.
On the few occasions that an auto-renewal went through before I could cancel it, I just open a ticket to request a refund. Not sure why that is so difficult.
The article said that arbitration recovers more $$ (Score:2)
The difference seems to be that a class action you just sign up and don't do anything, but in arbitration you have to take time to collect evidence.
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Just need to repeal the law (Score:2)
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How about we get arbitration for everything? I kill you, you must agree to arbitration and I get to select the arbiter.
Lawyers should be banned (Score:2)
Consumers should be able to sue, without lawyers on either side, for unlimited amount for a nominal fee. The impartial court should decide the law.
While the legal system cost so much, to go through it will never be fair. Even with class action suits you have to organize it and the lawyer gets a significant portion of any reward.
People should have the right to justice no matter how wealthy they are.
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Most individuals cannot understand the law well enough not to look a fool in court, which in itself is damnation of the overly complex and impenetrable legal system we have.
I would welcome some reforms around class action suits to ensure that consumers get at least 80% of the payout, and add some duty to not settle for pennies on the dollar.
As much as I share the disgust for lawyers, it is easily eclipsed by the bad behavior of corporate entities like Wells Fargo, Comcast, De Beers, and so many others. No
Blame for data security can be hard to establish (Score:1)
Let's say Home Depot used point-of-sale software from Vendor X, which uses a Linux distribution and relied upon a network driver from Manufacturer Y.
A hacker is able to penetrate their network by exploiting the combination of driver and linux, which was also misconfigured by Vendor X.
Who is to blame here? Home Depot for not completely investigating their entire stack ? Vendor X for sloppy configuration? Manufacturer Y for having a bug in their software?
It's so hard to ascribe blame in these situations. D
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The way this should work is pretty obvious.
Home Depot would be the party responsible from the customer's point of view -- in other words, Home Depot would be on the hook for making things right (or as right as possible).
If the underlying cause was because a company Home Depot uses messed up, then Home Depot sues them to recover their losses (including whatever they had to pay to customers). And so on and so forth.
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And if the Linux kernel has a vulnerability that was exploited, Home Depot would be on the hook for billions of dollars? Or if the software from a vendor included a unpatched 3rd party library (such as OpenSSL?) It just wouldn't work, and it would be a nightmare of responsibilities and dependencies. The only winners would be lawyers.
Lawsuits should proceed if (and only if) the company responsible was negligent in things under their control: If they used MD5 hashes for passwords, or left default system p
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And if the Linux kernel has a vulnerability that was exploited, Home Depot would be on the hook for billions of dollars? Or if the software from a vendor included a unpatched 3rd party library (such as OpenSSL?)
Yes. Home Depot is the one representing that their systems are safe. If that turns out to be untrue, then Home Depot is the one responsible. They can turn around and reclaim damages from whoever it was that put them in that situation.
It may seem unworkable, but it isn't really. It's as close to fair as we can get. What's more fair than holding the party that damaged you responsible for that damage? Otherwise, the situation is that nobody is effectively responsible and these sorts of things will only continu
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And if the Linux kernel has a vulnerability that was exploited, Home Depot would be on the hook for billions of dollars? Or if the software from a vendor included a unpatched 3rd party library (such as OpenSSL?) It just wouldn't work, and it would be a nightmare of responsibilities and dependencies. The only winners would be lawyers.
Lawsuits should proceed if (and only if) the company responsible was negligent in things under their control:
Then you'd have the case that companies outsource everything to a sister company with no assets purely to ensure that they cannot be sued.
They way it is now is fine, thanks - the company is responsible for ensuring that its vendors are diligent. No one else can be responsible for that except the company who made the decision to go with a negligent vendor.
That Wells-Fargo one still twists my brain (Score:5, Interesting)
How can the court hold that these people who never authorized, let alone agreed to the terms, of the credit card or account should have to follow the rest of the contract they never agreed to? That doesn't make any sense, legally or otherwise!
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not saying its right but the people did have an account with Wells that they agreed to have. They had to have at least one accounts its not like Wells signed up non-customers. They just took existing customers and signed them up for additional accounts.
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Breaking the law usually has criminal, not civil, penalties. In this case, defrauding their customers. Fraud is almost always a felony with jail time. Consumers can't sue over this as these matters are handled in a different court.
