PCBs & Chemical Safety: Chemical Safety Bill Could Help Protect Monsanto Against Legal Claims

Yesterday a jury in St. Louis, MO awarded $17.5 million in damages to three plaintiffs and assessed $29 million more in punitive damages against Monsanto and three other companies in a suit here alleging negligence in the production of PCBs.

Despite this verdict on behalf of injured plaintiffs, chemical safety in America is on precarious ground. A new version of the Toxic Substances Control Act has passed both the House and Senate. While the new bill would be, by most measures,  a major improvement over the 40 year old existing TSCA, there is one glaring exception. PCBs. Polychlorinated biphenyls. PCBs are used to make everything from fluorescent lighting, to plastics, caulking and oil-based paints. Until it stopped production in 1977, Monsanto was the source of 99% of the polychlorinated biphenyls  used by U.S. industry.

PCBs have been demonstrated to cause cancer, as well as a variety of other adverse health effects on the immune system, reproductive system, nervous system, and endocrine system. These problems may not affect Monsanto however. The New York Times notes:

Facing hundreds of millions of dollars in lawsuits, the giant biotechnology company Monsanto last year received a legislative gift from the House of Representatives, a one-paragraph addition to a sweeping chemical safety bill that could help shield it from legal liability for a toxic chemical only it made.

Monsanto insists it did not ask for the addition. House aides deny it is a gift at all. But the provision would benefit the only manufacturer in the United States of now-banned polychlorinated biphenyls, chemicals known as PCBs, a mainstay of Monsanto sales for decades. The PCB provision is one of several sticking points that negotiators must finesse before Congress can pass a law to revamp the way thousands of chemicals are regulated in the United States.

Source: Chemical Safety Bill Could Help Protect Monsanto Against Legal Claims – The New York Times

Forced Binding Arbitration & Access to Justice

Imagine you sign a contract for a cell phone. You agree to pay $50 per month. At the end of the month you get your bill and it’s $200 instead of the agreed upon amount. Now, imagine you’re one of 10,000 customers that the phone company has done this to. You meet with a lawyer, you form a class and sue the phone company. A class action lawsuit is born.

Not so fast, says the phone company, you signed a contract. In the contract is an arbitration agreement. We can’t go to court, we must go to arbitration. And, by the way, there are no class actions in arbitration. You must proceed on your own. If you lose, you pay for your own legal fee plus the fees of the phone company. Sound fair?

The New York Times has published a three part series about forced arbitration clauses in consumer contracts. These clauses, slipped into contracts ranging from cell phones to nursing, strip a consumer from their ability to sue or form a class action. Instead, consumers are forced to arbitrate their cases.

I’ve written before about the dangers of forced arbitration. (See Class Dismissed: Concepcion and the End of Class Arbitration). Over the last few years, as the New York Times reports “it has become increasingly difficult to apply for a credit card, use a cellphone, get cable or Internet service, or shop online without agreeing to private arbitration. The same applies to getting a job, renting a car or placing a relative in a nursing home.”

Corporations are increasingly filing – and winning – legal motions to force plaintiffs in federal class actions out of the courts and into private arbitration hearings. In arbitration, plaintiffs must pursue claims as individuals and in private proceedings. The problem is that most damages are very low, often less than $100, while legal fees remain sky high. The Economic Policy Institute Explains:

Giving up the constitutionally protected right to sue in state or federal court is a big deal and is often the result of ignorance and deceit: millions of people have no idea the clauses are there in the fine print of contract provisions written in legalese that few individuals ever read or comprehend. They don’t find out they’ve lost their rights until they need them.

Individuals give up not just their right to go to court but all protections regarding the venue of any hearing their claim will receive (for example, the agreement might require arbitration in a city a thousand miles away). They might give up certain remedies and the right to appeal even if the arbitrator gets the law completely wrong, and give up the essential right to join with other victims to file a class action, especially important when each claim is small and no single individual could rationally pay to hire a lawyer and bring a lawsuit for such a small sum.

The myth is that arbitration is preferable because it allows individuals to resolve their grievances easily, quickly, and cheaply. In fact, arbitration can be more expensive for a plaintiff than a civil suit because instead of a small filing fee in court, the plaintiff will have to pay half of the arbitrator’s fee, or sometimes all of it if the arbitration clause includes a “loser pays” provision. Legal fees can be ruinous, and the Times story relates the case of a woman who owes $200,000 in attorney fees after losing a case in which her former employer allegedly destroyed evidence.

With businesses using forced arbitration, consumers are unwittingly giving up their right to sue in a traditional forum – the court room. As was the case in AT&T v. Concepcion. In AT&T v. Concepcion, customers said the company had promised them a free phone if they signed up for service, and then, when they didn’t get the free phone, charged them $30.22 for it anyway. While these damages may seem trivial, multiplied by the number of consumers affected, the damages would be significant as a class.

