Mandatory-Binding Arbitration Swindles Consumers and Employees of their Rights

As Congress nears their Holiday break, consumer advocates and GTLA remain hopeful about a bill authored by Georgia’s Congressman Hank Johnson and Wisconsin Senator Russ Feingold amending the Federal Arbitration Act.

Countless corporations and companies put a mandatory-binding arbitration clause into their consumer and employee contracts that disallow a defrauded or abused employee or consumer the right to a jury trial—a right guaranteed by the 7th Amendment of our Constitution.

A recent article in Mother Jones magazine about this consumer issue provides several examples of how this affects consumers. The author of the article and her husband had attempted to a buy a used-car. After finding one to suit their needs, they perused the contract. They were surprised to find out that if they had signed on the dotted-line they would not have only purchased a car, they would have signed their Constitutional Rights away if it turned out that they were defrauded by the dealership. Perhaps the car had been totaled by its previous owner; perhaps the car was a lemon.

The couple would have been forced into mandatory-binding arbitration, a costly and in some cases, it can be argued, biased process favoring corporations, leaving them stuck with the result. Unlike our modern court system which allows one side or the other to appeal to a higher court if one feels like they did not receive a fair shake, mandatory-binding arbitration is a one-time deal.

The article provides several other examples of this corporate practice. The restaurant Hooters only hires women after they sign a clause that says they cannot go to a jury for a claim of sexual harassment. Halliburton and the pharmaceutical company Pfiser employ a mandatory-binding arbitration clause in their contracts.

Support from both sides of the aisle has been garnered because of a particularly egregious area that mandatory-binding arbitration can be found—nursing homes. Families trust the facilities to care for their aging parents. Sadly, stories abound of nursing home abuse and neglect. To circumvent a family taking the facility to court over abuse, many nursing homes put into their contracts the mandatory-binding arbitration provision, prohibiting a family to seek justice on behalf of an abused loved one.

The amending of the Federal Arbitration Act would get rid of the mandatory-binding arbitration clauses in employment and consumer contracts. Arbitration would still be an option, if both parties agreed, but so would the Constitutional right of a trial by a jury of one’s peers—a right that GTLA supports and acts to preserve as it is a bedrock of this nation’s foundation.

Illinois Caps on Noneconomic Damages Struck Down by County Circuit Court

Judge Diane Larsen of the Cook County Circuit Court in Illinois declared the state’s law on caps on non-economic damages in medical malpractice cases unconstitutional last Tuesday, November 13th. The decision, Lebron v. Gottlieb Memorial Hospital, found that the caps, enacted by the Illinois legislature at $500,000 per case for doctors and $1 million per case for hospitals, intrude upon the responsibilities of the judicial branch of government—thereby violating the guarantee of a separation of powers.

The Illinois legislature has capped non-economic damages three separate times over thirty-one years—and the courts have found each of those efforts to be unconstitutional. Robert S. Peck of the Center for Constitutional Litigation, PC (CCL), argued the case for the plaintiffs. Also representing Abigail Lebron in the matter were Chicago lawyers Jeffrey Goldberg and Todd Smith, as well as CCL lawyer Francine Hochberg. This case will likely be appealed and heard by a higher court

The Ten Most Dangerous Toys

Today’s article, “Unsafe Toys on Shelves,” in the AJC lists the ten most dangerous toys according to Georgia Trial Lawyer and founder of Keenan’s Kids Foundation, Don Keenan. With the holiday season approaching, the attorney and advocate for children is hopeful the list will help families as they purchase gifts for their children.

Magnetix 75 Piece Assortment Collector’s Tin $19.99 by Mega Brands Ages 6+ Purchased at Toys R Us HAZARD: Potential for choking injuries. Magnets that are swallowed can connect in the intestines, resulting in tissue damage, infection, and death.

Rocket Pocket Miniature Electric Motorcycle $183.22 by Razor USA, LLC Ages 12+ years Purchased at Wal-Mart HAZARD: Potential for severe bodily injuries or death.

Heelys $29.99 - $79.99 by Heeling Sports LTD Ages 5+ Purchased at Kids Foot Locker HAZARD: Potential for severe head injuries and injuries to others.

Creepy Crawlers Bug Maker $19.99 by Flying Colors Ages 8+ years Purchased at Toys R Us HAZARD: Potential for electric shock and burn injuries.

