June 21st, 2013

Why Arbitration is Rigged Against Consumers

The United States Supreme Court put arbitration back in the news yesterday, by deciding a case in favor of American Express and against a restaurant (American Express v. Italian Colors Restaurant). The restaurant had a $40,000 claim, but to prove it would cost about $1M. They wanted, therefore, to proceed as a class action with others similarly aggrieved by American Express policies, as that is what class actions are made for: allowing small claimants to aggregate to make justice economically viable.

Justice Scalia, writing for the majority, says boo hoo and too damn bad if the courthouse doors were slammed in their face due to a contract:

“Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the antitrust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.”

Justice Kagan, writing in dissent, calls Scalia on what he did:

Here is the nutshell version of this case, unfortunately obscured in the Court’s decision. The owner of a small restaurant (Italian Colors) thinks that American Express (Amex) has used its monopoly power to force merchants to accept a form contract violating the antitrust laws. The restaurateur wants to challenge the allegedly unlawful provision (imposing a tying arrangement), but the same contract’s arbitration clause prevents him from doing so. That term imposes a variety of procedural bars that would make pursuit of the antitrust claim a fool’s errand. So if the arbitration clause is enforceable, Amex has insulated itself from antitrust liability—even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse.

And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.

I won’t get into further details, as it is covered elsewhere, such as here:

The Supreme Court Just Made It Easier for Big Business to Screw the Little Guy (Mother Jones)

Details: American Express v. Italian Colors Restaurant (SCOTUSBlog)

SCOTUS Decision in American Express v. Italian Colors (CivPro and Fed Courts Blog)

I write instead to briefly explain why pro-consumer groups hate arbitration agreements that are forced onto consumers in the fine print of countless agreements.

Corporations appear regularly in front of arbitrators, but unlike judges, litigants get to actually pick who they appear before. True, the choice of arbitrator must be done with the consent of the consumer, but the consumer is likely to appear only once and not be the frequent flyers that corporations are.

Arbitrators have, therefore, two customers in front of them; one that regularly hires them to arbitrate and the other appearing as a one-off. Who does the arbitrator want to make happy?

You might think that the arbitrator would just do what is fair, but fair is a flexible term. Arbitrators know that if a defendant-corporation deserves to be hammered in the verdict, and they do exactly that in their decisions, then the company is likely to blacklist the arbitrator from their “approved” list.

If you were corporate counsel, wouldn’t you be tracking which arbitrators have given favorable verdicts and which ones not? Wouldn’t you be selecting only the favorable ones? Wouldn’t you have an “approved” list?

And if you are an arbitrator, wouldn’t you want to be on that list with a constant flow of business?

The consumer, of course, doesn’t have the advantage of appearing often, and even with counsel, the counsel is unlikely to be have as much business in front of the arbitration company as the corporation.

There are times, of course, when a plaintiff may want to arbitrate, such as circumstances where speed is of the essence due to age, or the cost of experts exceeding the value of the case. That’s fine, so long as it’s elective.

But that isn’t what’s happening lately as corporations rush to put compulsory arbitration agreements in every consumer contract they can find.

Congress should act to reverse this decision. Given the staggering sums of money that corporations give to candidates, of course (courtesy once again of the Supreme Court in Citizens United v. Federal Election Commission), that is unlikely.

June 20th, 2013

What Government Data is Public? What is Private?

My last two posts dealt with Freedom of Information requests to state government for data. Both decisions said that governments were allowed to evaluate the release of information based on the reasons for the requests, balancing out the privacy concerns of those whose information was sought.

The New York decision prohibited the transfer of mugshots and arrest data to a mugshot website (whereupon fees would be charged for their removal), and then a SCOTUS decision came on lawyers’ requests for Department of Motor Vehicle data so that they could solicit people for a class action against auto dealerships.

In other words, some government information can be made public, some remains private, and some is semi-public depending on who does the asking.

Into the comments came a response from a long-time commenter and mostly-retired software engineer, Old Geezer (a/k/a Tom Cikoski, bio and head shot at the bottom). I thought it should be elevated to a guest blog, so with his permission, here it is:
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In a sense all this talk of public versus private versus private/public versus public/private data becomes mooter by the day. (Mooter?)

The only data that is and typically remains totally private any more is that which has not ever been rendered into electronic form. Any type of data store that is connected to the internet is subject either to innocent revelation (as in “I forgot to PW that folder”) or to deliberate hacking by folks much smarter than the defenders of the data store.

So the particular data store is not internet connected? Well, for those we have individuals called “leakers” these days who take “thumb drives” and trade them, brimming with data, for money, or for publicity.

And to think, Daniel Ellsberg had to stand over a hot copier for hours in order to leak!

