Consumer Reports Blasts Arbitration Clauses as Too Common and Patently Unfair
10/02/2015 // Hartford, CT, USA // cttriallawyers // Neil Ferstand // (press release)
The Connecticut Trial Lawyers Association ongoing effort to transmit a variety of civil justice news items to Connecticut legislators reflecting the importance and extent to which civil justice and the civil justice system enters our lives. This week legislators were given the opportunity to learn more about mandatory forced arbitration clauses, which have become all too common in consumer contracts. Consumer Reports blasted this corporate practice as unfair to consumers and suggested consumers look closely at their cell phone, banking or credit card contracts. In further news, legislators learned more about the skyrocketing cost or prescription drugs and the corporate shenanigans that keep them high. In addition, one story included new information about “Right to Try” laws that increase access to experimental drugs for terminally ill patients. Experts at the Annals of Internal Medicine have discovered these laws may be ineffective and deny patients federal safety protections.
The [Forced] Arbitration Clause Hidden in Many Consumer Contracts
Last year a firestorm erupted after General Mills, the maker of Bisquick, Cheerios, and other food brands, changed the legal terms on its website, requiring that all disputes related to the purchase or use of any of its products be resolved through mandatory arbitration. Legal experts and consumers were outraged that by downloading coupons or entering a company-sponsored sweepstakes or contest they could be waiving the right to sue. General Mills ended the practice days later, writing on its blog, “We’ve listened—and we’re changing our legal terms back.”
Sound outrageous? You probably do business with many firms that tuck forced arbitration clauses into their terms and conditions. They are in hundreds of millions of consumer contracts, according to the National Association of Consumer Advocates. Amazon, Groupon, Netflix, and Verizon are among the companies whose contracts have the clauses. They’re in the fine print of terms for car loans and leases, credit cards,checking accounts, insurance, investing accounts, student loans, and even certain employment and nursing home agreements; you can be legally bound to forced arbitration by signing a contract or clicking “I agree” on a website. Once you do, if you eventually have a complaint against one of those companies, you will be obligated to take your dispute to an arbitration firm.
Uber’s Plan to Keep Driver Complaints Out of Court
The company bets on an arbitration clause in drivers’ rights case
Uber says its drivers should enjoy the freedom that comes with setting their own hours, as long as that freedom ends at the courthouse steps. As its California drivers battle to be treated as employees with benefits—rather than independent contractors—the world’s most valuable startup is arguing they can’t go to trial. According to the contracts most drivers signed, Uber says, disputes have to go through private arbitration.
The company’s position has taken on greater importance since a Sept. 1 decision by U.S. District Court Judge Edward Chen in San Francisco. Chen granted class-action status to a lawsuit brought by two Uber drivers seeking reclassification as employees. That means thousands more of the company’s 160,000 drivers in California could join the suit. The drivers are seeking reimbursement for expenses and tips, which would open the door to a minimum wage, meal breaks, workers’ compensation, and unionization. On Sept. 15, Uber asked the U.S. Court of Appeals for the Ninth Circuit in San Francisco to take up “the leading case raising urgent questions about the classification of sharing-economy workers” and reverse Chen’s decision.
Prescription Drugs Are So Expensive That People Die Waiting to Get Them
Martin Shkreli, the 32-year-old head of Turing Pharmaceuticals, stoked Internet outrage this week when it was reported that he raised the price of the 62-year-old anti-parasite drug Daraprim to $750 per tablet, from $13.50. Then he defended himself, Gekko-style, by saying, “I am a capitalist who plays to win.”
On Wednesday, he said he’ll lower the price to an undisclosed amount, but not before the parasite-free-organs-are-for-closers attitude drew widespread attention to the rising cost of prescription drugs. The prices of existing medications for everything from tuberculosis to blood pressure have rocketed up in recent years after the drugs were acquired by pharmaceutical companies.
“[Daraprim] is such a perfect, crystalline example of everything that can be done,
Right-to-try laws may be ineffective for terminally ill patients, experts say
Reuters (9/29, Rapaport) reports that right-to-try laws, which are intended to increase terminally ill patients’ access to experimental therapies, may be ineffective and deny patients federal safety protections, according to experts in a recent article published in Annals of Internal Medicine. The experts challenge whether the laws have actually increased access to experimental drugs and raise concerns over whether the laws interfere with compassionate-use programs currently available.
Complex Car Software Becomes the Weak Spot Under the Hood
The sophistication of new cars brings numerous benefits — forward-collision warning systems and automatic emergency braking that keep drivers safer are just two examples. But with new technology comes new risks — and new opportunities for malevolence.
The unfolding scandal at Volkswagen — in which 11 million vehicles were outfitted with software that gave false emissions results — showed how a carmaker could take advantage of complex systems to flout regulations.
Carmakers and consumers are also at risk. Dr. Patel has worked with security researchers who have shown it is possible to disable a car’s brakes with an infected MP3 file inserted into a car’s CD player. A hacking demonstration by security researchers exposed how vulnerable new Jeep Cherokees can be. A series of software-related recalls has raised safety concerns and cost automakers millions of dollars.
VW facing growing outrage, mounting legal challenges following debacle
In continuing coverage of the Volkswagen emissions debacle affecting more than 11 million vehicles worldwide, the AP (9/28, Krisher) reports on the increasing outrage against the auto manufacturer, saying that the company will need to pay more than the $7.3 billion it has set aside for the scandal. According to the AP, experts said that the company must find a balance between appeasing regulators, ensuring customer satisfaction and minimizing cash expenses. A cheap fix could antagonize customers further by reducing performance, while a better solution, that maintains performance, could cost as much as $20 billion.
The AP (9/28) also reports on the significant legal problems likely to face Volkswagen, noting that state and federal officials are investigating questions regarding “Who knew about the deception, when did they know it and who directed it.” According to David M. Uhlmann, former chief of the Environmental Crimes Section at the Department of Justice, “the company and any individuals involved could face criminal charges under the Clean Air Act, and for conspiracy, fraud and false statements.” William Carter, a former general counsel of the California Environmental Protection Agency, said in a statement, “They’re facing a tsunami of possible state and federal enforcement actions, and a potential large number of violations — including administrative, civil and criminal.” Commenting on the investigative procedure, Gregory Linsin, a former environmental crimes prosecutor at the Justice Department, said, “If a software package such as this were intentionally designed to defeat the emissions testing, there may well be email traffic, meetings, records that would establish that intent.”
USA Today (9/27, Phelan, 5.23M) reports that the act of premeditation separates the recent Volkswagen debacle from prior emissions scandals, noting, “Volkswagen set out to cheat emissions tests and sell cars that would damage human health and the environment.” In contrast, “other automakers seemed legitimately baffled and eager to address their crises.”
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