Breach of contract is something consumers CAN sue over. Wells Fargo broke the contract and so the courts should definitely throw out the contract in part or its entirety after confirming that the contract was broken at the outset. Both parties are responsible for upkeep of a
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The breach of contract would go to arbitration. That's the whole point. That's what an "arbitration clause" means. You can't class-action an arbitration, so Wells Fargo effectively only has to deal with the criminal proceedings, which are fairly minor compared to the potential fallout of a massive class-action lawsuit.
Money is power, and there is nothing you can do... (Score:1, Flamebait)
... except revolution.
Before doing so, you need an ideology and you got none.
You know who got ideology? Muslims.
Either eat shit from the real power: degenerate bankers or accept Islamic State, where capitalists will be subordinate to people, not vice versa.
No "Free market" bullshit. There is no free market. There are monopolies and there are piece of shit scumbags who exploit human sweat, tears and blood - legalized organized crime in the form tobacco companies, alcohol production, and newly allowed by piec
Don't sign (Score:2)
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You're funny. Big companies never accept that, they just tell you to either accept the contract as is, or go elsewhere, you're not worth their time to negotiate a contract individually.
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When your ONLY choice is Comcast or no ISP at all, good luck with that.
Yeah, um... I'm going to have to disagree... (Score:2)
That's because many contracts for products like credit cards and bank accounts have mandatory arbitration clauses that prevent consumers from joining group lawsuits, forcing them to go it alone.
My guess - IANAL - is that if someone had the cash-ola and lawyers *cough* EFF *cough* perhaps they could invalidate these types of arbitration clauses who's sole purpose is to restrict the rights of consumers...
No shit (Score:2)
It is despicable (Score:1)
It is despicable that companies can and do get you to sign away your right to legal redress in the courts if you want to do business with them. I can't think of even one single good reason why that should be a thing that is allowed.
Not fair (Score:3)
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It's not fair to allow consumers to sue merchants for payment card data breaches who, due to market forces, are forced to accept payments via the deeply flawed, archaic payment card processing paradigm we have today.
It's not fair for me to exercise my rights in the legal system? I can file a motion to sue whoever I want thank you very much. Now whether the judge would or should rule against the defendant that's a different question.
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It is entirely fair.
If the merchant is being forced to behave in an insecure manner by a company, they can sue that company for damages. Those damages include losses due to lawsuits from consumers.
That would provide the necessary financial incentive for credit card processing to be more secure.
Why hasn't it? Because the fuck-up was at the merchant. The merchant had no reason to save the credit card data from old transactions. Once the transaction was processed, they should have deleted the data. The me
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If you don't pay $30, it's highly unlikely the company will sue. Most likely they'll call and harass you, they put it on your credit report, and eventually send it to collections, but they are highly unlikely to ever take you to court over it, it just costs too much.
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Filing a lawsuit that goes to trial will cost at least $100,000 in legal fees. If there's an appeal, it can top $1,000,000.
In some states, there is a functional small claims court system that eliminates a lot of that, but generally, a company cannot be represented by a lawyer, or an employee whose job is to represent the company in small claims court. In short, someone who may or may not be able to string words together into complete sentences. And while they're at small claims court, they're not doing thei
Do the math and follow the money (Score:1)
In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total.
Sooo... for lawsuits, 6.8 consumers recovered $220 million -- that's $32.35 per consumer. Lawyers probably get around $100 million.
For arbitration, 16 consumers recovered around $100,000 -- that's over $6,000 per consumer. Lawyers get little to nothing.
Let's not be naive -- this is a push by a long-time, high-flying lawyer [allgov.com] to increase the volume of class action lawsuits that are generally easy money for law firms [forbes.com] and, as shown by his very own data, don't award meaningful money to consumers.
While we're on the subject: NURSING HOMES (Score:1)
Neo-liberals rule (Score:1)
This is identity theft; not a consumer complaint. It's a crime in the legal statutes, yet the criminals can demand arbitration? I should be saying 'corporations don't choose what laws they obey' but obviously, in neo-liberal USA, they can.
Corporations are People (Score:2)
Lunatics and fanatics have the same rights (Score:1)