It isn’t just ambulance chasers who go after such data, it’s also the pizza parlor down the street that has discovered the putative value of spam email or junk phone calling.

Two years ago we went from land line telephone to VoIP telephone at home. Within months we became the target of multiple daily telemarket and scam calls — so much so that I had to buy a call blocking device to filter them out. Even now, my call blocker, which holds 80 blocked numbers, must be recycled about every six weeks to deal with the new numbers that attack on an almost daily basis.

Don’t even get me started on spam email.

And this all stems from data which, at least in some sense, should be considered private. How do insurance companies know when I reach certain age milestones? They process the DMV data from the state. How do health insurers know my Medicare status? The government supplies everything they need — with a smile.

So, your “private” data is not only subject to public view, but also to public sale as well.

Note that our home number is on the so-called “Do Not Call” list and has been since the beginning. So every one of those annoying phone calls is in some sense illegal. That does not stop the calls. Legality is irrelevant.

And so, great and gallant judiciary, amuse yourselves by fighting that evil data protection windmill. Unless something takes down that mug shot business as a form of extortion, or the ambulance chasing as an ethical violation, the relevant data, IMHO, won’t stop flowing, SCOTUS or not.

Tom Cikoski, who considers himself an Old Geezer, is an avid blog reader and sometime blog commenter using that same sobriquet in a variety of fora. Although mostly retired from software engineering, he still consults on IT issues part-time, and also dabbles in film-making, comedy performance, playing drums in a Scottish pipe band, ranting about various topics, and other assorted forms of geezer foolishness.

June 19th, 2013

SCOTUS KOs Lawyers Trying to Use DMV Data To Solicit

Today’s question: If the government collects information about you, and makes it public to some people, does that mean it has to make the same data available to everyone?

If the question looks familiar it’s because it was the subject of a post I made last week about mugshots and arrest data that a mugshot website wanted to place on the web (so it could then charge people to take the information down). That answer, according to New York trial judge interpreting a local statute, was no due to the privacy interests of the arrestees.

The post gave rise to a spirited debate in the comments on the issue of whether a government could selectively decide who to disclose this semi-pubic data to. In other words, is there such a thing as semi-public data?

And now, just days later, the United States Supreme Court has weighed in with a similar issue. This time it deals with data about the citizenry from departments of motor vehicles. That data is available to attorneys, but not the general public, under a litigation exception in the law..

In Maracich v. Spears, enterprising lawyers figured they could mine the DMV data of South Carolina to find potential clients for a class action against certain car dealers claiming the dealers violated state consumer potection laws.

But not so fast, sayeth our highest court. Just because some people can get the data (lawyers involved in litigation) doesn’t mean anyone can get it simply because they want to solicit others for a lawsuit. Those folks were not involved in litigation, they were trying instead to drum up business to start litigation. In other words, the Supreme Court says that the idea of semi-public information is not a problem.

These were, of course, different statutes being interpreted; the first being New York’s Freedom of Information Law and the second a federal motor vehicle law designed to protect drivers from exposure of private information. But both dealt with issues of privacy for individuals regarding data that the government had, and in both cases that data was being protected from public dissemination the statutes that the courts enforced.

The various governments we elect and live under have tons of data on us, of course, and the issue of what to disclose and who can access it is an ongoing issue. Who really wants to government, after all, to release all of our social security numbers, tax returns and Medicare records? And yet, sometimes that data can come out, either in individual or aggregated forms to those doing studies.

But just because the government has data that might be public doesn’t mean the public gets it. The privacy rights of the public sit there on the other side of the scale.

June 14th, 2013

NY Judge KOs Request for Mugshots/Data by Mugshot Company (Updated)

Some of you are aware of a cottage industry whereby “entrepreneurs” scrape the websites of local law enforcement, put mugshots on the web, and then, for a small but tasty fee will take them down when an aggrieved individual complains. I wrote about this last year (as did Scott Greenfield, see also Reuters).

No, I don’t know how such people can live with themselves by creating misery for others just so they can turn a buck. But that is only a secondary point of this post.

As first reported by the New York Law Journal ($), a New York judge shot down the Freedom of Information request of Kyle Prall, who owns one of those extortion-like sites. In Prall v. New York City Department of Corrections, Justice Darrell Gavrin denied the request, which came to her attention when Prall sued for the information after being denied by the Department of Corrections.

The website, BustedMugshots.com (no link, no juice),publishes the names, addresses, dates of birth, arrest records and photos of inmates. The charge is $68 to have the data removed.

