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For the term "concepcion".
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Vanderbilt Law Review, Volume 67, Number 4

The Vanderbilt Law Review is pleased to announce the publication of our May 2014 issue:

 

ARTICLES

Peter B. Rutledge & Christopher R. Drahozal, “Sticky” Arbitration Clauses? The Use of Arbitration Clauses After Concepcion and Amex, 67 Vand. L. Rev. 955 (2014).

Jane K. Stoever, Enjoining Abuse: The Case for Indefinite Domestic Violence Protection Orders, 67 Vand. L. Rev. 1015 (2014).

 

ESSAY

Hon. J. Harvie Wilkinson III, In Defense of American Criminal Justice, 67 Vand. L. Rev. 1099 (2014).

 

NOTES

Michael Deshmukh, Is FINRA a State Actor? A Question that Exposes the Flaws of the State Action Doctrine and Suggests a Way to Redeem It, 67 Vand. L. Rev. 1173 (2014).

Laura Emmy Malament, Making or Breaking Your Billion Dollar Case: U.S. Judicial Assistance to Private International Arbitration Under 28 U.S.C. § 1782(a), 67 Vand. L. Rev. 1213 (2014).

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Misunderstanding General Mills

On April 15, General Mills added language to its website which purported, “in exchange for benefits, discounts,” to subject consumers’ claims for use of General Mills products to arbitration and a class-waiver. General Mills, notably, was free to sue in court at will. When the Times noted the change, General Mills reversed course, stating:

[W]e never imagined this reaction. Similar terms are common in all sorts of consumer contracts, and arbitration clauses don’t cause anyone to waive a valid legal claim. They only specify a cost-effective means of resolving such matters. At no time was anyone ever precluded from suing us by purchasing one of our products at a store or liking one of our Facebook pages. That was either a mischaracterization – or just very misunderstood.

 Like Jeremy Telman, I found the emphasized sentence to be mysterious. There are only two ways to square the historic facts with “mischaracterization — or just very misunderstood” claim:

(1) General Mills thinks that “suing us” and “brining a claim in our bespoke arbitral forum” are the same thing; or

(2) General Mills believes that liking “one of our Facebook pages” isn’t the same as “joining our sites as a member [or] joining our online community.”

The first claim is sophistry, the second is frivolous. Roderick Palmore, GC of General Mills, Chicago Law grad, and head of compliance, had a bad week.

But what’s triply irritating about this whole saga is the lack of precision in the Times and elsewhere as to what, exactly, is wrong with the terms. General Mills is right to point out that many consumer contracts contain arbitral class action waivers, though many do not.  Contrary to the other speculation, there’s nothing per se illegal about provisions which shift costs in litigation. General Mills’ arbitration proceeding is actually quite generous about cost shifting, waiving a filing fee for disputes under $5000, and paying for the arbitrators themselves. Though proceduralists generally recoil from arbitration trumping procedure, what’s obviously at stake here isn’t individuals losing “their” right to sue, it’s class action lawyers losing their right to act as private attorneys general in quasi-regulatory cases. The ultimate question here – are class actions in federal court required for consumer protection – is harder than the commentariat has acknowledged.

But there is a legal problem with these particular Terms.  I don’t think they create a contract which binds consumers. Here’s the now-deleted triggering paragraph:

In exchange for the benefits, discounts, content, features, services, or other offerings that you receive or have access to by using our websites, joining our sites as a member, joining our online community, subscribing to our email newsletters, downloading or printing a digital coupon, entering a sweepstakes or contest, redeeming a promotional offer, or otherwise participating in any other General Mills offering, you are agreeing to these terms.

The problem is that most people who participate in such activities are probably not actively required to click to agree to these terms, and consequently aren’t bound to them under traditional (or Principles of Software Contracts) doctrinal rules. They will lack notice, and consequently not be contractually engaged. Even the FAA requires a contractually enforceable arbitration clause to subject claims to binding arbitration – such terms can’t be imposed absent agreement. That is, the terms are unenforceable not because of their content but because of the process of their adhesion.

General Mills obviously knows this. Indeed, I bet that Mr. Palmore has a memo in his file from some aGC, or associate at a law firm, saying so.  But he proceeded with the term rollout anyway because he knows that the issue will be required to be presented to an arbitrator first under the FAA. [Update: I'm informed that assent issues are instead usually reserved to courts in the first instance.]  Maybe that arbitrator will ignore the law!  And, he hopes, the in terrorem effects of the purported class-waiver of the clause will sufficiently deter plaintiffs in large false-labeling cases so as to make the terms’ eventual defeat cost-justified.

