by Simon Lazarus, Senior Counsel to the Constitutional Accountability Center
Wells Fargo’s bogus accounts mega-fraud enabled consumer champions to spotlight the permissive legal environment that led the bank’s top management to believe they could get away with it. In congressional hearings, Democrats in particular pressed Wells CEO John Stumpf on the bank’s use of mandatory arbitration clauses in their standard-form, non-negotiable contracts. Such clauses typically force consumers and employees to sign away their rights to challenge any form of company illegality in court, or to band together with other victims to seek class relief from small-bore, large-scale fraud like that perpetrated by Wells Fargo. After the Senate hearing, six Senate Democrats observed in a letter to Stumpf, that “There can be little doubt . . . that the ability to force customers into secret arbitration proceedings allowed Wells Fargo to continue its outrageous practices with impunity for far too long.”
Now, with President Trump’s nomination of Judge Neil Gorsuch to the Supreme Court, and Senate Judiciary Committee hearings set for March 20, a new opportunity looms to further bump up awareness of the real-world impact of the judiciary’s pro-industry tilt, and, especially, the role of the conservative bloc of high court justices in fostering that lax environment. In particular, senators can probe the pattern of Judge Gorsuch’s opinions favoring business litigants over individual consumers and workers that has led business legal advocates to read his record to “suggest that his confirmation would restore the pro-arbitration direction of the Court [before Justice Scalia’s death cost the conservatives their majority]).”
More broadly, zeroing in on arbitration will enable senators to scrutinize the bona fides of the credo, “textualism,” that he, echoing former Justice Scalia and many other conservatives, repeatedly touts as the core of his judicial philosophy. Indeed, he and his supporters cite, as the rationale for the pro-business pattern of his decisions, “an assiduous focus on text, structure, and history . . . essential to the proper exercise of the judicial function.” Sounds good, but, for Gorsuch and kindred judicial conservatives, there is a problem: the Court’s arbitration doctrines are, simply put, impossible to reconcile with their professed devotion to the text and history of statutes.
In order to weaponize arbitration for companies intent on minimizing their legal accountability to individual consumers and workers, the Court’s conservatives have transmuted a long-obscure law, the Federal Arbitration Act (FAA), originally enacted in 1925 to facilitate voluntary agreements between businesses, having roughly equal bargaining power, for efficient resolution of inter-corporate commercial disputes. But, urged on by the U.S. Chamber of Commerce and other business advocates, the conservative justices have, over the past three decades, turned the FAA into a sweeping license for businesses to immunize themselves from private suits by individuals. Welcome though it is to Wells Fargo and similarly inclined corporations, this interpretation is antithetical to the FAA’s text and legislative history. As former Justice Sandra Day O’Connor wrote in a 1995 opinion: “[T]he Court has abandoned all pretense of ascertaining congressional intent with respect to the Federal Arbitration Act, building instead, case by case, an edifice of its own creation.” (Emphasis added)
In the two decades following Justice O’Connor’s critique, the conservatives’ penchant for pushing aside statutory text and history only accelerated. In a 2001 case, Circuit City Stores, Inc. v. Adams, a 5-4 majority held that the FAA applied to employment agreements with individual workers – permitting employers to condition employment on a prospective employee’s giving up his or her right to challenge in court any contractual or statutory violation by the employer. This radical redirection of the law bypassed an express FAA provision, excluding from coverage employment agreements with “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce . . . .” (Emphasis added)
A decade later, in 2011, the conservative bloc even more starkly put business interests ahead of statutory text and history. In AT&T Mobility LLC v. Concepcion, they held, again, 5-4, that the FAA preempted, i.e., invalidated, state laws barring enforcement of forced arbitration clauses that contain bans on any form of class relief, on the ground that including such restrictions in non-negotiable consumer sales agreements is “unconscionable.” The Court majority managed to reach this result, despite express language in the FAA specifying that arbitration clauses can be invalidated, revoked or not enforced “upon such grounds as exist at law or in equity for the revocation of any contract.” Unconscionability, as in the California statute struck down in the AT&T Mobility case, was precisely the sort of equitable basis for declining enforcement of contractual provisions contemplated by that exception.