Forced to arbitrate as an individual over the $30 fee, the costs of arbitration and the risks of losing and paying legal fees for both sides, outweigh the benefits of proceeding through the process and remedying the wrong.

The costs associated with arbitration are too high and the risks too great for consumers to proceed and get the justice they deserve. For example, the data on consumer arbitration obtained by The Times shows that Sprint, a company with more than 57 million subscribers, faced only six arbitrations between 2010 and 2014.

Forced arbitration clauses are just another tool to prevent access to the courts and whittle away the rights of consumers.

via Forced binding arbitration robs workers and consumers of basic rights | Economic Policy Institute.

See also Arbitration Everywhere, Stacking the Deck of Justice – The New York Times.

Government may soon begin putting an end to forced arbitration clauses

arc_1The Consumer Financial Protection Bureau is examining so-called arbitration clauses in terms and conditions for financial products. Last week, the head of the bureau, Richard Cordray, sent the strongest signal yet that the regulatory whip soon will come down on banks and other lenders denying customers their day in court if they feel mistreated.

“By inserting an arbitration clause into their contracts, companies can sidestep the legal system, avoid big refunds and continue to pursue profitable practices that may violate the law and harm consumers,” he said in a speech to the American Constitution Society.

“Companies should not be able to place themselves above the law and evade public accountability simply by inserting the magic word ‘arbitration’ in a document and dictating the favorable consequences,” Cordray said. “Consumers should be able to join together to assert and vindicate their established legal rights.”

Forced arbitration has become a routine part of many companies’ dealings with customers, thanks to the U.S. Supreme Court, which has issued several rulings in recent years upholding the practice.But under the financial reform law enacted in 2010, the Consumer Financial Protection Bureau was empowered to study forced arbitration by financial services firms and to issue new regulations if deemed necessary. It now seems certain that rule changes are in the works.This would affect banks, credit card issuers and other firms falling under the agency’s jurisdiction.

It wouldn’t affect non-financial businesses that also inflict arbitration clauses on customers, such as phone companies, pay-TV providers, rental car firms and others.That would take an act of Congress.

Lawmakers recently introduced a bill in the U.S. Senate called the Restoring Statutory Rights and Interests of the States Act. It would forbid companies from making customers waive their right to sue or join a class-action lawsuit.

Source: Government may soon begin putting an end to forced arbitration clauses – LA Times

The Guilty Plea Effect in Civil Litigation

What happens when a party to civil litigation has pled guilty to a crime and the civil litigation arises out of the same set of facts as the criminal complaint? An admission against interest arises.

A plea agreement will have an effect in the ongoing civil litigation arising from the same action or occurrence. Generally, evidence of a prior criminal conviction is admissible in a civil proceeding as prima facie evidence of the facts upon which the conviction is based if those facts are relevant to some issue involved in the civil proceeding. Brown v. Green, 738 F.2d 202, 206 (7th Cir. 1984)

While tickets and other citations are generally admissible in Illinois, guilty pleas for intentional torts such as assault or battery are also admissible as admissions against interest. Specific to guilty pleas for assault and battery, the court in Galvan v. Torres, 8 Ill.App.2d 227, 232, 131 N.E.2d 367, 369, stated:

‘A plea of guilty to a criminal indictment for assault and battery is admissible in evidence in a civil case based upon the same assault and battery as it is an admission against interest. Young v. Copple, 52 Ill.App. 547; Cammarano v. Gimino, 234 Ill.App. 556.

Barnes v. Croston, 108 Ill. App. 2d 182, 184, 247 N.E.2d 1, 2-3 (Ill. App. Ct. 1969)

Further, Smith v. Shehan is illustrative of this issue as it pertains to an assault and battery conviction. In Smith,  Plaintiff , a Correctional officer, brought a state common law tort action against another correctional officer for assault and battery. Plaintiff moved for judgment on the pleadings as to defendant’s liability on the ground that his prior criminal conviction for battering plaintiff prevented him from denying facts necessary to hold him liable on battery claim. The Court, held that in a tort action for assault and battery, defendant was collaterally estopped, under Illinois law, from denying liability by his prior conviction for battering plaintiff; defendant was party to criminal case, whether he battered plaintiff was actually litigated in criminal action, resolution of that issue was necessary for determination of defendant’s guilt, and issues were identical in both cases. Smith v. Sheahan, 959 F. Supp. 841 (N.D. Ill. 1997) The court in Smith stated that a guilty plea is an admission and may be considered with the other evidence. Id.