Or, to put it differently, contract law provides a clear path to enforceability of terms just like these. General Mills attempt to shortcut that path should be seen as an attempt to leverage consumers’ ignorance of the law, and lawyers’ risk aversion, to drive down claims. It’s bad – not good – news for consumer advocates that General Mills withdrew this sally. It would have been a excellent test case of the limits of Carnival Cruise and Concepcion.

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Stipulated Damages, Exculpatory Clauses and Unconscionability

On re-reading Discover Bank v. Superior Court (Cal. 2005) I found myself getting hung up on a conceptual problem you might be able to help me with.  The Discover Bank court considered the validity of class action arbitration waivers. Holding such waivers unconscionable as a matter of law, the court halted (that is, until Concepcion) arbitration’s inexorable conquest of consumer litigation.  The court reasoned was that such waivers presented issues of both procedural and substantive unconscionability.  Procedural, the waivers were default-forcing “bill stuffers” and consequently not meaningfully chosen.  Substantively, “they may operate effectively as exculpatory contract clauses . . . because . . . damages in consumer cases are often small . . and the class action is often the only effective way to halt and redress [wrongdoing.]“

The question I have is what distinguishes “exculpatory clauses” – typically thought to be against public policy – from ordinary “stipulated damages” clauses, which are subject to reasonableness review. I unaware of any scholarship that tries to define exactly what stipulated damages are (and are not). Consider two possibilities:

  • To the extent that stipulated clauses are broadly defined, so as, for example, to include bespoke procedure, courts’ permissive treatment of stipulated damage clauses would seem to then imply vastly more private-party control over remedies than the traditionally-narrow scope that the term stipulated damage implies.
  • But perhaps such clauses are narrowly defined – that is, the stipulation must relate only to damages flowing from the contract (i.e., a term that limited parties’ ability to seek specific performance would not count as a stipulated damages clause, nor would a waiver of damages for a tort). In that case the Discover Bank court’s categorical move is more defensible, but it’s not obvious that the line between damage and remedy makes sense analytically.

A third possibility is that stipulate damage reasonableness review is limited to scenarios where some remedies remain on the table, regardless of whether the remedy arises out of a claim related to the contract or not; the categorical public policy bar from Discover Bank applies when all remedies are precluded.  Discover Bank is, again, a bad case for that claim, since not all contract remedies were precluded, only those which would deter future harms.

Anyway, it’s a puzzle.  Thoughts?

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Illinois Law Review, Issue 2012:4

University of Illinois Law Review Logo

University of Illinois Law Review, Issue 2012:4

Please see our website for past issues

Articles

A Floating NAV for Money Market Funds: Fix of Fantasy? – Jill Fisch & Eric Roiter (PDF)

Veggie Tales: Pernicious Myths About Patents, Innovation, and Crop Diversity in the Twentieth Century – Paul J. Heald & Susannah Chapman (PDF)

Contemporary Meaning and Expectations in Statutory Interpretation – Hillel Y. Levin (PDF)

“Healthism”: A Critique of the Antidiscrimination Approach to Health Insurance and Health-Care Reform – Jessica L. Roberts (PDF)

David C. Baum Memorial Lectures on Civil Rights and Civil Liberties

Moving the Strike Zone: How Judges Sometimes Make Law – Vaughn R. Walker (PDF)

Notes

Never a Lost Cause: Evaluating School Finance Litigation in the Face of Continuing Education Inequality in Post-Rodriguez America – Kerry P. Burnet (PDF)

Beyond Michigan v. Bryant: A Practicable Approach to Testimonial Hearsay and Ongoing Emergencies – Adam A. Field (PDF)

Avoiding the Parade of Horribles: A Revised and Unified Fraud-Created-The-Market Theory of Presumptive Reliance Under Rule 10B-5 – Zachary M. Johns (PDF)

Consumer Class Actions After AT&T v. Concepcion: Why the Federal Arbitration Act Should not be Used to Deny Effective Relief to Small-Value Claimants – Charles Gibbs (PDF)

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The University of Chicago Law Review Volume 79, Issue 2

Articles

 

Which Science? Whose Science? How Scientific Disciplines Can Shape Environmental Law
Eric Biber

Suing Courts
Frederic Bloom & Christopher Serkin

After Class: Aggregate Litigation in the Wake of AT&T Mobility v Concepcion
Myriam Gilles & Gary Friedman

