November 20, 2007

Party at Joan's

Earlier this month, the Wall Street Journal ran an editorial accusing us of being hand-puppets of their favorite boogie men– the trial lawyers–because we oppose binding mandatory arbitration.  According to the Journal, our work to preserve the constitutional right to a trial by jury makes us all cabernet-swilling sell-outs. 

In her published letter to the editor, Public Citizen President Joan Claybrook sets them straight: 

"Party at Joan’s"
November 17, 2007; Page A9

Your Nov. 7, broadside ("Party at Ralph’s") on arbitration was baseless. We
oppose mandatory not voluntary arbitration requirements buried in the fine print of consumer contracts because they shred consumers’ legal rights in favor of a secret, expensive, business-dominated system.

The consumer attorneys attending a reception at Public Citizen’s office are
legal aid and private attorneys who toil in some of the least glamorous
corners of the law. They see firsthand the unfairness of this
industry-created system to avoid accountability. They work for consumers
harmed by home foreclosures, truth-in-lending violations, unfair debt
collection practices, predatory lending, auto dealer fraud and other
marketplace abuses.

To acquire a credit card, buy a home or car, open a bank account, use a cell
phone or get cable television, consumers usually must sign a contract
mandating arbitration to settle disputes. A mere signature effectively
eliminates their constitutional right to the public courts, extinguishes the
right to appeal, favors corporate repeat offenders whom arbitrators want to please and imposes substantial upfront costs.

"Studies" to justify mandatory arbitration, often cited by industry,
misleadingly lump together people who voluntarily enter arbitration with
those given no choice. In contrast, Public Citizen’s recent report evaluated
34,000 consumer mandatory arbitration cases in California. The results:
Consumers lost 94% of the time.

No wonder the Journal editorial page and the paper’s business advertisers
love this stacked deck. Your justification for it rests on the deeply flawed
Tillinghast Tower Perrin report on the cost of litigation. Yet Tillinghast
admits its numbers are not actual costs: Almost a quarter are for insurance
industry administrative costs, and most are associated with auto insurance.
Conservative jurist Richard Posner challenges Tillinghast estimates as
"fictitious."

Amazingly, the Journal, which lauds a free market, opposes the Arbitration
Fairness Act, even though it would allow consumers to freely choose or
reject arbitration and not be coerced into it. Congress should move quickly
to enact the bill.

Finally, please note that Ralph Nader left Public Citizen more than 25 years
ago, during which time I have led the organization, which has grown into a
potent force for consumer good. Thus, in the future, please reference our
events as a "Party at Joan’s."

Joan Claybrook
President
Public Citizen
Washington, D.C.