December 2, 2014

Cleveland Plain Dealer Reports on St. John’s Arbitration Study

Jeff Sovern

Jeff Sovern

Cleveland Plain Dealer consumer affairs columnist Sheryl Harris reported on the St. John’s arbitration study in her column, Arbitration – what you don’t know about fine print can hurt you: Plain Dealing. Here is an excerpt:

Well, lawyers at St. John’s University Law School recently conducted [a study] and found that even when [consumers] know there’s an arbitration clause in a contract, they often don’t understand what it really means  —  even when they think they do know.

Researchers showed consumers a standard credit card contract with a binding arbitration clause and then asked them a series of questions.

The findings:

  • Most people didn’t realize there was an arbitration clause in the contract.
  • Of the 40-odd percent who spotted the clause, almost two-thirds believed – wrongly – that if the disputed amount was too big for small claims court, they could still go to common pleas or federal court.
  • Less than 9 percent both spotted the arbitration clause and correctly said it would prevent all consumers from going to [a] court [other than a small claims court] to resolve a dispute.

Remarkably, 87 percent of the 303 people who swore they’d never agreed to a contract that contained an arbitration clause were flat-out wrong

How did researchers know? They asked people if they did business with AT&T Mobility, Sprint, Verizon, PayPal or Skype – companies whose contracts routinely require consumers to agree up front that if they ever have an issue with the company, they can only resolve it through binding arbitration.

“We don’t know about the remaining 13 percent,” says law prof Jeff Sovern, one of the authors of the study. Sovern says the number of people who had unwittingly agreed to mandatory arbitration is likely higher because researchers asked consumers about contracts with those five companies, not about every company they did business with.

November 18, 2014

Goldweber and Calabrese Participate in Nationwide Conference Call with Consumer Financial Protection Board Director Cordray

On Wednesday, November 12th, Professor Ann Goldweber and Professor Gina Calabrese participated in a nationwide conference call with the Director of the Consumer Financial Protection Board, Richard Cordray.  Eleven students from the professors’ clinical course, Consumer Justice for the Elderly: Litigation Clinic, also participated in the call.  During the call, thirty law school clinics from around the country discussed problems their clients encountered in mortgage servicing and debt collection.  Professors Goldweber and 2L Samantha Ruppenthal engaged in dialogue with Director Cordray and CFPB attorneys regarding a mortgage servicer that is violating a Consent Order reached with the CFPB.  Professor Calabrese discussed New York’s new rules for default applications in consumer debt cases.  The call is part of a CFPB initiative to establish regular exchanges of information with consumer advocates.  The CFPB has encouraged law school clinics in particular to share information and ideas about illegal, unfair and deceptive practices encountered in their cases.

goldwebercalabrese

November 14, 2014

DiLorenzo’s Papers Published in New York Law Journal and Accepted World Congress of the International Society for the Philosophy of Law and Social Philosophy

Professor Vincent DiLorenzo’s article, “Congress Exempts Condominiums from the Vince Di LorenzoInterstate Land Sales Act,” was published in the New York Law Journal on November 12, 2014. The article examines the provisions of the Interstate Land Sales Act that allow purchasers to revoke contracts for the sale of condominiums when developers (a) have not complied with the registration and disclosure requirements of the Act, or (b) have not complied with the contractual requirements contained in the Act, including limits on available remedies for breach. HR 2600, passed in September and signed by the President, exempts condominiums from the registration and disclosure requirements of the Act. However, it is not clear if Congress intended to exempt condominium developers from the Act’s contractual requirements. This article explores that ambiguity in the statute and the courts’ interpretation of the scope of earlier exemptions that arguably extended to the Act’s contractual requirements.

In addition, Di Lorenzo’s paper, “Reason, Cognition and Emotion: A Study of Regulatory Standards and Enforcement Policy,” was accepted and will be presented at the World Congress of the International Society for the Philosophy of Law and Social Philosophy.

November 13, 2014

Greenberg Presents Paper at AALS Conference

Elayne Greenberg

Elayne Greenberg

Professor Elayne Greenberg presented her paper, “Fitting the Forum to the Pernicious Fuss: A Dispute System Design to Address Implicit Bias and ‘Isms in the Workplace” at the AALS Alternative Dispute Resolution Section’s 8th Annual Works-in-Progress Conference on November 8 at Southwestern Law School.

November 13, 2014

Recent Panel Remarks and Lectures by Barrett

John Barrett

John Barrett

On October 25th, Professor John Q. Barrett participated in a reenactment of the 1935 oral argument before the U.S. Supreme Court in A.L.A. Schechter Poultry Corp. v. United States, and then in a panel discussion, with Judges Gerard E. Lynch (2d. Cir.) and Stefan R. Underhill (D. Conn.), on the Supreme Court, President Franklin Roosevelt, and the constitutional powers of Congress, at the Federal Bar Council’s bench and bar retreat in the Poconos.  On October 29th, Professor Barrett spoke at the Sid Jacobson Jewish Community Center in Roslyn, New York, about the Nuremberg trials.  And on November 6th, he delivered a lecture, “Kristallnacht:  Perpetration, Comprehension & Accountability,” at a Kristallnacht commemoration sponsored by the Brandeis Association and the Queens Women’s Bar Association, held at the Queens Bar Association.