Pirates of the Caribbean: At World’s End Sensor Sword with Magic Ring $17.99 by Zizzle Ages 5+ Purchased at Target HAZARD: Potential for eye and other bodily injuries.

Disney Princess Small Dolls - Favorite Moments $19.99 by Toys R Us Ages 3+ Purchased at Toys R Us HAZARD: Potential for choking, small pieces.

Lil’ Snoopy $7.99 by Fisher Price Age 1+ Purchased at Toys R Us HAZARD: Potential for Strangulation.

Elmo’s World: Talking Cell Phone $9.99 by Fisher-Price Ages 18+ months Purchased at Toys R Us HAZARD: Potentially dangerous levels of noise.

Yo-Yo Squeeze Toy $1.29 by Ja-Ru, Inc. Ages 4+ Purchased at KB Toys HAZARD: Potential for strangulation injuries.Hello Kitty Flavored Lip Balms and Nail Polishes $7.99 by Sanrio & Townley Cosmetics Age 5+ Purchased at Toys R Us. HAZARD: Contains the potentially toxic chemical Phthalate. Children can ingest toxins put on lips and fingernails.

To learn more about Keenan’s Kids Foundation and unsafe toys, you can find them on the web at www.keenanskidsfoundation.com

Lawyers Defend Justice in Pakistan

By: Jay Harvey
President of the Texas Trial Lawyers Association

There is an allegory in today’s news that Americans should note. For every person who has joked of lawyers at the bottom of the ocean, who has academically argued that America would be better if there were no more lawyers – there is a foreboding reminder in Pakistan of that for which they are truly advocating.

The protests in the streets of Pakistan this week are something different from others we have watched. The protests in the streets of Pakistan this week are lead by citizens armed only with their knowledge and commitment to the rule of law. The protests in the streets of Pakistan are lead by lawyers.

And the next time someone attacks our system of justice, its judges, and the lawyers that work to serve and protect it and their clients every day – remember this week in Pakistan.

Merk settles with victims of deadly drug Vioxx

For Immediate Release
AAJ Press Room

Washington, DC— American Association for Justice (AAJ) CEO Jon Haber made the following statement today, following the announcement that an agreement between drugmaker Merck and attorneys for thousands of Vioxx victims has been reached:

From 1999 to 2004, when it was pulled from the market, Merck sold $11 billion of Vioxx around the world to people who were purposefully kept unaware of the drug’s dangers. According to Food and Drug Administration scientist Dr. David Graham, the drug contributed to as many as 139,000 heart attacks and as many as 55,000 deaths in the United States.

American Association for Justice attorneys fought ceaselessly for this result – initiating the first suits, being the driving force to uncover Merck's misconduct and negligence and leading the litigation nationwide. These attorneys took on a powerful multi-billion dollar corporation, holding them accountable for producing an unsafe product. The attorneys in the multi-district litigation and coordinated state court proceedings all deserve our thanks and congratulations for their tireless efforts.

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Unsafe toys for kids still on shelves

For Immediate Release
AAJ Press Room

“Can’t Protect the Safety of Children” (CPSC) Chair Nancy Nord Should Resign

Washington, DC— Failing to protect the safety and health of America’s children, Consumer Product Safety Commission (CPSC) Chair Nancy Nord should immediately resign, the American Association for Justice said today.

“More than 13 million recalled toys on the market should never have been there in the first place, but they were because Nancy Nord was asleep at the helm,” said Jon Haber, American Association for Justice CEO. “When not asleep, she was flying around the world on the tab of the very industries she is supposed to be regulating. She should be working on keeping unsafe toys from ever reaching the hands of our children instead of allowing corporate manufacturers to put unsafe products on America’s shelves at a record pace.”

Last month, Nord opposed the efforts of Congress to increase her agency’s budget and give it more enforcement tools to stop dangerous foreign toys and other products from flooding the American market.

Nord has even opposed a long overdue ban on lead in children's toys. Lead, most commonly found in bright-colored paints, has been shown to cause developmental delays, impaired hearing and kidney damage, particularly in children.

Last week it was revealed that Nord had accepted free trips sponsored by the fireworks industry and toy manufacturers to a wide range of holiday destinations including New Orleans, Spain and a golf resort in Hilton Head. The corporations were among those whose products are regularly reviewed by the CPSC.