States of Bankruptcy
David A. Skeel Jr

 

Comments

 

The Antitrust State Action Doctrine and State Licensing Boards
Ingram Weber

 

Book Reviews

 

Binding the Executive (by Law or by Politics)
Aziz Z. Huq
A Review of “The Executive Unbound: After the Madisonian Republic,” by Eric A. Posner and Adrian Vermeule

Combating Contamination in Confession Cases
Laura H. Nirider, Joshua A. Tepfer, & Steven A. Drizin
A Review of “Convicting the Innocent: Where Criminal Prosecutions Go Wrong,” by Brandon L. Garrett

New York Times Financial Advice: Be an Unpaid Intern Through Your 20s (Then Work till You’re 100)

Jason Mazzone has already addressed the main shortcomings of the latest N.Y. Times article by David Segal on law schools. I’d like to situate it as part of a neo-liberal ideology developing at the Times and other scriveners for the powerful.

If you pair the basic message of Segal’s piece (“law students and professors aren’t doing enough to raise corporate profits”) with that of Ed Glaeser’s anti-retirement musings in the same pages (“work into your 90s”), the ideology starts to emerge. Labor economist Mark Price pithily suggested it:

Law schools couldn’t possibly teach the wide range of firm specific skills that law firms need . . . . And yet you have a writer [pushing] propaganda that the big law firms are tired of paying for on the job training.

On the other hand it is at least comforting to know that law firms are not that different from firms in Manufacturing or Health Care[;] that is[,] they would prefer that somebody else pay for the skills that make them profitable.

This is a classic problem of uneven bargaining power familiar since the 1920s.* Why are wages falling while productivity is rising? Because firms realize they can fire current workers, shift their duties (unpaid) to frightened current employees, and reap the profits of having one person do the work of many. It’s another form of “shadow work” that contributes to the time bind so many Americans find themselves in. When 65% of economic gains go to the top 1% of the population, it’s not too hard to discern this dynamic.
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Harvard Law Review, 125: 1 (2011)

Harvard Law Review

Volume 125 · November 2011 · Number 1

 

The Supreme Court 2010 Term

FOREWORD
Neutral Principles, Motivated Cognition, and Some Problems for Constitutional Law
Dan M. Kahan

COMMENT
Fairness in Numbers: A Comment on AT&T v. Concepcion, Wal-Mart v. Dukes, and Turner v. Rogers
Judith Resnik

LEADING CASES

FIRST AMENDMENT
Establishment Clause — Taxpayer Standing: Arizona Christian School Tuition Organization v.Winn

Freedom of Speech — Categorical Exclusions: Brown v. Entertainment Merchants Ass’n

Freedom of Speech — Mixed Public-Private Speech: Snyder v. Phelps

Freedom of Speech — Campaign Finance Regulation: Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett

FOURTH AMENDMENT
Exigent Circumstances Exception: Kentucky v. King

Material Witness Statute: Ashcroft v. al-Kidd

Right to Informational Privacy: NASA v. Nelson

FIFTH AMENDMENT
Self-Incrimination Clause: J.D.B. v. North Carolina

SIXTH AMENDMENT
Confrontation Clause: Bullcoming v. New Mexico

EIGHTH AMENDMENT
Prison Population Reduction Order: Brown v. Plata

SEPARATION OF POWERS
Displacement of Federal Common Law: American Electric Power Co. v. Connecticut

FEDERAL PREEMPTION OF STATE LAW
Agency Deference: Williamson v. Mazda Motor of America, Inc.

Immigration Law: Chamber of Commerce v. Whiting

Tort Law: Bruesewitz v. Wyeth LLC

PERSONAL JURISDICTION
Stream-of-Commerce Doctrine: J. McIntyre Machinery, Ltd. v. Nicastro

42 U.S.C. § 1983
Postconviction Access to DNA Evidence: Skinner v. Switzer

Scope of Municipal Liability: Connick v. Thompson

FREEDOM OF INFORMATION ACT
Personnel Exemption: Milner v. Department of the Navy

PATENT ACT OF 1952
Standard of Proof: Microsoft Corp. v. i4i Ltd. Partnership

STATISTICS
The Statistics

RECENT PUBLICATIONS
Recent Publications

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SCOTUS Arbitration Symposium

The SCOTUS blog hosts an impressive symposium on the law of arbitration. A score of pieces from active participants in the practice and literature are collected, covering a wide range of vital topcis. 

