Feb. 26, 2015

Upcoming Congressional Hearing on State of Class Actions Should Consider How Recent Restrictions Damage Individuals’ Access to Justice

Banding Together to Seek Redress for Corporate Wrongdoing Often Is Only Option for Consumers and Employees

WASHINGTON, D.C. – Congress must seriously consider the damaging consequences class-action restrictions have on consumers and employees, Public Citizen said in a letter (PDF) to the U.S. House Judiciary Subcommittee on the Constitution and Civil Justice.

As the subcommittee meets Friday to discuss the state of class actions 10 years after the enactment of the Class Action Fairness Act, Public Citizen urges lawmakers to use the hearing to address the restrictions on individuals’ access to justice. Specifically, they should consider the detrimental impact that additional restrictions on class actions in an already challenging system would have on their constituents and the American marketplace.

Over the past decade, consumers’ ability to band together to seek remedies in court has been stifled by a widespread corporate practice called forced arbitration. In forced arbitration, companies and employers bury terms in the fine print of non-negotiable contracts – including cell phone service, credit cards accounts, nursing home admission, banking, auto loans and leases – that require disputes to be settled in private arbitration instead of in open court. Many forced arbitration clauses also ban class actions.

“Perhaps the worst elements of arbitration clauses are the prohibitions that prevent consumers from banding together over shared wrongs,” said Christine Hines, consumer and civil justice counsel with Public Citizen’s Congress Watch division. “For low-dollar grievances, class actions are often the only economically feasible way for consumers and employees to seek redress for corporate wrongdoing.”

“With class-action bans, corporations are able to sidestep valid legal claims and evade answering for practices that cheat consumers, victimize employees and damage the American economy,” the letter concludes. “The subcommittee must seriously consider the consequences of restricting class actions in any way, because without this critical consumer protection, corporations do not fear the repercussions of their risky business practices that ultimately affect us all.”

Read the letter (PDF).

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