Lesson learned about rationality, perhaps.

December 12, 2011 | By | 2 Replies More

I thought I was different.

I have a well-documented history of being more skeptical than the average person. At this website, for instance, I have vigorously attacked the hypocrisy of all politicians, regardless of party. In the spirit of letting the chips fall and seeking the truth, even if inconvenient, I’ve often taken positions contrary to family, friends and “country.” I tend to not be a joiner.

I have long-agreed with David Hume that “Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them.” Therefore, I tend to be on-guard regarding runaway emotions. I also agree with Jonathan Haidt’s conclusion that humans function like tiny lawyers attempting to control big emotional-laden elephants upon which they ride.

The observations of Hume and Haidt dovetail well with the findings of Antonio Damasio, who carefully examined rationality. See Descartes’ Error: Emotion, Reason and the Human Brain. Phineas Gage, a 19th century railroad worker who suffered brain damage to his pre-frontal cortex, couldn’t no longer connect emotion to decision-making. He’s what Damasio discerned from the evidence about Gage (and about modern-day people who suffered damage to the pre-frontal cortex): He “could no longer set priorities or make decisions. He had no sense of the relative importance of any situation.” His accident made him “rational.” Damasio further noted that this pure rationality “is helpless to make decisions; it paralyzes us. In fact, he proclaimed that “Rationality” is the way “brain-damaged people make decisions.”

I’ve known all of this for a long time, and I try to stay on guard that when I write that I will keep emotions in check enough that I can be seen as a trusted source of information. That’s why what I’m about to mention is embarrassing and frustrating to me.

Back on April 28, 2011, the night I read the U.S. Supreme Court Case of AT&T v. Concepcion, I became angry at the majority opinion, and I steamed full speed ahead and published an angry post at this blog (since deleted, for the reasons discussed below). I stand by many of the concerns I raised in that post, including the following:

The Court baldly declared that professional arbitrators are not competent to handle class actions, despite the fact that this same Court has long held that arbitrators are competent to resolve virtually any civil law case or issue faced by trial courts. The U.S. Supreme Court offered no evidence to support this alleged inability of arbitrators to handle class arbitrations; it simply made this up, dismantling two decades of precedent in the process. The Court declared that arbitrators are “not generally knowledgeable in the often-dominant procedural aspects of [class] certification,” despite the fact that numerous arbitrators are well-recognized as experts regarding the ins and outs of class certifications, that they are as competent to handle class cases as any judge, and that the parties to class arbitrations seek out these specialized arbitrators who have recourse to their own well-respected rules for class arbitrations (e.g., The American Arbitration Association has its own specialized class arbitrators to whom I’ve submitted cases).

The majority opinion justifies its decision by arguing that class arbitrations are allegedly more complex than “bilateral” arbitration (i.e., individuals submitting only their own claims, rather than individuals submitting claims on behalf of a class of similarly situated potential claimant). The fact that the U.S. Supreme Court makes this argument is stunning, given that this comparison is irrelevant. Of course a class arbitration is more complex than an individual claim; the relevant comparison, however, should have been between class arbitrations and class actions tried in court. There is no doubt among lawyers who actually try these cases that class arbitrations are more efficient than class actions tried in court. To paraphrase the Court’s own opinion (at page 14), “In a [class arbitration, as opposed to a class action litigated in court], parties forgo the procedural rigor and appellate review of the courts in order to realize the benefits of private dispute resolution: lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes.” Yes, indeed. The Court notes that an average class arbitration at AAA lasts almost two years (p. 14) without bothering to compare the average length of time it takes to litigate comparable class actions in trial courts . . .

The Court argues that class proceedings are too complicated for arbitrators, regardless of the substantive law involved. This is a mind-blowing conclusion by a Court that has long held (ever since Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), that arbitration agreements should be enforced in virtually any conceivable legal context. There has never before been any carve-out from the types of matters that private parties might seek to submit to arbitration; no type of civil litigation has ever before been deemed to be too complicated for arbitrators. Not until this week when the U.S. Supreme Court carved out all class actions. And consider that, pursuant to last year’s decision of Stolt-Nielsen v. AnimalFeeds, Inc, this same Court has expressed no qualms about allowing parties who consented in writing to submit any type of class proceeding to arbitration. What gives? Arbitrators are perfectly capable of handling these claims if the parties expressly consent to the class arbitration, but those same arbitrators supposedly lack competence if there is no express consent?

On page 15 of the Opinion the Court can’t imagine how Congress would have “envisioned” class claims being arbitrated (except when the parties expressly consent, of course). This is a blindered and mal-creative retrospective. Does the Court really think that back in 1925 Congress envisioned that huge corporations would be systematically defrauding huge classes of consumers who would then have no real-life remedy because these claims lack sufficient heft (think of illegal fees of less than $500 or even less than $2,000) to justify an individual to hire an attorney to prosecute individual claims for individual persons? . . .

On page 15-16, the Court is concerned that class arbitration “increases risks to defendants.” Let’s get this straight. If a defendant has committed the same fraudulent act over and over, ripping off thousands of similarly situated consumers, it should be afraid of a class action. Repeated illegalities should have an increased risk to such a defendant. If it is liable to each customer individually, a big company should be made to face the entire class in a single efficient collective action.

The Supreme Court repeatedly expresses concern about protecting corporate defendants, whereas it fails to express any concern about the millions of consumers who have now lost their right to seek redress for consumer fraud by pursuing class claims. In its opinion, the United States Supreme Court doesn’t express any concern that the lion’s share of these victims will now lack any realistic opportunity to have their claims resolved.

