With Congress in recess and the fate of the Consumer Financial Protection Bureau’s arbitration rule in the hands of the U.S. Senate, the agency’s leader and the U.S. Chamber of Commerce took to the op-ed pages and the airwaves this week to make their cases for and against a ban on contract terms that prevent class action lawsuits.
On Thursday, two days after CFPB Director Richard Cordray published a New York Tmes op-ed—“Let Consumers Sue Companies”—the Chamber released an ad assailing the arbitration rule as a boon to plaintiff’s lawyers. The video opens with a cup of hot coffee, with a voice stating, “Trial lawyers, first they sue saying coffee’s too hot, then they sue saying iced coffee has too much ice.”
“Now an out of control government agency wants to give them more power. Government bureaucrats are pushing a rule that takes away arbitration and replaces it with more lawsuits,” the voiceover continues. “It’s time the Senate stood up to this rogue government agency and their trial lawyer pals.”
Cordray’s op-ed pushed back against an effort to repeal the CFPB’s rule through the Congressional Review Act—a legislative tool Republicans have used more than a dozen times so far this year to undo regulations finalized in the waning days of the Obama administration. The House passed a bill in July to tear up the arbitration rule, leaving it up to the Senate to follow suit under the CRA’s 60-legislative-day deadline.
Cordray, amid speculation he might run for Ohio governor, took aim at the notion that arbitration better serves consumers by giving them a faster, less expensive form of dispute resolution. Cordray also touted the CFPB’s arbitration study, which found that class actions return “more money back to more people” than individual lawsuits, he wrote.
The average payouts are higher in individual lawsuits, Cordray acknowledged. “But that is because very few people go through arbitration, and they generally do so only when thousands of dollars are at stake,” he wrote.
“Almost nobody spends time or money fighting a small fee on their own. As one judge noted, ‘only a lunatic or a fanatic sues for $30,’” he wrote.
“When a bank charges illegal fees to millions of customers and then blocks them from suing together, a result is not millions of individual claims, but zero. So the bank gets to pocket millions in ill-gotten gains.”
Here are some other big regulatory developments from the week:
Transportation Secretary Elaine Chao was bullish out of the gate on self-driving cars, but her department has effectively pumped the brakes on efforts to advance autonomous technology on the roads. The Trump administration is operating without several key safety regulators, and an industry advisory panel has fallen inactive. [Recode]
Meanwhile, automakers and tech companies are facing a long road ahead in their attempt to reform transportation regulations premised on an assumption that may soon be rendered obsolete: that a human is steering. [Bloomberg]
Colorado’s governor says U.S. Attorney General Jeff Sessions is blowing smoke with his missives to states airing “serious concerns” about their ability to regulate legalized marijuana. “When abuses and unintended consequences materialize, the state has acted quickly to address any resulting harms,” wrote Gov. John Hickenlooper, who’s seen as a possible Democratic candidate for president. [The Cannabist]
Wells Fargo is on the war path against a fired employee who claims she was retaliated against after trying to blow the whistle on what would blossom into the sham-accounts scandal. The bank has appealed a Labor Department decision ordering reinstatement and $577,500 in back pay. [National Law Journal]
Goldman Sachs, with alumni in key Trump administration roles, is seizing the moment and looking to roll back post-crisis financial regulations exacerbating its current trading funk. Though still highly profitable, the bank’s investment operation is a shadow of its former self. [Financial Times]
The Uber engineer whose blog post documented a hostile work environment at the ride-hailing giant has taken her story to the U.S. Supreme Court. In an amicus brief with the high court, Susan Fowler criticized the class-action waiver Uber had her sign as a condition of employment. [National Law Journal]
The Federal Reserve’s rarely-used in-house administrative court is beginning to come under fire, in a challenge similar to those raised against the Securities and Exchange Commission’s in-house proceedings. A defense lawyer for a banker facing an industry ban called the Fed’s proceeding “an affront to our justice system.” [New York Times]