November 10, 2014

Barrett & Traub Write Judicial Biographies for the SDNY’s 225th Anniversary

Professor John Q. Barrett, assisted by Barbara Gellis Traub, former Head of Reference & Instructional Services at St. John’s Rittenberg Law Library, helped draft and edit biographical information on the 154 Federal Judges who have served on the United States District Court for the Southern District of New York and its predecessor, the U.S. District Court for the District of New York, from 1789 to the present. The Court was the nation’s first federal court and thus is nicknamed the “Mother Court.”

The judicial biographical entries are part of voluminous historical information that was distributed on thumb drives to guests at the Court’s 225th anniversary special session on November 4, 2014. This information soon will be available on the Court’s website.

The Court’s 225th anniversary will be celebrated throughout the next year, including in a series of public events and programs.

U.S. District Judges Deborah A. Batts and P. Kevin Castel ’75, Co-Chairs of the Southern District’s 225th anniversary celebration, recruited Barrett and Traub to assist with the biographies project.

John Barrett

John Barrett

Barbara Gellis Traub

Barbara Gellis Traub

November 10, 2014

Warner Presents on Cross-Border Insolvency in London

G. Ray Warner

G. Ray Warner

Professor Warner will deliver a presentation on the UNCITRAL Model Law of Cross-Border Insolvency at the INSOL Global Insolvency Practice Programme at the University of London on Monday November 10th.

November 10, 2014

Baum Joins Panel Discussion on Human Trafficking

Jennifer Baum

Jennifer Baum

Professor Jennifer Baum appeared at a panel discussion on human trafficking as part of “Shut Out Trafficking” week at St. John’s University on October 22. The panel followed a screening of “Not My Life,” a new documentary about the global business of child exploitation. Professor Baum discussed legal and practical concerns for identifying and serving trafficked children in New York City, and described her students’ recent work with unaccompanied immigrant children from Central America.

November 7, 2014

Greenberg Presents at Annual Bankruptcy Conference

Elayne Greenberg

Elayne Greenberg

Professor Elayne Greenberg presented “Mediation: Injecting Rationality To Facilitate A Rational Result in Bankruptcy Cases” at the Annual Bankruptcy Conference co-sponsored by the Capital Region Bankruptcy Bar and the Central New York Bankruptcy Bar Associations on October 24 at Cooperstown, New York.

November 4, 2014

St. John’s Arbitration Study Posted to SSRN

Professors Jeff Sovern, Elayne Greenberg, and Paul Kirgis, along with Yuxiang Liu, have posted a draft of their article, ‘Whimsy Little Contracts’ with Unexpected Consequences: An Empirical Analysis of Consumer Understanding of Arbitration Agreements, to SSRN. Here is the abstract:

Arbitration clauses have become ubiquitous in consumer contracts. These arbitration clauses require consumers to waive the constitutional right to a civil jury, access to court, and, increasingly, the procedural remedy of class representation. Because those rights cannot be divested without consent, the validity of arbitration agreements rests on the premise of consent. Consumers who do not want to arbitrate or waive their class rights can simply decline to purchase the products or services covered by an arbitration agreement. But the premise of consent is undermined if consumers do not understand the effect on their procedural rights of clicking a box or accepting a product.

This article reports on an empirical study exploring the extent to which consumers are aware of and understand the effect of arbitration clauses in consumer contracts. We conducted an online survey of 668 consumers, approximately reflecting the population of adult Americans with respect to race/ethnicity, level of education, amount of family income, and age. Respondents were shown a typical credit card contract with an arbitration clause containing a class action waiver and printed in bold and with portions in italics and ALLCAPS. Respondents were then asked questions about the sample contract as well as about a hypothetical contract containing what was described as a “properly-worded” arbitration clause. Finally, respondents were asked about their own experiences with actual consumer contracts.

The survey results suggest a profound lack of understanding about the existence and effect of arbitration agreements among consumers. While 43% of the respondents recognized that the sample contract included an arbitration clause, 61% of those believed that consumers would, nevertheless, have a right to have a court decide a dispute too large for a small claims court. Less than 9% realized both that the contract had an arbitration clause and that it would prevent consumers from proceeding in court. With respect to the class waiver, four times as many respondents thought the contract did not block them from participating in a class action as realized that it did, even though the class action waiver was printed twice in bold in the sample contract, including one time in italics and ALLCAPS. Overall, of the more than 5,000 answers we recorded to questions offering right and wrong answers, only a quarter were correct.

Turning to respondents’ own lives, the survey asked if they had ever entered into contracts with arbitration clauses. Of the 303 respondents who claimed never to have done so and who also answered a question asking whether they had accounts with certain companies that include arbitration clauses in their contracts, 264, or 87%, did indeed have at least one account subject to an arbitration clause.

These and other findings reported in this Article should cause concern among judges and policy-makers considering mandatory pre-dispute consumer arbitration agreements. Our results suggest that many citizens assume that they have a right to judicial process that they cannot lose as a result of their acquiescence in a form consumer contract. They believe that this right to judicial process will outweigh what one respondent referred to as a “whimsy little contract.” Our results suggest further that citizens are giving up these rights unknowingly, either because they do not realize they have entered into an arbitration agreement or because they do not understand the legal consequences of doing so. Given the degree of misunderstanding the results demonstrate, we question whether meaningful consent is possible in the consumer arbitration context.

 

Jeff Sovern

Jeff Sovern

Elayne Greenberg

Elayne Greenberg

Paul Kirgis

Paul Kirgis

 

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