“From Aqua Dots to Thomas the Tank Engines, Americans have lost all faith that Nancy Nord puts the interests of consumers ahead of the businesses that she has sworn to regulate,” said Haber. “She has taken their free trips while allowing millions of dangerous toys into our stores, and it is long past time now for true strong leadership at the CPSC that will protect our children.”

The Voters in Washington State Cast their Ballots for Consumer Rights

All eyes were on the state of Washington yesterday. Consumer advocates around the nation waited anxiously as voters turned out to voice their opinions by casting ballots on Referendum 67. It seems that Washington, like many other places, has had problems with insurance companies denying or delaying fair and just claims. The referendum allowed the people to decide what should happen.

Referendum 67 basically stated that if an insurer, acting in bad faith, unreasonably denies a legitimate claim, that insurer could be liable for up to triple the amount of damages. An article in today’s Seattle Times said that the Insurance Industry spent a record-breaking $11,400,000 in an attempt to defeat the referendum. More than half of that amount came from the usual suspects-- State Farm, Farmers Group, Safeco Insurance and Allstate Insurance.

Trial Lawyers were among the Consumer Advocates supporting the bill. “Trial lawyers argued the new law would help level the playing field between consumers and insurance companies. They said that under present law, which only allows consumers to sue for actual damages, it benefits companies to lowball and drag out claims.”

Apparently the consumers agreed. Roughly 60% of voters approved Referendum 67. It would seem that unscrupulous business practices by insurance companies do indeed have consequences.

The Insurance Lobby has vowed to attempt to overturn the voice of the people in their next legislative session. But for now, the people of Washington State should enjoy their victory. The people have cast their ballots—and the rights of consumers have emerged victorious.

Administration Assault on Railroad Safety Must End

For Immediate Release

Administration Assault on Railroad Safety Must End, AAJ DeclaresProposed State Law Preemption Contradicts Congressional Intent,
Jeopardizes Public Safety and Victims’ Access to Justice

Washington, DC— The American Association for Justice (AAJ) today declared that the Bush Administration must end its effort to prohibit railway accident victims from pursuing legal action against railroad companies responsible for their injury or death. The latest proposed federal railroad safety regulations continues an unprecedented assault on state safety standards, directly challenging Congressional intent and jeopardizing public safety and victims’ access to justice.

“Embracing corporate irresponsibility, the Administration is blatantly ignoring the recent law passed by Congress and instead proposing a slap in the face to consumer safety,” said AAJ CEO Jon Haber. “This is yet another cynical effort allowing major corporations to evade accountability in the courts when people are killed and injured by their negligence and wrongdoing.”

Despite Congressional action earlier this year to clarify that federal law does not pre-empt state law or causes of action, the FRA has ignored the legislation and instead effectively claimed the power to regulate with the force of law without regard to the will of Congress.

In the preamble to the proposed rule (Docket No. FRA-2006-26175, Notice No. 1) the FRA added language claiming that “[s]ubject to a limited exception for essentially local safety or security hazards, its requirements will establish a uniform Federal safety standard that must be met, and state requirements covering the same subject are displaced, whether those standards are in the form of state statutes, regulations, local ordinances, or other forms of state law, including state common law.”

While in its comments on the proposed regulation the AAJ stated it believes that the language in the preamble has no substantive effect, it must be withdrawn to avoid conflict and possible misinterpretation with the Congressional intent clarifying the issue recently. That legislation stated “that 49 U.S.C. 20106 does not preempt State law causes of action where a party has failed to comply with the Federal standard of care established by a regulation or order issued by the Secretary of Transportation or the Secretary of Homeland Security, its own plan or standard…, or a State law, regulation or order that is not incompatible with 49 U.S.C. 20106(a)(2).”

A copy of AAJ’s letter to the FRA demanding the removal of the pre-emption language is available upon request.

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As the world's largest trial bar, AAJ (formerly known as the Association of Trial Lawyers of America) promotes justice and fairness for injured persons, defends the constitutional right to trial by jury, and strengthens the civil justice system through education and disclosure of information critical to public health and safety. Serving members worldwide, AAJ provides attorneys with the information and professional assistance they need to serve clients successfully and protect the democratic values of the civil justice system.

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