Probing Judge Gorsuch’s forced arbitration views can provide a basis for assessing whether he would consistently respect the text and history of laws, or check that approach at the Supreme Court’s front door when business interests point in the opposite direction. On that score, a great amount of skepticism is warranted by decisions in Gorsuch’s appellate court record from which industry as well as consumer advocates have concluded that, with a Gorsuch confirmation, “the prior relatively pro-business conservative trajectory of the Supreme Court [before Justice Scalia’s death] will now be restored.”
One very recent Gorsuch opinion, detailed in a Feb. 6 post on this blog, has drawn widespread attention and provides particular cause for concern. In TransAm Trucking, Inc. v. Administrative Review Board, decided Aug. 8, 2016, Judge Gorsuch dissented from a panel decision that affirmed a U.S. Department of Labor award, under a federal whistleblower protection law, to a trucker who was fired after he had reported to his employer that the brakes on his trailer had frozen and his cab’s heating unit was not working. The trucker had waited three hours in subzero temperatures for the employer to send a repair truck, and, according to the majority opinion, when “he realized his torso was numb and he could not feel his feet,” he unhitched the trailer and drove to safety. The majority upheld the Labor Department’s decision for the trucker under a provision protecting from discharge an employee who “refuses to operate a vehicle [because of] reasonable apprehension of serious injury . . . because of the vehicle’s hazardous safety or security condition.”
Judge Gorsuch dissented, arguing that the statute did not apply, because the trucker had not “refused to operate” the vehicle, but, instead had operated the vehicle “in a manner he thought was wise but his employer did not.” Understandably, consumer and worker advocates see in this dissent a judge at pains to set aside a responsible agency’s straightforward application of the terms of a statute crafted to protect worker safety, and, further, callously insensitive to an employee’s desperate response to a manifestly “reasonable apprehension of serious injury,” precisely as prescribed by that statute.
To be sure, in principle, there is nothing wrong with statements to the effect that divining the meaning of a law, or any legal text, must start with what it actually says. But pro-business conservatives, in the name of adherence to text, frequently ignore the statute as a whole, lift a single statutory word or phrase out of context, then give it an ideologically loaded reading, in order, as noted by former Justice John Paul Stevens, to “skew interpretation,” and “defeat the purpose for which a provision was enacted.”
By contrast, two years ago in King v. Burwell, the Supreme Court decisively rejected the type of loaded, a-contextual version of textualism evident in Judge Gorsuch’s handling of cases like TransAm.. Writing for a 6-3 majority, Chief Justice Roberts ridiculed the challengers’ argument as a “winding path of connect-the-dots” assertions that made “the viability of the entire Affordable Care Act turn on . . . a sub-sub-sub section of the Tax Code.” “We doubt,” he explained, “that is what Congress meant to do.” Courts interpreting laws must look, not to the text of isolated phrases, but to the text of the whole statute. “A fair reading of legislation,” Roberts wrote, “demands a fair understanding of the legislative plan.”
In assessing Judge Gorsuch’s capacity for even-handed application of laws protecting individuals against corporate abuse, senators can ask how Gorsuch would square the abstract focus on isolated statutory phrases displayed in such instances as his frozen trucker dissent, with the holistic “legislative plan” approach prescribed by Chief Justice Roberts (and joined by Justice Anthony Kennedy) in King v. Burwell. They will be on solid ground to question whether Gorsuch’s professed “textualism” means fidelity to the whole text of a law, or using a-contextual readings, as Sen. Patrick Leahy observed in a 2008 hearing, “turning these laws on their heads and making them protections for big business rather than for ordinary citizens.”