Among my favorites is this one by Hiro Aragaki of on how the Court’s jurisprudence is a regression to status, not an embrace of contract.  My own piece explores the costs of the Court’s misleading habit of packaging its cases in this area in the rhetoric of freedom of contract. 

Some pieces (e.g., Jean Sternlight, Brian Fitzpatrick) rivet closely on the future of class actions in light of the recent AT&T v. Concepcion case while others range more broadly over the Court’s approach to the field (e.g., Thomas Stipanowich, Myriam Gilles).

Reading these pieces reinforces a view, held by many and summed up by Cliff Palefsky in his contribution, that the Court’s jurisprudence in this area is “one of the low points in the Court’s history.” In my view, that is charitably put.

Invisible Hand or Hidden Fist?

In his press conference last week, Ben Bernanke concluded on an upbeat note. He had high hopes for a US recovery, since he believed that the Great Financial Crisis (GFC) of 2008 hadn’t taken from the US any of its basic productive capacity.

Whatever the merits of that view, the GFC did highlight debilitating trends in US finance infrastructure that have been intensifying for years. In this week’s Businessweek, Hernando de Soto (with Karen Weise) highlights one of the most important: the opacity of key markets and relationships. With scant exaggeration, de Soto warns that the US is on its way to levels of uncertainty more common in developing and communist countries:

During the second half of the 19th century, the world’s biggest economies endured a series of brutal recessions. At the time, most forms of reliable economic knowledge were organized within feudal, patrimonial, and tribal relationships. . . . The result was a huge rift between the old, fragmented social order and the needs of a rising, globalizing market economy.

To prevent the breakdown of industrial and commercial progress, hundreds of creative reformers concluded that the world needed a shared set of facts. . . . The result was the invention of the first massive “public memory systems” to record and classify—in rule-bound, certified, and publicly accessible registries, titles, balance sheets, and statements of account—all the relevant knowledge available, whether intangible (stocks, commercial paper, [etc]), or tangible (land, buildings, boats, machines, etc.). Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: “economic facts.”

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Supreme Court Arbitration Rhetoric v. Reality and AT&T

Lawyers keep telling clients that arbitration is a matter of contract, not coercion. That follows Supreme Court rhetoric that’s belied by Supreme Court practice.  The Court’s pending case in AT&T Mobility v. Concepcion gives the Court a final chance to resolve the gap between its talk and action concerning arbitration. 

 I doubt, however, the Court will seize the opportunity.  Instead, the Court likely will continue to tell us that its arbitration jurisprudence is merely applied contract law, while its applications will continue to coerce people into arbitration because the Court has established a national policy favoring arbitration. 

That is the lamentable assessment provided in my new article on the subjectRhetoric versus Reality in Arbitration Jurisprudence: How the Supreme Court Flaunts and Flunks Contracts (and Why Contracts Teachers Need Not Teach the Cases).

As with practicing lawyers, legal scholars have generally ignored this rhetoric-reality gap too, many routinely repeating that arbitration is all about contract (a notable  exception is David Horton).  As a teacher of Contracts for 20 years, I began to hear this rhetoric last summer, beginning with my receipt of a reprint of an Illinois Law Review article by noted arbitration scholar Thomas Stipanowich

In a comprehensive review of the state of arbitration law and practice, the piece criticized editors of Contracts casebooks for paying too little attention to arbitration and especially to how the attention given was often extremely negative. With modest exceptions, including in Ian Ayres’ casebook, Contract law books and courses have not generally treated arbitration much and the treatment often is in the context of illustrating doctrines like unconscionability or lopsided terms not comporting with reasonable expectations of a community. 

I began following pending Supreme Court cases on the subject and scrutinizing those handed down in preceding terms. I found the talk about contracts and contract law intriguing because it made it sound as if arbitration was at the center of contract law and that contract law was at the center of arbitration law. That made it seem irresponsible for me, Contracts casebook editors, and other teachers, to leave arbitration at the margins of the Contracts course or outside it altogether.

Alas, the truth is that contract and contract law have so little to do with what happens in arbitration jurisprudence, particularly compared to Court rhetoric, that it would confuse or mislead students taking Contracts to provide it as an illustration. To that extent, arbitration warrants the glancing treatment in the Contracts course it gets, followed by an optional upper-level course.  

Among the many costs of the Court’s rhetoric-reality gap are those manifest in the AT&T case, on which the Court is now struggling to write an opinion.

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