Given the problems with identify theft and the fact that much of the information is private, the court ruled that the Department did not act in an arbitrary and capricious manner in using the magic word ‘no.” The court wrote that the Department of Corrections:

demonstrated a particularized and specific justification for withholding the dates of birth and addresses of inmates. Respondents assert that the dates of birth and addresses of inmates are not relevant or essential to their work, as it is primarily charged with the duty of detaining inmates and preparing them for successful reentry into the community. This personal information has been reported to respondents in confidence and the information is not relevant to the ordinary work of the New York City Department of Corrections.

…

In view of the privacy interests at stake, disclosure of the records of respondents containing dates of birth and home addresses, and other personal information of inmates could easily be used to facilitate identity theft, thereby resulting in both economic and personal hardship to inmates. The dates of birth of inmates, who enjoy a lesser degree of privacy, have been protected from disclosure under FOIL. The decision of respondents to deny petitioner access to dates of birth and addresses of inmates was not arbitrary and capricious nor was it an abuse of discretion.[citations omitted for blog post]

And Prall didn’t get the pictures either, and that was based on his own conduct in trying to use the information to inflict harm. As much as I hate using block quotes from opinions

As to that branch of the petition which seeks photographs, respondents properly withheld photographs of inmates as the disclosure would constitute an unwarranted invasion of privacy resulting in personal and/or economic hardship to inmates. Specifically, respondents contend that “the department is not privy to the circumstances surrounding any trials, court appearances, and possible cooperation with enforcement” and the release of inmate photographs could expose them to harm. Furthermore, inmates will suffer economic hardship if their photographs are released because petitioner intends to post these photographs on his website and then demand a $68.00 fee to remove each photograph. Given the earning capacity of inmates, the $68.00 fee is quite steep. If the fee is not paid, an inmate’s photograph and other information will remain on the website, causing personal and economic hardship due to the notorious nature of the photograph which would be readily available to a prospective employer, creditor, potential landlord, or the like.

Respondents also claim inmate photographs are exempt from FOIL disclosure because disclosure will endanger the lives and safety of inmates and their family members. In support of their argument, respondents submitted the affidavit of E. Perez, Assistant Chief of Security for Department of Corrections. Mr. Perez states that he has more than 20 years experience and explains that the majority of violence in jails is gang-related. He opines that the release of photographs of inmates would increase gang violence targeted at inmates and their family members. Personal information such as names, addresses and photographs of gang members in jail, which is ordinarily not available to gang members outside the prisons, would be more readily available through exposure on the internet; this exposure would endanger the lives and safety of inmates. Interestingly, petitioner did not rebut the affidavit of Mr. Perez.

The only real question I have on this, why would a lawyer be a party do such a scummy project, whose only purpose is the creation of misery so that someone can profit? In this case Prall was represented by John Campbell of Tilem & Campbell. It is one thing to represent someone bad who’s been arrested, but assist him in creating misery by representing him in a civil suit? As I wrote just yesterday, you have to learn to say no to potential clients.

Update: Just days after this post, the United States Supreme Court weighed in on another case dealing with semi-public governement data: Sometimes the government will give it out and sometimes not, depending on who you are and what the data is being used for.

June 13th, 2013

The Most Important Word

The call comes in a thousand iterations. It often looks something like this, with my quick analysis in parenthesis:

My kid was hurt on the playground. Is there anything I should do? (Parent wants to know they did everything possible for the child.)

Could my spouse’s disease have been treated earlier? (Spouse wants to know they did everything possible.)

Someone said mean things about me on the Internet that are defamatory, can you help me? (Rage, often justifiable.)

That car ran a light and almost injured me. (Almost doesn’t count.)

You know where this is going, right? Lawyers that work on contingency receive all kinds of calls; they may be from the “how much is this worth” crowd, but quite often the motivation is emotional, not financial.

The word every lawyer needs to know is this: No. Say it out loud, say it again, say it often.

Part of the reason is because taking poorly vetted cases will drive the lawyer to bankruptcy. But also important is to save the potential client from themselves. A few minutes explaining the Streisand Effect, for instance, may make perfectly clear to the potential defamation litigant why that cease and desist letter may catastrophically backfire.

When the injured person is a child, saying no isn’t particularly easy. Especially when you have your own and can truly empathize. But the ill-taken case will almost always lead to disappointment, making not only your situation worse, but theirs.

Interestingly, the most common response to the the word no is gratitude. The potential litigant simply didn’t know what was involved or how things worked or called because a friend insisted, or simply needed to know that they did all they could under the circumstances. Most people are appreciative when a clear response comes back.

I’m asked, every so often, if I could be a juror in a personal injury case. Defendants would no doubt want to boot me from the jury ASAP assuming I would be overly sympathetic and would have a tough time saying no to an injured litigant. But that would only be because they don’t know how much experience I have at turning people away.

No is the most important word. Use it and use it often.