Saturday, October 31, 2015

What it means to be business-friendly

Andrew Koppelman

It is now well established that the Roberts Court is extremely business-friendly, but this way of putting it masks the fact that there are different ways of being business-friendly.  Some of these subvert what is valuable and honorable about business. 

Today’s New York Times reports the increasingly widespread use of arbitration clauses in consumer contracts, with the Supreme Court’s encouragement, to insulate businesses from class action suits.  The consequence is that the misbehavior that such suits target – small thefts and abuses that affect large numbers of consumers, producing millions of dollars in illicit profits – is insulated from any legal remedy.

Among the lawyers who devised this clever trick was one John G. Roberts.  He later provided the crucial vote to interpret the Federal Arbitration Act to shut down consumer and employment discrimination suits, in defiance of the intentions of the act’s authors. 

Doubtless class action suits can be a nuisance for businesses, and sometimes they’re not meritorious.  But when they are entirely blocked, really nasty business practices can be conducted with impunity.  The Times describes one case in which Sprint allegedly imposed roaming charges for customers’ cellphone calls from their homes.  If this was true, each individual suffered a roughly $20 loss, far too little to be worth suing for on an individual basis, even though it was worth quite a bit to Sprint.  (Sprint’s successful legal argument was that it did not matter if it was true.)

In the world that the Court’s arbitration jurisprudence has brought about, businesses that do not swindle their customers for small sums are foolishly leaving money on the table.

Business is a good and honorable pursuit because, in a free market, you can feel confident that your good or service is making your customers better off.  If you weren’t somehow improving the world, you wouldn’t be making any money.  But the Court doesn’t care if you’re honest.  If you’re in business, the Court is on your side.

There has been a notorious tendency, in some police departments, for officers to refuse to inform on corrupt or brutal cops.  I suppose you could say that this is “police-officer-friendly.”  A similar guild mentality led many leaders of the Catholic Church for years to cover up priests' sexual abuse of minors.  One might perhaps call that “priest-friendly.”  But isn’t that a silly way to talk?   The best people in both professions understood that this willful concealment spread the disgrace from these few malefactors to the entire profession.  You don’t protect a corrupt cop just because he’s a cop.  You don’t protect a predatory priest just because he’s a priest. 

For the same reason, you don’t protect a cheating businessman just because he’s a businessman.  Honest people in that profession should repel the Court’s embrace with disgust.

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