These problems with AT&T still disturb me, months after first reading AT&T.

Based on my frustrations, however, the legal conclusions I drew were not accurate. I wrote at this website that AT&T would slam the door shut for all consumer class actions. This is not an accurate reading of AT&T. I had violated a basic interpretive rule: that one should look to the actual holding of a case, setting aside the other comments the court might have added as dicta.

I understand why I was bent out of shape, and I was not alone, for what it is worth. Consumer advocates from coast to coast were sounding the alarm that this case was a deadly blow to consumer class actions. Those in the business community were similarly crowing that AT&T would be the end of consumer class actions . . . except that these conclusions are not true, and the truth became apparent days and weeks after AT&T, after the smoke cleared.

My biggest error had been to publish a post on my reaction to AT&T while I was still angry about the U.S. Supreme Court decision. I was angry at the gratuitous pro-big-business dicta. I was still angry that the Court’s decision in Citizen United and in a long string of other cases. My frustration was heightened because I had read reports that Clarence Thomas had accepted a $25,000 gift while on the bench. I now know that the alleged ethics violations are far worse, in that Justice Thomas had not been reporting his wife’s income from a conservative think tank, and that he had been the beneficiary of a $100,000 advertising blitz by Citizen’s United while working to be confirmed by Congress, yet had not recused himself on that case. I was frustrated that no rules of ethics apply to justices on the United States Supreme Court. I was frustrated, and I continue to be frustrated, with the direction the United States is taking in many ways, all of which more strongly than ever suggest that the People are no longer running the country and corporate interests are in charge. On the night I first read A&T, I was overwhelmed by the thought that the U.S. Supreme Court majority was intentionally doing its part to promote the pro-corporate agenda of the United States. So much so, that I lost sight of what appears to be the holding of the court.

None of the above justifies my mistake in over-reading AT&T—it was an embarrassing legal blunder on my part. Concepcion v. AT&T should not be the end of consumer class actions except in cases where the arbitration clause involved is similar to the one employed by AT&T—it was a gold-plated clause that offered the following:

  • AT&T will always pay all costs of arbitration for non-frivolous claims.
  • AT&T waived any right to seek attorney fees from the consumers.
  • AT&T guarantees $7,500 to consumers to whom the arbitrators award more than AT&T’s offer of settlement
  • AT&T agrees to pay double attorney fees to consumer attorneys where the arbitration award exceeds AT&T offer of settlement.

The AT&T clause is dramatically different than most arbitration clauses. The AT&T clause might actually invite at least some consumers to file cases against AT&T. The AT&T clause would allow at least some consumers to “vindicate” their rights, which is the test that the U.S. Supreme Court case had had for decades under the Federal Arbitration Act. The trial court in AT&T considered evidence supporting these arguments by AT&T. In sum, Conception v. AT&T should not apply to most arbitration clauses that prohibit class actions.

My mistake in over-reading AT&T became clear to me days after posting on AT&T. It just so happened that I was handling an appeal in another case that was then accepted by the U.S. Supreme Court and remanded to the Missouri Supreme Court to review in light of AT&T. To my embarrassment, my opponent pasted some of my rash end-of-the-world assertions (those I had made the night I first read AT&T) into its own appellate brief, claiming that I had officially taken the position that AT&T spelled the absolute end of consumer class actions in the United States. Admittedly, that is how I felt on the night I first read AT&T, but that is not how I felt after coming to my senses. Because my opponent pasted my rash words from this blog into its own brief (attributing them to me) it likely caused many judges on the Missouri Supreme Court to wonder why I had written such statements. It was because I had just read AT&T for the first time when I wrote those words, and I was angry, which clouded my judgment. Intense emotion turned me into an idiot. David Hume wouldn’t be surprised in the least.

In the case I was handling, there was ample evidence that a non-gold-plated arbitration clause used by that merchant would prevent consumers from ever having a chance to resolve their cases in any forum. For this reason, AT&T’s holding should not determine the outcome of my case (and it should not determine the outcome of many consumer cases). If you’d like to see the detailed arguments my law firm made before the Missouri Supreme Court, you can read the briefs and even hear the oral arguments here. There were actually two cases that my firm presented to the Missouri Supreme Court on the same day, and the issues were quite similar in both cases: Robinson v. Missouri Payday and Brewer v. Missouri Title Loans. Stay tuned for the ruling by the Missouri Supreme Court.

Since seeing my anger-induced words pasted into my opponent’s appellate brief, I’ve often thought of the adage: If you’re angry, go ahead and write a letter but don’t send it right away. Let it sit; don’t send it until the next day, if at all, and only if it seems to say exactly what you really want to say.

I’d like to say I learned my lesson. Time will tell.


Category: Consumer Protection, Court Decisions, Law

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (2)

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  1. The fact that you got mad was a good thing, Emotions, can be powerful weapons, when it comes to combating your enemy.

    The fact that your enemy took your words and used them against you in court, shows you, that he took an honest man and slammed him.

    To him, it was sport. But you have learned that now. You won’t do it again.

    Most people have done what you have done. Nevertheless, as somebody once said,…all it takes for tyranny to succeed is for a good man to do nothing.

    You DID something, and this nobody wishes more men would. Do you stay silent? Did Otis stay silent in Boston?

    If we all don’t get really mad, but just turn over on our “reasonable” butts, being afraid to speak their minds… then the Kleptocracies will continue.

    They are very few men in government NOT currupt. I liked to see MORE angry men…not less.

  2. Sorry, me again..

    THIS is what we need…lessons from Daniel Hannan.


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